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COVID-19: What About The Appraisals?

Here comes the vital role of the human resources team in providing guidance, strategy and implementation support to the employees during the current period of uncertainty.

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As COVID-19, the respiratory illness has spread across the world, there are some key and immediate steps organizations are taking to sustain a healthy workforce and workplace. To engage the executive team, including talent management, leadership and essential staff in the planning process has become critical in the current market situation globally.

Here comes the vital role of the human resources team in providing guidance, strategy and implementation support to the employees during the current period of uncertainty associated with COVID – 19, it is a time to activate your crisis management plan. In times of crisis, boards can expect to have a role that might shift from their normal course.

Performance appraisal is the one area where the companies will make the decision and run a risk of not properly compensating and incentivizing their employees at a time when increased dedication is necessary to maintain the company’s stability. The dramatic shift in the economic forecast has rendered the targets set for 2020, seemingly impossible to reach. It is very well may be appropriate and necessary to adjust those targets in further months without making appropriate adjustments to compensation programs to account for the impact of COVID-19. Similarly, many cash-based bonus plans may have broad adjustment and amendment provisions that companies can refer to when deciding whether to adjust performance targets.

Companies have started completing a review of all business goals, objectives and processes, in order to find ways to decrease expenses, increase revenue and protect the future. As a result of this analysis, and in an effort to manage company assets conservatively, companies might make the difficult decision to forgo salary increases for all employees.

Over the past three months, coronavirus (COVID-19) outbreak has already brought considerable human suffering and major economic disruption. Industries such as food and beverage, hospitality, and travel have been hit significantly. In light of the exceedingly challenging circumstances, it's likely that there will be large layoffs if the outbreak is not quickly contained. If this becomes the case, the executives should demonstrate true leadership and slash their lush pay packages so that fewer workers will be let go.

This is the beginning of global coronavirus recession; we recommend companies to review their compensation programs more broadly to assess any other actions that need to be taken. For companies that have already adjusted 2020 budgets to take into account COVID- 19 impacts, newly set performance targets should take into account the current and projected impact on revenue and stock price performance, to the extent known, but since there is so much uncertainty as to how 2020 will play out, this alternative may not be a feasible alternative for many companies.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house



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