Compensation Planning in a COVID-19 World

by | Apr 24, 2020

Human Resources Management has become quite a bit more complicated than usual in the Spring of 2020.

Issues abound: Offices closed, social distancing, crisis management, business continuity planning, employee communications, flexible work arrangements, tele-commuting run rampant, new workplace policies, staff safety and prevention concerns, measuring employee performance remotely, and government-subsidized payroll. Interesting times indeed.  But what about Compensation?

Every November, the Compensation associations produce summaries of the Compensation Planning surveys conducted in September of each year by the major national HR consulting firms. These list the results of Forecasted Annual Base Salary Adjustments for the new calendar year – in this case 2020.

The data comes from the Conference Board, Mercer, BenchMarket, Willis Towers Watson, Korn Ferry, Morneau Shepell and others.  They cover four employee groups: Executives, Management, Professional, and Office Clerical.

The overall amalgamated average forecasted adjustment to Base Salaries from these surveys for 2020 for Ottawa / Ontario was 2.7%.

However, that was in November 2019.  When we were amidst a vibrant economy and a long running bull market. Pre-COVID 19.  2.7% seems high these days.  April 2020’s national CPI is showing 0.9%.  Quite a bit different.  What is one to do?

If you are looking at annual Compensation Planning through the spring and summer of 2020, you may be justified in toning down the 2.7% to something much smaller.

Your increases and structure movement decisions are also impacted by your current business status.  If nothing has changed, lucky you.  If you are laying off staff, they may be more concerned about keeping their job than the size of their annual salary increase.

My ‘semi-educated’ suggestion?  Provide an annual average increase of 1.0 to 2.0 % (giving more to your high performers and less to the others) and a structure movement of maybe 1.0%, depending on your average compa-ratio. Hope that makes sense!

Best wishes,
Tim McConnell, BA, MPA, SPHR
Managing Partner
McConnell HR Consulting Inc.

Compensation – Organization Design – HR Strategy