Want To Set Competitive Salaries & Compensations? Read This First

September 13, 20191:54 pm78 views
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Becoming a strong company in a competitive talent market is not a piece of cake. When your strategy does not align with employee’s personal needs, they will easily find another opportunity elsewhere, said Timothy Low, a chief marketing officer at Hiya Inc.

The year of 2019 and following will be difficult for organisations at large to attract and keep the right people on board due to more opening jobs that set higher competitive salary, even for low-wage workers. As reported by SHRM, there are at least 2.6 million more jobs in 2018, allowing employees to seek better and more opportunities somewhere else which eventually driving turnover. Moreover, when it comes to hiring, ghosting might increase due to the number of opportunities to choose from and employers begin to hire talents without meeting them in person just to ensure that they are hiring the right talents.

See also: Long-Term Incentive Compensation for Private Company

Besides the hiring and turnover problem, poor employee retention could also become another nightmare for employers. Workers are continuously job-hopping to ensure that they meet their expectation and career satisfaction. The two biggest reasons for job-hopping are money and career growth. The additional reasons are issues related to benefits, internal relationships with direct supervisors or managers, as well as inability to fit with an organisation or the job.

Owing to the aforementioned statements, attracting and retaining the right talents is vital for an organisation, yet without ensuring compensation philosophy, strategy, and practice, it will be so much more than a stone-burden for business to do so. Therefore, through the latest findings on 2019 Compensation Best Practices Report, here are some key highlights for employers to ensure that your business stays above the competitive market while reaching beyond goal expectations.

1. Pay raises

In today’s tight talent market, retention is a major concern for any business. Employers who seek to be employers of choice will do well to link their pay raises to performance and market rates for their jobs while ensuring employee satisfaction. To do this, employers must give approach to fairness and transparency in pay at organisation.

High performers are often more informed about the value of their jobs in the market and they are often approached by recruiters about new job opportunities. Additionally, the rising number of online sources to which employees can now turn for pay information has made employees confident in approaching their employer to ask for a raise.

2. Compensation smarter, not harder

Following the raise, compensation is also among the top reasons to retain top talents. 62 percent of surveyed organisations agree or strongly agree that compensation is becoming more important to their executives. And organisations are turning their concern into action with 31 percent or organisation have a compensation strategy and another 39 percent are working on developing one.

In addition, a majority of organisations target a higher market percentile when it comes to compensating for competitive jobs. For example, companies would target the 50th percentile for their core jobs, but then 65th or 90th percentile for their competitive roles.

3. Benefits and perks to hiring and retaining

With the same old method, employers are continuously using benefits and perks to hire and retain talents. This year, however, employers are seen to make greater use of incentives, benefits, and perks. Most of the surveyed companies are expanding beyond traditional benefits like employer-paid health insurance and retirement plans to keep up with evolving employee needs and desires.

4. Use two or more market data

The backbone of an organisation’s salary structures, market data.

72 percent of organisations base their salary structure on market data, indicating that there is a continued shift up from last year where 66 percent assigned jobs to grades using market data. Employers, in this case, can best use this guideline based on pay grades. Pay grades group is some kind of similar jobs based on market value, level of responsibility, and value to the organisation.

5. Performance and pay

Majority of organisations plan to use a merit-based pay plan to recruit and retain high-performing employees. This tactic is seen to be more prevalent for a top-performing organisation as well as for enterprise organisations. Providing learning and development opportunities came second, while using discretionary bonus plane came third.

However, top companies are less likely to use non-discretionary, incentive-based pay plans. As reported, top companies are more likely to send the message to employees that bonuses are not guaranteed – they need to be earned. 

Read also: Why You Should Conduct Salary Survey in Your Company