Forecasts and fears

Daniel Defoe published his Journal of the Plague Year more than 300 years ago, a novel aiming to highlight the lessons learned after last major plague to strike London until 2020.

Defoe was also the originator of the phrase later used by Roosevelt, that ‘fear of danger (and acting in response to it) is more terrifying than the danger itself’. Listen to Roosevelt’s electrifying inauguration speech in 1933 and his announcement of the ‘needed efforts to convert retreat into advance’, with his forward-looking New Deal investments to address the ‘common difficulties of existence’ of tens of millions of Americans.

We face not dissimilar challenges, as a society and as employers and HR and reward professionals today, working out just how to escape from this economic and health Armageddon. So just what have we learned over the past year and what should we be planning ahead for in the next in UK employment and reward management? What’s the right balance ahead of an understandable sigh and ‘retreat’ to the pre-pandemic situation versus an ambitious ‘advance’ to a ‘new normal’?

Covid contexts and choices

Your initial impression might well be that our 2020/21 version of the plague and Great Depression combined is not generally going to be good news for pay and rewards in the UK; and you would be correct of course. As Forbes magazine noted in its end of year edition, ‘The past year brought a combination of challenges that nobody could have anticipated: A global pandemic, a wounded economy, and a reckoning over racial injustice – and that was all before July!’

Despite the denial of any repeat of post-2008 austerity, the Chancellor on November 25^th announced a ‘pay pause’ for the majority of the 5.5 million public sector workforce in order to help to start to address the £2 trillion debt-burden induced by the pandemic. Interestingly, he described it as ‘fair’ given what is happening in the private sector, although his political opponents labelled it as ‘morally obscene’. The TUC called the chancellor’s action ‘a “kick in the teeth” to all key workers who had kept the country going through the coronavirus crisis.

I argue in my forthcoming longer paper on this topic that 2021 represents a critical pivot and decision point for governments, employers and HR leaders: do we move forward with new and fairer reward strategies, or revert to tired failing ones? Do we pursue investment or austerity, practice compassion and collectivism or continue to incentivise individualism and inequality? The choice and change is ours to make.

‘All in this together?’ The plague of inequality

Covid-19 has turned out not to be the equivalent of ‘the great leveler’ that Defoe refers to. It has intensified the UK’s already deepening social, health and income inequalities.

The House of Commons Women and Equality Committee inquiry on the unequal impact of the pandemic, demonstrates conclusively that female and ethnic minority employees have been disproportionately badly affected, health and wealth-wise. According to the ONS the risk of death involving COVID-19 for people of Black ethnic background of all ages was two times greater for men and 1.4 times greater for women, compared with those of White ethnic background. Meanwhile, the UCL Institute of Health Equity’s  The COVID-19 Marmot Review concluded that ‘the more deprived the area, the higher the mortality rate’ from Covid.

Sir Michael Marmot’s conclusion and answer to Roosevelt’s ‘retreat or advance’ choice is unequivocal: ‘the “normal” that existed in February 2020 is not acceptable. The Covid-19 pandemic must be taken as an opportunity to build a fairer society’. His latest report is subtitled Build Back Fairer.

Employment and reward policy choices: retreat or advance, back to ‘normal’ or build back fairer?

So what does a ‘new normal’ involve, what are the key features of a more collaborative, equitable and caring employer rewards model that many of us seek?

I would suggest attention to five key areas where I hope to see a significant spotlight focused by the end of 2021:

1. A return to ‘fair’ pay and reward policies and the re-design of executive reward packages.
2. Rediscovering the value of investing in pay, skills and pay progression.
3. More collective bonus plans, profit sharing and sharing in success. 
4. Benefits changes: More hybrid and shared-risk pension and benefits plans cush as CDC schemes.

5. Benefits changes: Greater attention to employee’s mental health and financial wellbeing, moving beyond the traditional EAP.

Conclusions

‘Tough’. That’s how a client summarised his past year in one word, personally and professionally, financially and emotionally, as a result of Covid-19. Economically, the toughest times since the Great Frost of 1708; health-wise probably the worst since Defoe’s-documented great plague 14 years later.

I would not question nor underestimate the continuing difficulties of doing anything beyond reacting to the immediate needs of this current horrendous situation occasioned by Covid-19^th; nor the need to ensure the affordability of any reward improvements and changes in an organisation. Intervention by the state has been essential to the survival of many employers and individuals; and further huge government investments and actions will be needed.

But that is one of the major learning points of the pandemic – these are investments. The research record on human capital investments is unequivocally positive that they pay off: for the individual, the employer and society.

I believe that a stronger emphasis on fair, collective and compassionate reward policies and practices in our pay and rewards policies in future would be a justified and highly beneficial outcome from the horror of Covid-19.

Yes, government needs to act to address the gaping holes exposed by the pandemic in the UK’s supposed safety-net of welfare provisions and health and safety and employment protections. But we all have agency here too, we have choices. We all will need to have the courage to act – to advocate, to invest, to make that happen, if we are not to let the tough learning from this crisis go to waste. I very much want to see the opportunity taken for a ‘new new normal’ to emerge; and we need to address and advise on these bigger questions as an HR community. 

 

Dr Duncan Brown is a member of the IPA Executive Committee