2020 bonuses and benefits: where do businesses stand?
CFO Strategic Partners recently asked CEOs about their plans related to year-end pay raises, bonuses, holiday party and their outlook for the future. The results appeared to represent companies that, despite the challenges of this year economically, want to reward their employees but, for many, they plan to do so at levels less than the prior year. In addition, CEOs are focused on corporate culture, have become more flexible in the working arrangements they allow, and are trending toward being cautiously optimistic about the future. A majority of respondents reported that while they may have had to reduce their workforce either through furloughs or layoffs, most of them had now returned to pre-Covid-19 levels.
Below are the full results from the survey.
Work force reductions
A surprising 82 percent of respondents no longer have reductions in compensation or staffing levels due to Covid-19. Of those that still have reductions, just 17 percent have laid off employees while 3 percent have furloughed employees. Nearly 7 percent still have reductions in employee compensation.
2020 bonuses and benefits plans
About 24 percent of respondents will not award bonuses or pay raises this year. Of those that do plan to do so, 14 percent will award pay raises and 27 percent will award bonuses while 41 percent will do both. The answers to this question provide insight to how, despite difficult economic times, employers are still working hard to reward their employees.
2020 bonus structures
Of the 41 percent of companies willing to give bonuses and pay raises only 10 percent expect that amount to be more than prior year. Most (more than 40 percent) indicate they will give about the same as previous years and almost 25 percent of companies will give less than previous years. While employers have a desire to reward their employees, the need to be conservative with their cash still exists.
Company holiday parties
One thing most likely to get the axe this year is the company holiday party. Only about one-third of respondents said they will host an end-of-year gathering. While 44 percent have canceled the merriment, another 24 percent are still trying to make a decision. For those who plan to hold a holiday gathering, they are looking for low-key, scaled-down events that focus on teambuilding. Several companies already have plans in place, such as having a catered party at the office, taking the celebration online or renting out a private space. One company plans to donate the money it saves from not having the typical large party to local people in need.
Confidence in 2021
Many people are ready to get past 2020, but the confidence level in the coming year isn’t overwhelming. Only 10 percent of respondents shared they were extremely confident 2021 would be better for their organization with most reporting a cautious optimism. Still a nagging 27.5 percent of those surveyed were not so confident 2021 would improve from this year.
Working from home
Telecommuting was the business story of 2020 as most companies shifted their employees to home offices for at least a portion of the year. But, is that trend here to stay? A majority of companies are keeping this flexibility in place. Nearly 90 percent allow employees to work from home under certain circumstances and depending on the employee’s position. Of the respondents, 24 percent allow any employee to work from home at any time while almost 40 percent allowed only some to work from home. Just 13 percent don’t allow work from home at all.
To end the survey, we asked respondents to share non-monetary ideas or benefit strategies they have utilized to retain key employees. We received a number of comments, but most boiled down to one key concept – investing in employees through strong company culture and flexibility. Our respondents have found ways to remain flexible with employees, boost morale and build a strong company culture. From recognition awards to virtually scheduled social outings to absorbing the substantial increase in the cost of medical coverage during a recent renewal period, employers have been focusing on ways to provide support to their employees. Other companies have indicated they used the funds received from PPP to avoid cutting employees’ compensation.
Do you need support as you wrap up the end of the year and begin 2021 planning? Our team of experienced, on-demand outsourced CFOs can provide the support you need. Email us at email@example.com or fill out the request for information form here.
NOTE: Given the current evolving economic climate, CFOSP is publishing more frequent communications on this topic based on what our clients are experiencing and our firm’s expertise. Stay tuned for updates or click here for more content on this topic.