Life changed as society emerged from the Covid-19 pandemic. Most of all it impacted people’s views about work and how they work. So, it is not surprising that compensation trends for a post-pandemic world look vastly different from the one before the pandemic.
Employee compensation trends have been heavily influenced by the change in work culture and expectations. Experts admit that the last two years have had a lasting impact on the future of work and human resource personnel must take them into consideration while setting compensation goals. Brian Kropp, Distinguished Vice President at Gartner acknowledged, “Chief Human Resource Officers (CHROs) are facing historic challenges from an exhausted workforce and a highly competitive labor market.” He also added that this unique situation “creates an exciting opportunity for CHROs to lead talent into the future and differentiate their organizations as employers of choice.”
Companies must thoroughly study employee compensation trends to modify their systems to recruit and retain top talent.
As organizations plan their way forward, it is imperative that their goals align with the latest compensation trends. The three most popular compensation trends 2022 are listed below:
1. Remote Working Pay Structure
The global workforce now prefers a hybrid system of work instead of working full time in office. Companies that have tried to enforce office working have seen mass resignations as top executives look for ways to balance their personal lives with their career aspirations. According to the Flexible Work and Rewards Survey: 2021 Design and Budget Priorities study, 61% of organizations have plans to make remote working a permanent policy. In 2021, nearly 71% of organizations had decided to keep the pay structure the same for remote and in-office working. However, it cannot be ignored that organizations can optimize costs with remote working policies and that it will benefit both the company and the employee. Fair rewards and talent-nurturing programs are a must to keep up with employee compensation trends. As remote working becomes more popular, companies must have systems in place that will not differentiate between workers in-office and those working remotely.
2. Improved Tools to Measure Performance and Higher Rewards
As hybrid working and remote working become more mainstream, the job market is facing increased competition as companies scramble to retain top talent. To ensure your company stays ahead of the game, it is important to recruit and retain top talent and reward them accordingly. As per a 2020 Gartner survey of nearly 3,000 managers revealed that 64% of managers and executives believe in-office employees are higher performers than remote employees and 76% believe in-office workers are more likely to be promoted. This can only be changed if the right performance-measurement tools and systems are put in place. The current trends in compensation reflect that today workers have better asking power as companies are always on the lookout for top talent, irrespective of geography. Managers and supervisors must be equipped with the right tools to reward their best employees and not delay it until the next appraisal cycle. Michaela Leo, Ipsen’s head of compensation and benefits, North America, told World at Work that, “benefits are becoming increasingly important and can be key differentiators. Culture, including recognition, is another key factor.”
3. Measure Return on Investment (ROI) in Compensation Spending
Organizations must put practices in place to measure the ROI in compensation spending. This includes everything from offering paid leaves to wellness benefits to remote working. Companies must use reliable data and information to proactively build comprehensive compensation structures and systems that provide a holistic return on investment, keeping in line with employee expectations. The pandemic highlighted the need for health and insurance benefits, and many employees admit that they would consider switching jobs based on the benefits provided. Organizations must evaluate their pay structures in terms of how beneficial they are to the employee and the company for a mutually prosperous partnership. As inflation continues to rise, organizations must rethink their compensation strategies to form better employee experiences. Measuring their ROI on compensation will also provide insights on where a company is falling short, allowing it to make necessary changes before losing talent to a competitor.
Employee compensation management today extends far beyond the remuneration given to employees. It encompasses everything from mental wellness to greater autonomy as employees redefine their job expectations. Compensation trends change from time to time depending on the market. For companies to stay relevant and to attract top talent, it is important to stay abreast of the latest employee compensation trends.