With a patchwork economic recovery, an entrenched new normal, and the pandemic refusing to let us relax into comfortable predictability, what will be expected of compensation and rewards in 2022?
Our research over the past few years indicates trends that are likely to continue well into the next year and beyond. 2022 looks to be a year in which compensation strategies need to remain flexible to allow us to keep our options open. Here is what we predict.
Generational trends will have increasing influence
Trends were already moving towards the need for more flexible rewards and work options, particularly amongst the new and emerging workforce. In our 2020 survey report, How The Next Generation of Workers is Changing the Culture of Total Rewards, 42% of Gen Z workers listed flexible work hours or remote work options as the most important workplace benefit - even before the pandemic. The pandemic brought work flexibility into the mainstream. Our 2021 Compensation and Culture report found that more than three-quarters (77%) of employees would consider switching jobs for unlimited paid leave, more flexibility in working hours (76%), or remote work post-COVID (77%).
That flexibility seemed all the more important to women. Job search site Fairygodboss polled 400 women ages 18-22 and found that nearly three-fourths of the respondents said their most important company perk is a “flexible schedule/the ability to work remotely.”
The COVID-19 pandemic forced us in 2020 and 2021 to adopt remote work and flexible schedules even more quickly than the pace of the existing trend, much to the delight of Zoom. The post-COVID or continued-COVID workplace promises to be much more amenable to remote work in industries where that is possible.
That aligns well with what Gen Z wanted anyway, and proved to be popular amongst the workforce in general. As the younger workers continue to enter and rise in the workforce, their preferences will hold even more sway.
Recruiting will require meeting new expectations
In July of 2021, during a time that became known as the Great Resignation when millions of workers quit their jobs, beqom surveyed 1000 job seekers in the US to understand how the pandemic had impacted employee views of compensation, benefits, and work arrangements. The survey also uncovered what prospective employees now expected from their future employers and what those employers needed to do to attract top talent.
The report concluded that since the advent of the pandemic, job candidates evaluate companies through a different lens. They are demanding flexible work arrangements, higher pay, and support for a balanced life. They also care about company values and policies, like how a company responded to the pandemic and their Corporate Social Responsibility (CSR) efforts. The survey report, Employee Expectations in Hiring, suggested 10 tips for competitive hiring in today’s unprecedented labor market, based on findings such as:
- Remote work and flexible hours are now expected
- Americans prioritize pay but are willing to work for less in exchange for flexibility
- Employees want more compensation transparency
Employees will demand balance in their lives
One of the most common complaints seen on Glassdoor by disgruntled employees is that their company culture does not allow for a work-life balance. The stresses on personal and family life from the pandemic have only exacerbated the difficulty of juggling work and home responsibilities.
beqom’s research on employee expectations echoes the sentiment that employees want lives that work. Perhaps the pandemic got people more in touch with what matters in life, but in any case, job candidates want benefits that support them in having an easier family or personal life. A majority expect their prospective employer to have paid parental leave (67%), commuter benefits (66%), and a childcare stipend (52%).
Our 2021 Compensation and Culture Report found that more than three-quarters (77%) of employees would consider switching jobs if another company offered unlimited paid leave, more flexibility in working hours (76%), or remote work post-COVID (77%). Men (76%) are most likely to consider switching jobs for the ability to work remotely post-COVID, while women (79%) are most likely to consider switching jobs for unlimited paid leave.
Pay equity and transparency will continue to be important
beqom’s Compensation and Culture Report also found that slightly more than a third (36%) of employees said they do not think their company pays employees fairly. This represents a drop of 12 percentage points from the prior year, with women (40%) more likely than men (31%) to think their company does not pay fairly.
Gender pay equity has been a hot topic for years and 2021 brought renewed focus on social justice issues in general. Fair pay as a recruiting, retention, and employer branding issue is not going away.
Transparency is not only important to employees so they can know how their pay was determined and if it was fair, but it is a critical component of compliance. A company needs to have the systems in place to be able to show how pay is calculated, track the approval process, and produce compensation and pay equity analytics.
Analyzing pay equity to expose pay gaps and risks is a complex task, as it requires correlating an array of different factors (demographics, roles, promotions, etc.) with pay. It’s a job well suited to machine learning and artificial intelligence, and so requires the right technology.
HR agility will be critical
In our 2020 Agile HR report, we identified compensation must-haves to successfully manage change, and they remain equally essential for 2022:
- Systems that can withstand disruption
- Tools to model, plan and execute new strategies
- Data to optimize compensation spending
- Ability to realign and motivate sales teams
- Tools to retain and motivate your best performers
In an article on Reimagining Total Rewards, co-authors Martha Cook, Total Rewards Centre of Excellence Leader for EY, and Fabio Ronga, CEO of beqom, noted that organizations need to provide customized total reward experiences that keep pace with evolving employee needs. The authors argued that this will require organizations to implement flexible digital total reward solutions. These solutions enable HR and total reward teams to nimbly navigate their HR suite of technology to provide real-time data insights, while delivering time and cost savings and mitigating security and legal risks. The value proposition for a total reward digital solution that serves as a companion to an organization’s existing HR suite has never been greater.
With the emergence of the omicron variant of the coronavirus in late 2021, and the related uncertainty, it seems that 2022 will be another year of waiting, watching, and adapting.
Through the trials and tribulations there is perhaps a silver lining. Challenging times give a company a chance to re-examine past practices, license to make big changes, and an opportunity to develop a deeper bond with its workforce. By prioritizing the needs of workers for not only safety, but for lives that are balanced and allow them to meet family needs during difficult times, a company can build trust and loyalty among its employees.
One thing that’s for sure, from a practical operational perspective, it will be important to have HR compensation systems that can adapt quickly to changing circumstances, flex to meet new requirements, roll with fluctuations in workforce size, and be operated remotely.
Companies relying on their HCM system for compensation management would do well to evaluate whether their HCM software is providing the optimum compensation functionality. Companies considering digital transformation of their compensation processes in 2022 can get a jump start by talking to beqom. Happy New Year!