5 Pay Predictions Post-COVID
Like many people, I have not been impressed by the old normal and therefore I am not looking forward to the new normal. If normal worked so well pay would not be a constant thorn in the side of companies and their employees. If normal was so great, wouldn’t compensation philosophies state that they were designed to support hiring average talent to deliver average results? Normal is not the objective of the companies leaders state they want to be like. I am confident that most companies will return to a slightly modified version of normal, and I am excited by the ambitious minority who will find that it is time to break the mold.
5 Predictions for Pay in a post-COVID world.
The continuation of remote work will lead to new ways to determine compensation for a position.
Remote work isn’t going away. The best companies will not only adapt to this reality, they will embrace and capitalize on it. The best companies will plan for a new world where mid-level managers are better (and paid accordingly). They will plan for a world where highly talented professionals can choose where they are most productive, whether that is a social office environment or a remote office location. Training will change and performance management will adjust with it. Within a few years having 25-75% of your staff in the office only occasionally will become commonplace.
Equity will return to its roots as a unifier and broad-based leveling agent.
Equity compensation began its popularity as a tool designed to get as many people as possible aligned with the companies long-term mission. It was supposed to work as a unifying force to bring people together to fight the common challenge, enemy or soulless giant company. I believe this ethos will return to plans at the most effective companies.
There will be a rethinking of the concept of “long-term” incentive plans.
Long-term once meant “career.” Later it meant ten years. Over the 15 years, it has crystallized to mean anything that is more than a year. Great companies are going to rediscover the value of truly long-term, committed employees. Incentive plans will respect this value in both design and potential value.
There will be a rethinking of the gig economy.
The gig economy has become a bit of a murky mess. For some, it means a full-time job with none of the security. For some, it means sporadic work that barely pays the bills. For others it kind of works. I can see workplaces paying and treating gig workers more like highly valued consultants. Engagements may be limited, but pay will better reflect the talent and deliverables of the gig-based individual or team. This type of work will augment “normal” staff instead of replacing it.
One-size-fits-all will be replaced by a range of sizes that correctly fit more people.
Many compensation programs have been designed around the difficulty of managing complex programs using antiquated tools. Better tools already exist. The best companies will expand their use of these tools to build better “menus” of pay programs. Similar people with different motivations may not be required to have the same incentive plan structure (even if they have the same metrics and goals). Employee choice will become increasingly popular as staff locations become more flexible and compensation professionals better understand things like behavioral economics, temporal aspects of pay, and the psychology of motivation. I don’t expect the wild west, but the “you get what we serve” mentality will become less acceptable.
I can go on, but I am hoping you will add your predictions in the comments wherever you read this. Now is the time for big ideas. Very soon will be the time for executing on those ideas. The old normal wasn’t that impressive. A new version of it won’t inspire many. Taking advantage of the chance for real change will separate the companies who become the aspirations of others for the next decade, from those who become examples of missed opportunities.
Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He is a “Compensation Futurist” who works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.