At this point in the year,  we would typically survey executives from dozens of companies on whether they expect to receive a bonus this year, whether they’re expecting increases next year, what their overall business outlook is and whether they’d consider job opportunities at other companies within the upcoming year.

However, as with most things in 2020, the Jack Hammer annual Bonus and Business Sentiment survey has been “Covidified”. Expectations of bonuses and salary increases have steadily dropped over the past four years and, needless to say, the picture is even more dire this year.

COVID-related salary sacrifices

Polling executives in a range of industry sectors, our findings show that, in the wake of this pandemic, 15% of companies implemented compulsory salary sacrifices of up to 10%  for senior managers and executives, with businesses agreeing to pay these back at an undetermined future date, on the assumption that the company will perform better in coming years. In companies where there was no compulsory decrease, 70% encouraged voluntary sacrifices, with the funds being channelled into company-wide “ubuntu” funds, to benefit colleagues whose income was directly impacted as a result of COVID-19. This was positioned as an alternative to donations to the government’s Solidarity Fund.

2021: Inflation-related increases at best

In terms of increases going forward, 85% of companies surveyed reported that they would grant only inflation-related increases across the board but that other increases remain discretionary. These discretionary increases would not apply to those categorised as “senior or top management”. In most instances, bonuses will not be withheld, but there is no doubt that the quantum achieved will be far lower than in previous years, in some cases as much as 70% less.

But wait, there’s more…

However, 80% of those polled also indicated that there are monetary reserves in place to fund Key Talent incentives – these are awarded as retention bonuses for key executives or to executives who have exceeded their individual KPIs, even though the broader business has not. Some key executives have also been awarded once-off payments from cash reserves to counter-balance some of the loss incurred for devalued shares that were due to vest this year or next year.

South African resilience comes to the fore, again

Despite this overall bleak picture, however, when asked about their outlook for the year ahead, over 70% of respondents said they remain hopeful. As one respondent told us “the South African will to thrive and succeed will never die; we are a resilient people”. This optimism may be partly informed by StatsSA’s Q3 results showing positive GDP growth and the fact that the Rand is currently trading at less than R15 to the dollar.

Last year, we reported that companies were worrying less about cannibalising market share from competitors and focussing more on adaptation, innovation and customer-centricity to achieve growth. This year, respondents gave detail on some of the COVID-induced positive advances that have helped the bottom line, including increased use of AI and automation and rapid digital transformation, resulting in better customer experience. According to one financial services executive “this pandemic has certainly helped us connect more with our customers, even if we can’t actually see them”.

While businesses and individuals have been warned to keep the belts tight and remain circumspect, it is clear that optimism and positivity remain at the centre of the South African business landscape.

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