Talent is still in high demand, regardless of the current state of an industry. Employees are taking advantage of this information, especially millennials who are using it to win higher-paying jobs.
Business leaders are being forced by reality to assess their employee value proposition and total rewards offering to reduce attrition. This assessment is in addition to the already existing expenses like hiring, onboarding, and training as well as lost productivity from vacant jobs because of changing circumstances.
A growing number of employees are quitting their compensation package without fully understanding or appreciating its value, which leaves them more open to alluring offers, especially among remote workers. This is particularly true as businesses may find it difficult to express gratitude and maintain informed and engaged employees when they are far away.
These factors make it imperative that you convey to potential hires and current employees how much your company values their contributions as part of your talent acquisition and retention strategy.
Why do you need compensation strategies?
A complete compensation management strategy, when backed by the right solution, offers a cohesive perspective of the components of pay and greatly benefits individuals in various jobs within your company.
Attracting top talent
Motivated and engaged employees
Reduces attrition
Improving transparency and equity
The true war for top talent is being waged here, which is why leading organisations are embracing a total compensation management approach. The yearly achievement of your company’s strategic goals and objectives will be largely determined by your compensation management program.
Pay parity and benefit parity are guaranteed by well-managed compensation plans throughout the whole company. To ensure that their pay plans are successful, business owners and HR directors should be well-versed in both employee expectations and the workings of compensation administration.
Update your compensation strategy for the changing economy
Here are the top three recommendations by SAP experts for an effective compensation strategy that will make sure your organisation’s demands are met both now and in the future.
Aligning rewards strategy with organisational strategy
The road map for acquiring a competitive advantage is established by organisational strategy. Additionally, this alignment makes it possible to encourage positive behaviour and penalise negative behaviour. Employee motivation stems from what is assessed and rewarded; hence incentive strategies must complement organisational strategies.
Everyone must fully understand the plan for it to serve as a magnetic north for calibrating employee compasses. When total compensation is in accordance with company objectives, it may dissolve organisational silos and bring people from different departments, business units, and even the whole organisation together.
Pay transparency
Professionals have a rising interest in how their pay is decided, and many interpret “pay transparency” as a corporation being fully transparent about everyone’s salary.
Pay transparency has several advantages, including improved work performance and satisfaction, enhanced trust, and retention. You can tell how much you respect your staff by the way you reward them, after all. Create a core philosophy of compensation that guides your pay transparency policy, provides context for the decisions you make about compensation structures and policies, and ultimately helps you decide how transparent to go with respect to your organisation.
Re-evaluate remote work compensation
Remote work is the way of the future, and its benefits exceed its drawbacks. Reward systems may be used by businesses to maintain the engagement of their remote workers. It’s essential to identify a pay plan that effectively accommodates this scattered workforce.
Four most significant remote work strategies as shown below:
- Tying an employee’s pay to their geographical location.
- Merit-based remote work compensation.
- Benefits and entitlements that extend to remote workers.
- Global salary standard
Global compensation rewards to consider within an organisation
Short-term incentives:
Recognition awards
Spot bonuses or recognition awards are frequently given and are often closely linked to demonstrating business values. They typically lack predetermined criteria and are awarded solely for outstanding achievement. These initiatives may consist of monetary rewards, publicly acknowledged “thank you” messages, and point-based schemes that let the workforce redeem rewards after reaching predetermined milestones.
Referral bonuses
Referral bonuses are rewards employees receive for introducing job prospects to their employer. When they recruit someone who is highly recommended by an existing employee, and they stay in the role for a set period of time—typically a few months—employers commonly give cash awards.
Long-term incentives:
Stock-based
Shares of the company’s stock are used to deliver value. Employee compensation may be contingent on meeting performance targets, but in the end, workers will get a portion of the company’s stock. This strategy aids in the longer-term retention of top performers by allowing employees to partake in company earnings.
Performance-based incentives
Performance bonuses are given regularly to employees based on their achievements. When individuals actively contribute to the financial success and expansion of their company, performance bonuses are often paid by the employer. Setting and rewarding annual or quarterly performance incentives for top achievers is a common practice in monitoring employee performance targets.
Develop an informed and employee-centered compensation strategy with Zalaris’ Compensation Planning Solution
A total rewards strategy will serve as an effective visual reminder of the financial investment your company has made in the personal and professional development of its workforce. Additionally, it’s a fantastic start in the direction of accepting pay transparency.
This article was written by Zalaris. You can find them in the Software Suppliers area of the HRTech247 website here.
