Far more employees than C-suite executives took a pay cut during the pandemic, according to a study carried out by compensation management platform beqom.
Its 2021 Compensation and Culture Report revealed that more than half (51%) of US employees experienced a pay cut during the pandemic, compared to 24% CEO or executive leadership teams. The majority (55%) of employees would take a pay cut to avoid being furloughed or let go; with Gen Z (61%) and Millennials (57%) most likely to accept cuts. Around 44% also said they would take a pay cut if it meant their colleagues would not be furloughed.
The report uncovered how employee views of total rewards, diversity and inclusion, work-life balance, transparency, and benefits have changed during the Covid-19 pandemic and what employees expect from their employers in 2021 and beyond.
PROMOTIONAL OPPORTUNITIES & FAIR PAY
Lack of childcare benefits for working parents also led to reduced working hours and less career opportunity, revealed the report. Around 47% of working parents were forced to cut down hours; and therefore pay due to childcare obligations. And nearly two in five (39%) considered leaving the workforce. Nearly half (48%) of working parents believe their path to promotion has been negatively affected due to managing childcare during the pandemic.
Additionally, employees want to know they’re fairly paid within their specific role above all else, according to the report. When it comes to compensation transparency, staff are most interested in understanding the average compensation for every position at their company (37%); compared to the compensation of every member of their team (21%); the compensation of their CEO and executives (17%), and company compensation by demographic (7%). Women (42%) are more likely than men (30%) to want to know the average compensation for every position; while men (22%) are more likely than women (13%) to want to know the compensation of the CEO and executives at their company.
PANDEMIC ERODES PAY TRANSPARENCY
However, only half (51%) of workers say they have felt comfortable discussing pay with their direct managers during the pandemic; while 41% have not. Far more men (62%) than women (44%) have felt comfortable speaking with their manager about their pay. Baby Boomers (51%) are almost twice as likely as Generation Z (26%) to be willing to broach the subject.
Of employees who were not comfortable speaking with their manager about their compensation during the pandemic, more than a third (37%) said they’re grateful just to have a job and did not think discussing pay would reflect positively; while a quarter (25%) were nervous it would impact their employment status. In 2018, 46% of employees said they would share or discuss salary with colleagues, including 56% of Millennials. But in 2020, that share dropped to 40% overall; with a significant 13% drop among Millennials (43%).
FAIR PAY AND DE&I KEY TO RETENTION
Finally, the report pointed out that employers “should not underestimate the importance of pay transparency or a diversity, equity and inclusion (DE&I) strategy for employee retention”. More than three-quarters of employees would consider switching jobs if another company offered unlimited paid leave (77%); more flexibility in working hours (76%); or remote work post-COVID (77%). Nearly half (48%) of employees would also consider switching jobs if another company had a built out DE&I strategy. And 58% would consider switching for more pay transparency than their current company provides. Another recent report revealed that employees would jump ship for a better work-life balance, as reported.
“In a year like 2020, employees may have in fact been justified feeling uneasy discussing their pay; but the gender and age gaps in these responses should be of concern to employers,” stated Tanya Jansen, Co-founder and CMO of beqom. “This reluctance has the potential to exacerbate gender-related pay gaps; and to affect not only the retention of but the lifetime earning potential of Gen Z in particular. Because pay equity perceptions have such a strong influence on retention and employee morale, it’s incumbent upon organisations to be more transparent and communicative with employees around compensation.”
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