Deloitte Human Capital Insights & Rewards COVID-19 Flash

Deloitte Human Capital Insights & Rewards

COVID-19 Flash Survey II

July 2020

Preface

The first week of July officially marked the 100th day

since the South African Government announced a

lockdown as a result of the Covid-19 pandemic. Since

the announcement , we have published a Covid-19

Flash survey that sought to provide input on what other

organisations are doing in this pandemic. This is our

second publication, seeking the same and providing

input to other issues that may have developed after our

first publication.

To date, the South African government has announced

the move from level 5 to level 3. The movement has

been alluded to be a careful reopening of the economy

whilst ensuring that the spread of Covid-19 is

minimized and contained. On the upside, the reopening

of the economy has brought economic trade in some

sectors such as the services sector, manufacturing and

others. However, besides the positive economic trade,

we have noticed a downside, this in the increase of

Covid-19 infections.

In June, the Minister of Finance presented to the South

African Members of Parliament, the 2020

Supplementary Budget Speech. In his speech, key

highlights drawn is the increase of unemployment in

the first quarter rising to 30.1%, the economic

contraction by 7.2%, the forecasted inflation to 3% and

the gross tax revenue decreasing by close to 20%

(Actual gross tax revenue compared to forecasted gross

tax revenue for the first two months of the 20/21

financial year). As a result of these effects, the Minister

of Finance has therefore made a revision of gross tax

revenue. The revision moves from R1.443 trillion to

R1.12 trillion, resulting in a R300 billion tax reduction.

Studying the recent patterns of Economics and Finance,

it is inevitable that organisations need to be more

flexible, adapt quickly to the new ways of trade and

operations and keep abreast of the season of change.

Perhaps Charles Darwin would better help navigate

the tides through his saying “It is not the most

intellectual of the species that survives, it is not the

strongest that survives, but the species that

survives is the one that is able to adapt to and

adjust best to the changing environment in which it

finds itself”. As such, people and organisations

through its leaders need to adapt and adjust

quickly for survival.

With much uncertainty looming, survey

publications such as our Flash Surveys help

organisations keep up with changes that are

happening, and by such help organisations adapt

and adjust to changes. In an effort to obtain the

pulse of the market change, gauge the need to

explore uncharted routes as it would relate to

Remuneration, Rewards and Benefits, our Human

Capital team has put together this report that

explores:

• Policy changes;

• The future of office bound working

arrangements;

• Allowance tracking;

• The decrease or increase of allowances as a

result of working from home;

• Changes in remuneration structuring; and

• Incentive scheme pay-out.

We hope that this report will be insightful and will

enable your organisation to navigate the challenges

we currently face. Should you have any queries,

please do not hesitate to reach out to our team.

Tyrone Jansen

Associate Director

Workforce Transformation

Deloitte Consulting (Pty) Ltd

Deloitte Consulting 2020 3


COVID-19 Flash Survey IITrends and Insights01

26%

16%

13%

11%

8%

5%

5%

5%

3%

2%2% 2%2%

Manufacturing

Other

Agriculture & Forestry

Professional Services

Logistics

Pharmaceutical

Fast Moving Consumer Goods (FMCG)

Retail

Healthcare

Education

Financial Services

Public Sector

Technology, Media & Communications

Participants in the Flash Survey

Distribution of Participants

Detailed Flash Survey Results

1. As a result of Covid-19 have you recently updated your HR policies?

2. Is your organisation considering remote work for previously based office staff on a more permanent basis?

3. If yes, is your organisation considering work-from-home allowances?

71% 29%

Yes No

68% 32%

Yes No

24% 76%

Yes No

4. If yes, what kind of furniture and / equipment can be claimed as an expense?

5. Prior to the lockdown period, did your organisation provide travel allowances / petrol cards for office based staff, in addition to basic remuneration?

67% 33%

Yes No

6. If yes, has the allowance / petrol cards been reviewed or is it currently under review due to lesser travel as a result of remote working?

23% 77%

Yes No

100%

83%

38%

29%

17%

13%

8%

3G Cards

Fibre data allowance

Printers/Scanners

Monetary amount to be used at employee…

Office chairs

Second screens

Other *

* Respondents that indicated “other” elaborated as follows:- Insurance for equipment


Copyright @ 2020 Deloitte Consulting (Pty) Ltd

7. If you have reduced or no longer providing a travel allowance / petrol card, have you:

8. Has your organisation implemented cost saving strategies for any functional areas or levels in the wake of Covid-19?

3%

4%

10%

10%

10%

63%

Increased another benefit

Increased basic remuneration

Reduced / removed the benefit with no other

change to basic remuneration

Unchanged

Other*

Allowance is already part of a structured Total

Package value

* Respondents that indicated “other” elaborated as follows:- Converted to fully taxable allowance- Introduced reimbursive travel allowance - Reduction in basic pay and car allowance

63% 37%

Yes No



9. If yes, which cost reduction strategies is your organisation implementing?

% of respondents

Exec Level1

SnrMngr2

MiddleMngmt3 Skilled4 General5

LowerSkilled (hourly

rate)

