Every year brings uncertainty, but 2022 may well have HR departments on the edge of their seats like never before. With two disruptive years behind us and a new reality emerging, what goals should compensation teams set for 2022?
Our research shows that there are important trends that will impact HR and compensation strategies in the coming year, providing opportunities for the well prepared.
Employee needs and expectations have been changing as a result of both shifting workforce demographics and the global pandemic. At the same time, there has been a growing trend towards HR digital transformation, including in compensation management.
Given those drivers of change and the evolving technology landscape, compensation teams would do well to adopt some broad goals for the coming year. Here are some transformative suggestions.
Boost your employer brand through your rewards strategy
Employer brand and reputation are influenced greatly by a rewards policy that is popular with employees. Your internal rewards strategy is quickly communicated to the market these days through company review sites like Glassdoor and Comparably.
Having a strong employer brand helps you to attract talent in a competitive market, and builds loyalty amongst existing employees. According to LinkedIn, 75% of job seekers consider an employer’s brand before even applying for a job. LinkedIn’s research also shows that a strong employer brand reduces turnover by 28% and cost per hire by 50%.
Rewards don’t just provide a livelihood, they tell employees that they are valued and that the company cares about what is important to them in their lives. When you look at companies that have been identified as great places to work, you see that rewards play a big role. In Glassdoor’s 2020 Best Places to Work report, it’s evident that the large companies with the top overall ratings from employees on the 5-star scale also have solid ratings (4+) for compensation and benefits – even where factors like work-life balance don’t score as high.
Be the company that employees and job seekers want to work for. Make the time and investment to provide rewards that resonate with your employees, the kind that earn positive reviews.
The best way to do that is to…
Ensure flexibility in rewards
Demographic changes in the workforce will continue, with younger Gen Z workers entering the workforce, Gen X & Y becoming more influential, and boomers retiring at a faster pace than expected due to the disruption of the pandemic.
Our research has shown that today’s workforce was already moving towards the need for more flexible rewards and work options. Our 2020 survey report, How The Next Generation of Workers is Changing the Culture of Total Rewards, showed that Gen Z workers placed a high value on flexible work hours or remote work options, even before the pandemic. The pandemic made workplace flexibility the norm. Our 2021 Compensation and Culture report found that a majority of employees would consider switching jobs for more flexibility in working hours, more paid leave, or remote work post-COVID.
What has become clear is that in order to compete for talent, employers need first to listen to employees and pay attention to their needs and aspirations — both in the aggregate and individually. This may mean flexible schedules or work locations, but also flexible rewards, and compensation plans that are tailored to the needs of the individual employee. One-size-fits-all rewards programs can no longer suffice if you want access to the full labor pool and the best talent.
To ensure this flexibility, it’s important to…
Automate your rewards processes
Manual compensation processes — based on spreadsheets, email, and siloed databases — are hard enough to manage even when the rewards program is simple and standard, but they are definitely not up to the task of providing flexibility in rewards or individually tailored plans. Even HCM suites are not designed to handle complexity in compensation.
Make this the year that you invest in best-of-breed compensation technology to ensure you have the ability to deliver on the compensation strategy that you need, and to accomplish the goals of offering flexible rewards and a strong employer brand.
A dedicated compensation platform can enable a transparent and efficient rewards process, aiding managers and providing employees with self-service visibility to their total rewards.
In addition to the many benefits of automated compensation management, it can also help boost your reputation as a great place to work. Employees like to work for a well-run company. Operational efficiency not only increases productivity, it builds morale and pride.
Are you prepared for 2022 and beyond?
Is your compensation system ready for the challenges and opportunities of 2022 and beyond? Take this short compensation readiness assessment to find out!