News & Announcements

2020 CORONAVIRUS Impacts on Pay, Benefits and the Workforce Survey

Posted Tuesday, May 5, 2020

The past six weeks has been a life changing experience for everyone and we’ve been forced to make adjustments and sacrifices.  With this unprecedented pandemic, some people and businesses are being impacted more than others.  The results from a UHERO-Chamber of Commerce Hawaii survey reported the hardest hit industries in terms of full-time employees were accommodations (hotels) down 83% and retail businesses down 76%.  Food services, education services and various other services experienced reductions above 50%.

In response to the COVID-19 pandemic, many businesses are exploring ways to manage pay, benefits and the workforce.  Hence, the Council recently invited local business to share their insights during a survey conducted from April 23rd – 29th, 2020.  A total of 231 local organizations covering more than twenty-four industries responded to the survey.

Understanding the situation is very fluid and changing regularly, the survey outcomes shared in this report may have changed. Employers continue to evaluate pay and benefit programs along with workforce planning initiatives, as they consider new levels of flexibility dealing with the “new normal” COVID-19 has pushed everyone into.

The data outcomes are being shared at a pivotal time, as employers understand the new work environment will be much different as compared to the pre-COVID era.  Employers are working diligently to manage the balance between managing costs while also taking significant steps to support employees as we all adjust to a “new” work environment.

Changes Impacting Pay & Bonus Plans

Less than one-fourth of participating companies (18.6%) are freezing salaries (14.3%) for 2020 or have plans to decrease 2020 merit budgets (4.3%).  One-half (50.2%) will continue to proceed with 2020 salary/pay adjustment budgets as planned and one-fourth (24.7%) are undecided.  A handful (1.7%) plan to increase merit budgets and a few others (4.8%) are looking at other ways of dealing with budgets such as delaying the timeframe for adjustments.

Participants were requested to share how the COVID-19 pandemic has impacted their plans with making salary/pay adjustments this year.  Of the actions taken, 30.3% of employers reported they are undecided at this time (which was the largest response received amongst the options provided).  Slightly more than one-fourth (27.3%) reported that salary/pay adjustments for 2020 were implemented earlier in the year, with 15.2% reporting plans to proceed with their initial plans for 2020.

As employers face difficult economic conditions, they are working to manage expenses yet are striving to support employees. The outcomes indicate just that.  More than two-thirds of employers (71.9%) have not implemented salary reductions and do not have plans to reduce base pay.  The remaining employers reported they remain undecided (18.1%) with the smallest group of employers (10%) have implemented or plan to implement salary reductions.

Based on those companies (10%) who have implemented salary reductions, the workforce impacted most heavily by salary reductions are within Executive and Management type jobs.

2019 Bonus Plans

Bonus plans are not part of the total rewards programs for 30% of participating companies.  For those companies offering a bonus plan, nearly one-half (49.7%) reported no changes to bonus plans where bonuses have been paid out as planned. The below table displays the types of actions being taken (listed in order of most responses received).

2019 Bonus Plan Actions

Percent Representation

No changes, bonuses have been paid

49.7%

Undecided

24.2%

No changes to bonus plans

14.9%

Bonus payouts will be reduced and delayed

5.6%

Bonus payout will be delayed

3.7%

Adjust plan performance measures

1.9%


2020 Bonus Plans

Similar to 2019 Bonus plans being offered to employees, nearly one-third (28.5%) are not offering a 2020 Bonus plan as part of their total reward programs.  As businesses focus on plans to bring employees back to work or return to the office from temporary remote work arrangements, more than one-half (59.6%) are undecided as to what type of changes might be considered.  The below table displays the types of actions being considered (listed in order of most responses received).

2020 Bonus Plan Actions

Percent Representation

Undecided

59.6%

No changes to bonus plans

23.3%

Adjust plan performance measures

9.2%

Decreased budgets for bonuses

6.7%

Other

1.2%


Changes impacting Defined Contribution Plans

While employers work to manage costs, few employers have executed cost-saving measures with defined contribution plans.  Based on data collected, only 5.7% of employers have suspended or reduced company matching contributions (which aligns with national trends reported in a survey conducted recently by Aon). 

With data indicating that more than two-thirds (73.8%) of employers have decided not to implement any changes, it’s important to note that the 2017 Retirement Plan Survey published through the Council reported the overall average matching contribution percentage to be 4.2%.

