How are companies addressing the short- and long-term implications of the coronavirus (or COVID-19) crisis on their compensation plans? A survey of more than 200 companies conducted by Willis Towers Watson sheds some lights on the steps companies are taking to plan for 2020 and 2021 compensation, such as target performance metrics, but also how opinions on the crisis and its impacts are shifting in nearly real-time.
In mid-February, 15% of firms expected COVID-19 to have a moderate or severe impact over the next six months. By the end of the month, that number had risen to 34%. Longer-term, 20% estimate at least some negative impact for the next 12 months.
Almost half, 44%, of survey respondents estimate their annual incentive plan has been or will be impacted. However, 43% of those respondents (20% of the total respondents) indicated that the impacts are not expected to result in changes to annual incentives.
The survey included several other interesting statistics:
- 44% of companies had not discussed the crisis’s impact on compensation at the time of the surveys, though several said it was on the agenda for March.
- Most companies are maintaining existing goals but will likely exercise discretion at the end of the year once the full impact is better understood.
- 10% are reducing goals
- 6% are widening a target range
- 4% are changing metrics
- 2% are delaying goal setting
- For performance-based long-term incentives, 35% of companies anticipate an impact, but the vast majority have no intention of adjusting goals or metrics.