2022 was a year of transition and innovation, as companies began to normalize after the pandemic and adopt new HR strategies based on lessons learned during the Great Resignation. In the spirit of "never waste a crisis," organizations embraced remote and hybrid work and HR digital technologies to become more flexible and better able to meet employee needs and company goals, in good times or bad.
As we look back over the past year, a few key trends stand out that will likely continue to influence total rewards practices in 2023.
#1: A Competitive Market Requires Creative Pay Practices
Whether you call it the Great Resignation or the Great Reshuffle, it’s clear that one of the compensation challenges of 2022 was to compete for talent in a jobseeker’s market. Continuing a trend that grew during the pandemic, an unprecedented number of employees left their jobs each month. That, combined with inflation, put upward pressure on pay scales throughout 2022. Employers needed to find creative ways to address the challenges of rising pay expectations, while still being transparent about pay practices.
Sometimes that meant leveraging what you've got, other times it meant tailoring personalized reward packages to one-to-one compensation. Through it all, compensation remained a key element in a strategy of ensuring diversity, equity, and inclusion in the workforce.
#2: HR Technology Can Ensure Compensation Alignment
An organization’s culture and its compensation system are complementary pieces in achieving the strategic goals of a company. Without the alignment of these pieces, the results can be unpredictable. Just as technology has increased the efficiency of processes in many other business functions, the use of compensation management technology can free HR from many of the manual tasks it performs today.
Specifically, HR technology offers 3 key benefits for compensation alignment by reducing risks, increasing efficiency, and enabling better compensation decisions.
#3: Real-Time Rewards Can Deliver Incentives at the Moments They Matter
It’s generally accepted that regular and timely feedback on employee performance is good for morale and productivity, and that rewards should be tied to performance. Why is it then that we strive for a continuous feedback culture but dole out rewards only quarterly or once a year? Good question, and one for which HR visionaries have been seeking a solution.
The answer is real-time rewards. But what does that mean and how can you achieve it? As companies move away from rigid annual reviews towards continuous performance management, the possibility of continuous total rewards seems enticing. It can mean an end to painful year end calibration processes, threading in rewards processes throughout the year, so that rewards can be given when they matter most, tied closely to feedback and regular check-ins. Continuous performance management needs continuous rewards to realize its full potential.
#4: Executive Compensation Is Key But Getting More Complex
Long Term Incentives are a key part of any executive compensation program, and they continue to get more and more complex. A well designed LTI program can help a company to attract top executive talent, engender employee loyalty, and align leaders with the long-term performance of the organization.
However, compensation committees are increasingly using executive plans to achieve a broad range of company goals, and the added complexity can lead to confusion. A dedicated compensation management platform can allow for sophisticated plans that drive a balanced scorecard while helping executives focus on the right priorities.
If you are still managing your LTI plans in spreadsheets, now may be the time to move to an automated total compensation platform to simplify administration, integrate LTI with total compensation, and improve compliance.
#5: Global Organizations Need Dedicated Technology to Face Unique Compensation Challenges
More than ever, companies need to employ HR digital technology to move away from spreadsheets and streamline and align global compensation processes, for both operational and compliance reasons. The planning and executing of compensation on a global basis continues to be highly challenging, as organizations seek to create consistent processes in multiple countries, while still allowing local flexibility.
Peter Devlin, Head of Total Rewards at Deloitte Germany, gave us his take on the key factors that any company doing international compensation planning and administration needs to consider. He cites a wide range of issues like regulation, taxation, administrative errors, differing market practices, local governance, reporting requirements, and transparency. As he notes, companies need a proven solution like beqom that can help them manage all these issues in a large, global organization. These days, an automated compensation management platform is an absolute necessity. Watch the video to see why global organizations need a global compensation solution like beqom.
Download top eGuide of 2022, beqom's 2022 Compensation & Culture Report, to uncover how employee attitudes are changing and how employers can adapt to attract and retain talent.