Reward consultancy Watson Wyatt has published this list of 10 ways that organisations can keep a lid on their compensation costs during a downturn. Before you do anything in a hurry, we'd suggest you read it carefully!
Focus on your key talent
Managers need to be focusing what resources they have on keeping and rewarding their key talent, as these are the people you need most to get through the difficult times and will also need to have in place and firing on all cylinders when the economy recovers
Be careful what and who you cut
Don't make harmful short-term cuts. It's important before cutting to carry out a strategic workforce planning review to understand your current and future talent requirements and to ensure your business has the necessary resources and skills for the upturn.
Ensure performance management is understood
Ensure your performance management process is effectively understood by your employees and delivered well by line management. It should not be seen as simply a process for identifying and culling underperformers, but a way to raise performance throughout the organisation.
Don't abandon bonuses
Don't abandon performance pay and bonuses but instead target them on your top performers and refocus them on realistic but stretching targets that will promote the right behaviours in this new environment.
Review sales targets
Review sales targets and territory strategies to focus your sales force on the largest opportunities. For many businesses, now is not the time to reduce investment in sales.
Look for cost savings
A review of business processes, HR policies and tax and administration could reveal untapped efficiencies. Examples could include shorter working weeks, changes to travel policies, and salary sacrifice for pensions contributions, where savings can come through within a few months of implementation. Promote the total reward message
Keep communicating the value of your total rewards. A tendency to focus on base salary means that employees generally underestimate the full value of their total reward package. Ensure employees know just how valuable their total reward package is to them.
Review executive reward
Review executive compensation to ensure the package is aligned to shareholder requirements, but still retains key executives.
Don't damage your employer brand
Don't harm your employer brand by not delivering on your employee value proposition the moment things get tough. Live it through tough times and you will maintain an engaged and productive workforce.
Be as open as you can with employees about your current HR and reward strategies. Silence breeds fear and reduces employees' engagement with the organisation. Employees know you don't have all the answers or can offer guarantees about the future.