The below table displays the types of actions taken in response to the COVID-19 pandemic (listed in order of most responses received):

Defined Contribution Plan Actions

Percent Representation

None, no changes

73.8%

Undecided

19.5%

Suspend company matching contributions

3.8%

Reduce company matching contributions

1.9%

Other

1.0%


As a point of reference, 9.1% of participating employers do not offer a defined contribution plan as a benefit. 

Workforce Impacts

Faced with the significant downturn of consumer demand for goods and services due to the “stay at home” order in place, 25.5% of participating employers have furloughed employees or executed permanent reduction in force measures (with the Leisure & Hospitality Industry feeling the greatest impact). Hence, the unemployment rate in Hawaii has soared from 4.1% earlier in the year to 37% according to local news reports.

Survey participants were provided a list of options to describe how the COVID-19 pandemic has impacted their workforce. The table below is in order of the most responses received:

Impact

Percent Representation

No changes to the workforce

40.6%

Furlough (temporary layoff)

20.7%

Workforce staffing is being reviewed

19.9%

Other

11.8%

Permanent Reduction in Force

4.0%

Undecided

3.0%

For the other category, options shared were (listed in alphabetical order):

  • Alternating work schedules
  • Employees being compensated, although not working
  • Hiring freeze
  • Hiring of temporary job to fulfill additional business needs
  • Increase in hiring (including travel nurses)
  • Job elimination
  • PPP assistance allowed for the reinstatement of furloughed workforce
  • Reduction of work hours
  • Utilization of leave options

2020 Recruitment Plans

Nearly three-fourths of participating employers (73.5%) reported either no changes to 2020 hiring plans or limited recruitment for particular jobs.

Actions

Percent Representation

No changes to 2020 hiring plans

26.8%

Hiring is limited to select jobs

25.5%

Varies by job, department and/or location

21.2%


Looking Ahead: Workforce Changes

Dealing with the COVID-19 pandemic, companies were required to change the way business is executed, hence, participants were asked to share how future workforce strategies might change.  The top three areas identified as key initiatives to continue for the longer term by more than one hundred employers are noted in the below graph.

When looking at all responses reported, below is a list of all the action areas (listed in order of the most responses received).

Action Areas

Percent of Responses

Continue to enhance remote work capabilities

25.4%

Flexible work arrangements

22.5%

Workforce review/redesign (increase or decrease in staffing levels)

16.6%

Enhance cross-training between jobs

14.3%

Review/redesign of jobs (changes to existing jobs)

13.0%

Job sharing

4.8%

Other

3.4%

      The other category comprises of the following (listed in alphabetical order):

  • Improving online systems
  • No changes, since actions have been in place prior to COVID
  • Undecided, as actions are being reviewed

Looking Towards Business Re-opening

As businesses look towards the gradual re-opening of the economy, employers are considering various roll-out restrictions and initiatives as they prepare to re-open, while keeping the safety of employees and customers top of mind.

The initiatives receiving more than one hundred responses are indicated below (in order of most responses received):

  • Physical distancing requirement for employees and customers
  • Mask requirements for employees and customers
  • Revised sanitation protocols
  • Phased return to work for employees
  • Flexible scheduling

Understanding each business has its own unique manner of executing their business, we are sharing the complete list of initiatives (listed in order of the most responses received.

Initiative

Percent of Responses

Physical distancing requirement for employees and customers

17.1%

Mask requirements for employees and customers

16.1%

Revised sanitation protocols

13.4%

Phased return to work for employees

11.3%

Flexible scheduling

10.3%

Employee self-assessment and verification

7.3%

Employee temperature checks

6.3%

Return to work orientation sessions (covering new policies, processes and protocols

5.2%

Transmission-limiting behaviors training programs

3.4%

Financial Counseling (through EAP or other external source) for a transitional period

2.8%

Employee COVID or anti-body testing

2.5%

Assistance for childcare needs for a transitional period

2.2%

Increase number of EAP visits available for a transitional period

.5%

 

HEC conducts a variety of compensation and benefits surveys to provide data useful in developing and administering compensation and benefit plans, and personnel policies.  Custom snapshots and comparison reports from our compensation surveys are available, along with customized, proprietary surveys conducted on your behalf.  Our Survey & Compensation experts can also work with members on employee opinion surveys to identify gaps between being an employer of choice and being merely an employer.  For more information, please contact Cathy Keaulani, Survey & Compensation Services Manager (ckeaulani@hecouncil.org), or Susan Amuro, Survey & Research Analyst (samuro@hecouncil.org).

Feature of the Month:

Guide to Returning to the Workplace: Organizational Effectiveness (Phase 2)

As you bring employees back to the workplace, keep in mind strategic considerations for the future of your organization’s health and effectiveness.

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