Gartner Research

Executive Pulse: Motivating Employees When Budgets Are Tight and Home Is the Office

Published: 20 August 2020

ID: G00734309

Analyst(s): Corporate Strategy Research Team

Summary

Here’s a roll-up of pandemic-related executive sentiment and insights from thousands of functional leaders across the C-suite.

Fast word on tactics and concerns from thousands participating in our conference calls andpolls.

More detailed role-specific reports may be available on the website, depending on your subscription.

Even during the best of times, it can be challenging to recognize and retain employees and encourage peak performance. This year, two big changes make life even more complicated for anyone who manages a team: the need for many organizations to curtail financial incentives — and the dispersal of the workforce.

Let’s look at money first:

For now, the majority of HR leaders (64%) say the pandemic hasn’t affected base compensation, though a quarter report that it has — and 13% say they expect it will.

In 2021:

  • When it comes to merit budgets, 37% say the pool will decrease, 30% say they’ll keep those budgets at about the same level while only 2% plan to increase the amounts available.

  • Over a third of HR leaders still aren’t sure of the budget for short-term incentives (STIs) that reward employees for achieving immediate strategic objectives.

  • A higher proportion (44%) don’t know how much resourcing will be available for long-term incentives (LTIs) such as vested stock options designed to hold on to talent for a longer period (see Figure 1).

Figure 1. Impact of COVID-19 on Merit, STI and LTI Grant Budgets

Most sales leaders (82%) out of a group of 136 we surveyed are not changing base salaries, but for some, incentives are a different story:

  • Twenty-two percent are launching contest or sales performance incentive funds (SPIFs) focused on short-term goals, while an additional 15% plan to do so in the next three months.

  • Sixteen percent have made changes to quarterly or monthly payouts.

  • Ten percent have made changes to payout curves or other payout mechanisms determined by performance against targets. But these are most common for a small subset of reps disproportionately affected by COVID-19 in their territories.

Employees at companies requiring workers to do their jobs on-site are receiving fewer extras, such as bonus payments, hazard pay and free meals. In the April to July period, between 43% and 53% of companies were offering some form of reward for coming to the workplace. That percentage fell to 34% in August (see Figure 2).

Figure 2. Incentives for On-Site Workers

Given the predominance of remote work, employees feel more at liberty to move — to be closer to family or because they want a change in lifestyle (see Figure 3). Thirty-eight percent of HR leaders say they don’t adjust pay based on location. Companies that adjust for the cost of living are finding different ways to deal with these transitions:

  • Twenty-six percent decide on a case-by-case basis and 9% defer to managers or business unit leaders.

  • When an employee moves to a higher cost location: 16% provide a one-time bonus and 9% raise subsequent merit increases.

  • For moves to a lower cost area: 8% reduce subsequent merit increases and 6% say they’ll implement a one-time pay cut.

Figure 3. Criteria to Adjust Pay When Employees Change Where They Live

And for the record, eight in 10 companies tell us they aren’t (or don’t intend) to offer a stipend to remote workers to operate a home office during the pandemic. But eight in 10 provide equipment and supplies.

The multinational semiconductor manufacturer Advanced Micro Devices (AMD) noticed extremely low use of paid time off, despite a “use it or lose it” policy in regions where that is legal. The company sent out a pulse survey to find out why. Three quarters of respondents noted that since moving to work from home, everyone is “always on.” They felt like they needed permission to disconnect from work.

The solution: Global Recharge Days, when everyone is encouraged to take a long weekend several times a year.

  • The company proactively marks the designated days as vacation for employees, prompting them to adjust or opt out if they decide they still need or want to work.

  • During the launch AMD’s CEO, Lisa Su, shared a video blog with the entire company talking about her commitment to Global Recharge Days, clearing her meeting calendar at those times and sharing her expectation that leaders across the company follow suit.

Money and time aren’t the only ways to engage and motivate employees. Team camaraderie and collaboration are seen as important aspects of maintaining organizational culture in a hybrid workforce that blends employees who are remote, on-site and alternating between locations (see Figure 4).

Figure 4. Camaraderie and Collaboration Top Concerns

To help employees feel less isolated, companies are (see Figure 5):

  • Encouraging use of video conferencing for internal meetings (92%)

  • Encouraging more frequent manager-team check-ins for conversations, both for work and social purposes (78%)

  • Hosting virtual celebrations or team events (72%)

  • Introducing new social collaboration platforms or tools (48%)

Figure 5. Actions Taken to Help Employees Cope with Feelings of Isolation While Remote

Compiled by Daniel Ryntjes

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