Six compensation strategies to attract and retain talent
When designing a compensation and reward strategy, companies usually start by defining their core principles. Typically, these will circle around ‘rewarding people for the work they do and how well they do it’, staying ‘competitive’, being ‘fair and equitable’ and ‘creating opportunity’ for workers. Since the pandemic the talent market has been tough, and many companies have been forced to look closely at pay and career pathways to hold on to their best people.
- Lay strong foundations with Job Evaluation
As organisations expand, contract, flex or adapt they can become more complex in terms of their job architecture, organisational design and administration. Where there is complexity, we often see a lack of transparency and simplicity, and employees struggling to see where they fit, how their skills are relevant, and what their potential career opportunities might be.
To move forward, both companies and employees need clarity around three things
- The company’s role and reward structure
- Criteria for progression
- A framework to create, amend and administer those criteria
Most organisations need a simple hierarchy in place, which is commonly achieved through a Job Evaluation exercise. Using a digital levelling tool like Evaluate can help simplify over-engineered hierarchies enable meaningful conversations about the value of each role and define the components parts within each role and how they might differ from those above, below or alongside it.
Rather than allowing people to hit a ceiling, this blueprint helps identify development, opportunities for skill acquisition, greater responsibility or a sideways within the business.
- Think ‘Agile’
We are seeing many businesses rethinking what ‘career’ means: no longer a series of ‘earned’ progressions with frustrations and ‘dead man’s shoes’, but a more modular series of experiences where people are encouraged and enabled to move around the business, experiencing different positions, projects and mentors.
This kind of agile ‘talent marketplace’ empowers employees to reinvent themselves, and businesses to improve internal talent mobility.
- Focus on skills acquisition
We are seeing a shift from companies buying talent in from a finite pool, to growing their own by enabling committed workers to better themselves. While it may take longer to teach existing staff new skills than hiring in, it saves time and money in recruitment and onboarding and fosters a sense of loyalty and pride in the business.
While this comes naturally to industries like engineering and tech, some may find it more difficult to assess skills, or to place a value on one over another. In these cases, it is common for these companies to take on strategic help to assess the skills they need; how to measure that need; how to enable people to acquire those skills, including manager training; and how much it will all cost.
- Re-evaluate your Pay progression principles
Making these kinds of changes can also lead to pay progression principles becoming more forward-thinking, focused on competencies, skills and the potential to contribute and add value. Instead of making across-the-board increases or having a discretionary pot based solely on performance, decisions might become more aligned with how workers progress within their role and add value to it.
Workers will still reach a point where they hit a ceiling, but we want to make that ceiling as high and wide as possible. To achieve this, pay ranges should be designed with the scale and variety needed, taking performance and skills acquisition into account alongside other factors like competency and behaviour.
- Think Benefits 2.0
Benefits form a key part of any Employee Value Proposition (EVP) and, if relevant and useful, can play a key role in job satisfaction, productivity and loyalty.
Alongside the more traditional benefits like pension, PMI, flexi holidays and salary sacrifice schemes, companies are looking to create ripples in the marketplace by spicing things up:
- Cryptocurrency pay can be used for bonuses, incentives or even base salary, although it requires a lot of knowledge and education.
- Subsidised DNA Testing and Genetic Counselling can help employees understand their genetic predispositions and help them make informed decisions around health and mental wellbeing.
- Cash plans are increasingly popular as a low-cost alternative to PMI for blue collar workers.
- Eco-Friendly commuting incentives are an easy win that integrate well with ESG policies.
- Offering a focus on 'Wellness' beyond physical health through stipends or subsidies to enrol in hobbies or interest classes encourages personal development and creativity and can also be tied into recognition strategies.
- Remote or hybrid work allowances might cover furniture, internet or headphones.
- LTPIs - traditionally seen as a tool for engaging senior management, Long Term Incentive Plans can also be used to incentivise employees across various levels.
- Consider non-monetary benefits, for example flexible working and PPD, for happiness and work-life balance.
- Think Pay Equity and Transparency
Being fair and transparent with your pay principles is becoming increasingly important, especially for a younger generation of workers more interested in company culture, purpose and feeling valued.
Try to move towards a situation where the following statements ring true:
- Our workers and managers have a strong understanding of the intent and reasoning behind our pay decisions
- As a business, we are consistent in the application of the pay policy
- We have effective communication between the business and its employees around pay decisions and constraints
As part of this process, introduce important checks and balances to constantly reinforce these values:
- training for managers in assessing skills and behaviour
- auditing of processes for bias
- measurement and analysis of employee demographics to gauge equal opportunity
If you could benefit from guidance in any of these areas, please email Sarah.Lardner@innecto.com or get in touch with our team of expert Innecto consultants today
