Editorials

Design fair staff motivation and compensation plans

jacqueline mugo

Federation of Kenyan Employers Executive Director Jacqueline Mugo. FILE PHOTO | NMG

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Summary

  • In the last two years, most pandemic-hit companies have turned to pay cuts, freezing salary raises, and other monetary incentives to stay afloat.
  • Even if this has been a better option than enacting massive layoffs and furloughs, this strategy may translate to higher staff turnover and demotivation among workers, who are expected to boost production at a crucial time.

In the last two years, most pandemic-hit companies have turned to pay cuts, freezing salary raises, and other monetary incentives to stay afloat.

Even if this has been a better option than enacting massive layoffs and furloughs, this strategy may translate to higher staff turnover and demotivation among workers, who are expected to boost production at a crucial time.

The latest Economic Survey by the Kenya National Bureau of Statistics shows companies raised average monthly pay by 3.82 percent in the year ended June 2020, a steep drop from the 8.16 percent raise a year before, the slowest rise in earnings since 2011.

In a pandemic, the slow growth in salaries is understandable. However, it is also time to rethink worker compensation and other motivation schemes.

There must be a balance between paying workers just enough so that they can continue working productively.

The economy is hard on both the businesses and the workers. Some businesses have started posting profits, yet they are not planning to move forward with salary increases and bonus payouts for 2021.

Some have plans to cancel salary increases or bonus payouts, even as their businesses rebound from the pandemic.

Times are tough for everyone and disgruntlement over very low salaries, if the workers are not given good reasons why they are low, can lead to corruption or theft, which harm the business.

The Economic Survey data shows that earnings by employees in the hospitality and education sectors, which are yet to resume full operations, were the hardest hit by pay cuts because of Covid-19 knocks.

Workers in accommodation and food service activities were the most affected by the closure of bars and restricted operation of restaurants and hotels as well as a fall in tourists.

While pay is under pressure, companies must give employee perks and incentive programmes a fresh look.