Research from Deloitte suggests that “64 percent of respondents expected their organizations to redesign compensation yet again either this year or in the next three years.”
Has COVID brought around these changes or are organisations simply moving with the times?
Dissatisfaction with compensation
In the same research from Deloitte they found that executives rated compensation negative 15 on the NPS, second lowest, above only performance management.
Studies of female workers in the US found that those victims of compensation inequality were four times as likely to suffer from general anxiety and twice as likely to be depressed. Compensation doesn’t just mean that workers are paid for when they work, it’s a way to reduce inequalities and promote better mental health in the workplace. Fairly and transparently organising your compensation can be aligned to the new world of work. Here’s our tips:
Plan for the future
Especially when looking at start-ups and small businesses, compensation is often done on a case by case basis, and while it works in the immediate, over time this can cause complications.
By setting in compensation plans from the early stages, you can create a healthy culture of compensation and equal working. But how in practice do you carry this out? Well, you can:
- Plan for individual and company growth in parallel. Rather than leaving compensation out of the overall company strategy, align it and as the company grows, so will your team.
- Think about teams in your compensation growth plan. Perhaps you don’t have any right now but as times change, team positions may change, and compensation should reflect that.
Factoring in bonuses and equity payments should be included in any plan.
Be flexible with job compensation and automation
As technology grows and changes, so too will compensation for jobs that are automated. This requires flexible and scalable compensation as well as upskill opportunities for those where jobs are automated.
The World Economic Forum estimates that 42 % of the skills required from the global workforce will change between 2018 and 2022, and that by 2022, no less than 54 percent of all employees will require significant reskilling and upskilling.
This must be reflected in the compensation of employees. Upskilling, especially for those who may struggle should be rewarded and compensation plans put in place.
Maintain a compensation package plan that reflects society
As society grows and calls for changes around pay and leave after adoption, shared parental leave etc, it is time for employers and HR professionals. For example, less than 10% of those surveyed by Deloitte thought that fairness of compensation relating to the national living wage was a priority, which contradicts the growing external stakeholder opinion.
One study of workers in Sweden found that perceived fair treatment led to higher employee motivation and healthier lifestyle decisions. Compensation is no longer seen as just a requirement, it’s a way to show your employees you value them, as well as wider society.
It reflects a growing trend of consumers choosing brands that treat workers, across all areas, fairly and compensate well. The rise of BCorp and similar sustainability targets for companies has only accelerated the demand for fair and transparent compensation.
Collaboration across all levels
Collaborating with a variety of levels, from your own employees to local governments can help to align compensation packages. The most obvious is employees.
By creating a healthy and honest discussion space around compensation, and asking for input, you can build a good compensation plan that can satisfy all employees.
Take UK employer GrantTree. They have a self-set pay policy, which encourages employees to award themselves compensation. Employees ask for pay rises and then they are peer-reviewed by colleagues and feedback is given. Because of this, employees have voluntarily taken reductions.
Authored by Steven Cox, Chief Evangelist at IRIS FMP, a leading global international payroll provider to SME organizations.