Should Management still conduct performance reviews during COVID-19?
When considering if you should still conduct performance reviews during COVID-19, consider the following:
If you answered “yes” to the first two questions then consider conducting your performance reviews as planned.
If you answered “no” to either of the first questions, you may want to consider postponing your performance reviews, but ensure continued and regular feedback. Employees want feedback that is meaningful, relevant and well delivered. Feedback that is delivered ‘in the moment’ is often more relevant and useful for employees.
What to do about performance based bonuses?
Recently, HR consultancy firm Mercer has been advising employers to consider the following actions for their long-term incentive plans:
For long-term incentive plans specifically, Mercer suggests these steps:
Crucially, organisations must plan how they will communicate changes to incentive programs and be prepared to answer questions from participating employees. Troutman Sanders, compensation attorneys, also advise that well-drafted incentive plans will allow for potential adjustments to performance goal measurement for unforeseen or unusual circumstances.
In a survey conducted in late March, Willis Towers Watson consulting firm found 85% of 775 mostly large U.S. employers said the pandemic would reduce payouts from their company's short-term incentive plan, including annual bonus programs.
Most respondents also expected the coronavirus to negatively impact their performance-based long-term incentive plan (69% of those operating one) and sales incentive plan (63% of those with an applicable plan).
Therefore, as a result of the current economic crisis, many employers are adjusting these programs, with design changes more likely to be made for short-term incentive plans (43%) than performance-based long-term incentive plans (15%) or sales incentive plans (20%).
For those organisations that reported an intent to make changes to incentive plans, most will maintain existing goals but apply discretion at the end of the performance period; have or will adjust previously approved target goals; or have or will delay goal setting until a later date.
WorldatWork, in partnership with consultancy SalesGlobe conducted a poll in April where sales compensation was the focus. The 372 responses from members and clients showed that companies are most often looking at adjusting sales compensation quotas (46%), performance measures (44%) and other plan thresholds (36%).
In a survey conducted by WorldatWork in April 2020, they asked organisations if they were moving forward with bonuses based on 2019 performance:
Despite a huge loss in revenue for many businesses, "the majority of organisations have already moved forward with or are planning to move forward with salary increases and bonus payouts for 2020, and only a handful of organisations have decided to cancel salary increases or bonus payouts," said Chris Moodhe, head of insights at WorldatWork.