Do You Pay Enough to Retain Your Talent?
Unsteady economic conditions put pay and compensation practices all over the map. Engagement, benefits, and bonuses are all part of the picture. How do you know the appropriate pay levels that will attract the talent you want to hire?
In the last decade, some of the mystery around compensation practices has fallen away. The Great Recession resulted in dramatic job loss and fine-tuning of businesses to reduce costs through automation, and focus on recruiting and retaining talent that improves organizational market value.
At Brightmove, we deliver software solutions that reduce overall personnel management costs and free HR to focus more closely on the metrics and measures needed to make appropriate compensation offers. So what about pay? Are you paying enough?
How much money retains an employee?
An annual survey conducted by Payscale offers insight into the compensation practices of more than 7,000 companies around the world.
Most respondents, composed of executives and managerial level staff, were from medical, nonprofit, education, manufacturing, and technical sectors. Companies were compared across sector for size, and by profitability.
Some of the key findings include:
High-performing companies pay high-performers more:
Companies ranked in the top percentile for their sector were more likely to give talent raises than companies that performed at a level considered average. About 80 percent of companies gave an average wage increase of up to five percent, while around 14 percent gave salary increases in the six to ten percent range.
Transparency is improving:
Millennials are more likely to expect managers to embrace transparency during their hiring and pay discussions. The survey found 47 percent of higher performing companies valued pay transparency, while only 40 percent of lower performing companies offered information on their salary calculations to employees. Decades-old hiring and retention practices that valued salary secrecy are on their way out.
As engagement practices improve, the old tradition of an annual review is also giving way to new approaches. Approximately 44 percent of survey respondents report moving away from performance reviews toward real-time evaluation and ongoing feedback.
Despite continued buzz around engagement, higher pay continues to be a primary reason for desirable employees decamping to other employers. While personal reasons like relocation, or change in circumstance like parenthood, continue to rank a close second, it is clear that money remains a prime motivator—delivered in a paycheck, bonus, or benefits package.
Across the Great Divide:
According to the survey, 36 percent of employees feel they are compensated appropriately, while more than 70 percent of employers feel they are paying their employees well. While this divide drives talent to look elsewhere, it is also an area ripe for addressing with relevant engagement practices. If a valued employee feels underpaid, they are going to look elsewhere. If an engagement specialist approaches that employee before they reach the limit of their discontent, more transparent negotiation between employer and employee could lead to a better solution for both parties—without the loss of a valued worker and the expense of the next recruiting cycle.
Do you pay enough to hire and retain the talent your company needs? The answer of course is—it depends. If your top performers are surprising you with exit plans, there are communication issues that came before the salary problem. Solve the communication issue, and engage your high-performers before they look elsewhere.
Compensation practices must remain agile. To maintain market relevancy, you may need to pay more this year for a skill set that will be commonplace in two years. Create a salary range for each position to help managers and HR develop strategic offers—or suggest an appropriate pay raise. Case-by-case evaluation and respectful engagement go a long way to ensuring you pay enough to keep your top talent on board.