SalesRep

SHORTENED WORK WEEK WITH SALARY DECREASE

5% 4% 5% 5% 5% 10% 4%

SALARY DECREASE FOR SAME AMOUNT OF WORK

14% 13% 12% 13% 12% 8% 10%

ZERO INCREASE 41% 39% 38% 37% 37% 35% 38%

ZERO BONUSES 24% 22% 23% 21% 22% 20% 21%

ZERO PROMOTIONS

11% 12% 10% 11% 10% 12% 13%

RETRENCHMENTS 0% 3% 6% 5% 6% 8% 4%

UNPAID LEAVE 5% 4% 3% 5% 7% 6% 6%

OTHER 0% 3% 3% 3% 1% 1% 4%

1. Executive level2. Senior Manager3. Middle Management4. Specialised / Skilled / Supervisory (non-manager)5. General (Clerical / Supervisory)

* Respondents that indicated “other”, elaborated as follows:• Reduced work hours• Reduction of high annual leave balances• Reduction of benefits



10. The chart below indicates the percentage of respondents cost reduction strategies across all levels of staff

5%

11%

38%

22%

11%

5%

5%

3%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Shortened work week with salary decrease

Salary decrease for same amount of work

Zero increases

Zero bonuses

Zero promotions

Retrenchments

Unpaid leave

Other


11. What % of salary increases are being granted for on-target performance for the following levels of staff for the period April 2020 to March 2021?

CATEGORY OF STAFF

% of respondents

0% 0.1% - 3% 3.1% - 5% 5.1% - 8% Above 8%

EXECUTIVE LEVEL 53% 5% 19% 19% 4%

SENIOR MANAGER 53% 7% 20% 17% 3%

MID MANAGERIAL 50% 7% 21% 20% 2%

SPECIALISED / SKILLED / SUPERVISORY

47% 7% 22% 23% 1%

GENERAL (CLERICAL/ SUPERVISORY)

48% 6% 24% 21% 1%

LOWER SKILLED (HOURLY RATED)

43% 8% 14% 32% 3%

SALES (REPRESENTATIVES)

51% 5% 23% 21% 0%


49%

6%

21% 22%

2%

0% 0.1% -3% 3.1% - 5% 5.1% - 8% above 8%

12. The chart below indicates overall salary increases across all levels of staff which are being granted for the period April 2020 to March 2021.

13. What increases are being granted for Non-executive Directors for the period April 2020 to March 2021?

68%

4%

21%

7%

0%

0.1% -3%

3.1% - 5%

5.1% - 8%

% of respondents



14. Annual bonuses for on target performance are being awarded for the following categories of staff for period April 2020 to March 2021?

49%

50%

47%

47%

43%

43%

48%

51%

50%

53%

53%

57%

57%

52%

Yes No

15. Has your organisation changed the following for commission earners (sales staff)?

3%

13%

13%

71%

Paying minimum commission

Commission models

Commission targets

Unchanged



Workforce Transformation Practice

Deloitte’s Workforce Transformation service line is able to assist clients in all

remuneration and benefit related matters, be it the complexity of a merger or

acquisition, market trends or establishing benchmarks and job evaluation.

We also consider the impact of change on employee engagement, attracting critical

talent, administrative requirements, tax optimisation, compliance, change readiness,

and level of effort to implement. We assess and align our reward programs with an

organisation’s financial, risk, and talent management objectives.

Our practice has been advising global companies on remuneration for over 20 years.

We are recognised for providing independent, expert advice, as well as commercial

and pragmatic implementation support.

Our team has experience across various industries, sizes of organisations and

complexities of projects. We provide expertise and deliver on projects to the wider

Africa Consulting Practice of Deloitte.

We have access to a vast Deloitte team, which includes specialists in employment law,

corporate governance,

JOB EVALUATION AND PROFILING

EXECUTIVE COMPENSATION

STRATEGY AND POLICY DEVELOPMENT

REMUNERATION REVIEWS

BENEFIT DESIGN AND PACKAGE STRUCTURING

PAY MODEL DESIGN

RETENTION SCHEMES

LONG AND SHORT TERM INCENTIVES

SALES COMPENSATION

SURVEYS AND BENCHMARKINGregulations, tax advice,

mobility, share plan

drafting, accountants,

lawyers and a dedicated

research team.

Our varied client base

affords us a level of

market exposure that

ensures that our

knowledge and

experience are

continually refreshed, as

stakeholder views

develop across

industries and sectors.


Why


Tyrone JansenAssociate DirectorWorkforce [email protected]

+27118066218

Elana Hattingh Senior Manager Workforce [email protected]

+27 (0) 11 806 6092

Lesley ColemanManagerWorkforce [email protected]

+27 (0) 11 517 4145

Musa MasingiSenior ConsultantWorkforce [email protected]

+27 (0) 11 209 8803

13

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Deloitte Human Capital Insights & Rewards COVID-19 Flash