Modern Compensation Strategies
Although it often dominates the dinner table, compensation is more than just a dinnertime topic – it’s one of the most personal aspects of employment for every employee, at every level. While this has always been a hot topic, the conversation around compensation has really ramped up recently due to the current political and cultural climate – not to mention the fact that we’re now in the recovery phase of the COVID-19 pandemic.
2020 was a year unlike any before in quite literally every aspect, with aftereffects that will be felt for years to come – including affecting how organizations handle compensation. While 82% of companies issued pay increases in 2019, only 63% issued them in 2020. In fact, in 2020, 27% of businesses issued pay cuts, 32.7% froze pay, and 27.1% issued hazard pay.
Because 2020 was such an unprecedented and unique year, it’s difficult to use as a benchmark for 2021 activity. Many organizations are instead choosing to use it as a jumping off point to enact major changes in their compensation strategy. 47.1% actually cite the changing economy as driving the importance and urgency in updating their compensation strategy in order to retain their current workforce, better recruit new employees, and stay on the right side of pay equity.
With more organizations than in the previous 4 years investing in updating their compensation strategy, doing so within your company is critical to your ability to remain competitive in the fight for talent. 80.4% of organizations now say they are approaching pay by compensating their employees equitably in order to engage and retain rather than to save on payroll costs. They realize that in the long-run, it’s much more beneficial to be competitive and compensate fairly than it is to save a little bit on payroll in the short term.
Considering the lesser-known yet undeniably high cost of a high turnover rate and an inability to retain and recruit top talent, fair and equitable compensation strategies are actually one of the best ways to stay ahead in today’s market and economy.
Contact The Arnold Group today to discuss how you can stay ahead in the increasingly difficult fight for top talent.