The Spotlight is a regular Q & A feature that showcases our people, their expertise, and trending topics that are on top of our clients’ minds directly from the voices of our business leaders.
David Knopping
President, Rewards Solutions
Ephraim Edelman
Partner, Product Strategy
Yanina Koliren
Partner, Product Strategy
Using Data to Make Informed Decisions in Response to COVID-19
The COVID-19 pandemic is first and foremost a humanitarian challenge. However, its impact on the global economy, businesses and their workforces is also vastly changing the world around us. In these unprecedented times, we launched a series of pulse surveys to help our clients gain the insights they need to navigate the uncertain road ahead. Each survey included results from nearly 2,000 participants across industries and geographies on various topics that followed the evolution of the crisis, from responding and reacting to changing workplace strategies and how to compensate the virtual workforce.
We recently had the chance to speak with David Knopping, President of Rewards Solutions, and Ephraim Edelman and Yanina Koliren, leaders in our product strategy team, to discuss rising compensation challenges and how data can help address these needs. This Q&A offers insights from our pulse survey results, focusing on ways firms can use data to support their business for the new normal.
How has the COVID-19 pandemic impacted compensation differently across industries?
While all industries have been impacted by the COVID-19 pandemic, the degree of impact varies widely. Unsurprisingly, our pulse surveys revealed that retail, hospitality and travel were by far the most affected industries, with store closings, furloughs, layoffs and pay reductions for executives and beyond. The effects happened quickly, forcing firms to act immediately. Those firms with existing strong technology and e-commerce platforms did quite well, but others that were struggling to transition to the new e-commerce world saw tremendous declines. It’s a similar story for our medical device and pharmaceutical companies, where revenues declined dramatically due to elective surgery cancellations and the inability for sales representatives to enter hospitals, leading to pay reductions across the board.
For banks, technology and biotech, the large majority of firms were in a solid position to weather the storm and haven’t had to drastically change course as of yet. Although there is still uncertainty, markets have recovered quite a bit over the past couple of months. To date, we are seeing measured decisions around costs — pausing on hiring and perhaps delaying merit increases to see how quickly the economy bounces back. – David Knopping
How should companies use and interpret data to their advantage in today’s volatile market?
There is uncertainty in nearly every facet of our current lives, including evolving societal, political, economic and health concerns; there is even uncertainty in the context of making compensation decisions. Hiring is on pause for many organizations, only increasing the focus on retaining and motivating existing colleagues.
In the midst of this uncertainty, firms need to plan ahead and make critical compensation choices. My recommendation is to reduce as much ambiguity as possible to facilitate fact-based decisions around both pay levels and pay composition using timely and industry-specific market compensation data. Survey data can help you understand the annual compensation rates for each position, analyze geographic differentials and re-examine the market data impact resulting from competitor group changes due to evolving location strategy, business strategy or the broader economic environment.
As David mentioned, some firms are thriving in the current environment, some are trying to survive, and others are rapidly accelerating long-desired digital transformations. In any case, analysis and decisions begin with understanding the baseline of your firm’s current market positioning. Even though data does not always provide the final answer of what is right for your company, it is certainly a valuable starting point. – Ephraim Edelman
How can firms use survey data to help meet and respond to evolving needs?
The COVID-19 pulse survey series came to life in response to the need to have relevant and point-in-time data that will help clients and consultants navigate the rapid changes that the COVID-19 pandemic presents. Companies have undergone, and continue to undergo, various stages of impact and response. For example, the initial focus was for businesses to steer the changes occurring by instilling new practices, such as providing additional pay, benefits, flexibility and so on for their employees. These topics served as the basis for our first pulse survey. Fast forward to the end of April — when companies were focused on how to further protect their employees, which was reflected in our survey’s emphasis on safety. Now, the key area is based around setting the stage for a new normal. Our latest surveys are therefore centered on developing the workforce of the future, return to workplace and how to compensate a rising virtual workforce. All surveys in this series are designed to gather and create insights that will help clients make educated decisions with timely data every step of the way. – Yanina Koliren
How should companies be addressing the emerging trend of pay mobility?
I think pay mobility is the biggest unknown that will come out of the business response to the COVID-19 pandemic — will this new era of location flexibility be here for the long term? How will companies that are headquartered in higher-cost areas of living, who are now providing location mobility to their staff, adjust pay accordingly? Or, will they even adjust it? Rent in the San Francisco Bay Area went down 10% in the month of May, clearly indicating that people are leaving. So, if they are going to lower-cost locations, will the pay get right-sized? Most businesses see this as an opportunity to optimize their workforce in a different way, meaning the impact of COVID-19 on talent and rewards will continue to evolve and unfold over the coming the months and years. – David Knopping
Additional Resources
To access our latest survey results on return-to-workplace strategies, please visit: https://aon.io/pulse-3. Results from our next pulse survey, Setting the Stage for the Future of Rewards and Work, will be published on June 17, 2020.
For more insights on compensation trends and our survey products, please write to rewards-solutions@aon.com.
To read more articles on how rewards professionals can respond to the COVID-19 pandemic, please click here.
COVID-19 Disclaimer: This document has been provided as an informational resource for Aon clients and business partners. It is intended to provide general guidance on potential exposures, and is not intended to provide medical advice or address medical concerns or specific risk circumstances. Due to the dynamic nature of infectious diseases, Aon cannot be held liable for the guidance provided. We strongly encourage visitors to seek additional safety, medical and epidemiologic information from credible sources such as the Centers for Disease Control and Prevention and World Health Organization. As regards insurance coverage questions, whether coverage applies or a policy will respond to any risk or circumstance is subject to the specific terms and conditions of the insurance policies and contracts at issue and underwriter determinations.
General Disclaimer: The information contained in this article and the statements expressed herein are of a general nature and not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without the appropriate professional advice after a thorough examination of the particular situation.
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