With hiring and retention more challenging than ever, due to the combination of a volatile economy and tight talent market, employers cannot afford to misfire when it comes to determining and implementing effective compensation strategies.
Let’s take a closer look at the latest research into the current state of compensation, along with highlighting the dynamic desires of their talent markets and why understanding them will lead today’s organizations toward optimal hiring outcomes.
Employers on Compensation
A staggering 78 percent of employers report being unsatisfied with their compensation structures, while a mere 29 percent claim to be very satisfied with their salary market data, according to PayScale’s 2015 best practices report, “Attack of the Out-of-Date Comp Plan.” While this information in itself points toward the need for improved access, its value is underscored by results indicating that despite the fact 63 percent of employers view “retaining top employees” as the main objective in determining compensation, only 57 percent of managers ever discuss compensation with their employees. (“Attracting new talent,” was a distant second with just 12 percent of respondents claiming it as their primary objective.)
Even more revealing? Only 17 percent of employers weighed in as being “very confident” in the ability of their managers to have difficult compensation-related discussions with employees. Factor in that “seeking higher pay elsewhere” tied “personal reasons” as the leading cause of employee attrition, and it’s not exactly shocking that a disconnect exists between what employers think candidates want in terms of compensation and what actually matters to them.
So, where are companies planning on directing their compensation efforts moving forward? Just 7 percent will use wage increases to promote retention. Rather, 57 percent will use merit-based raises while 60 percent will promote increased opportunities for development and learning. Not to mention that while managing the Millennial mindset gets the lion’s share of buzz, retirements accounted for a mere 6 percent of all job separations in 2014. The takeaway? In addition to understanding Millennials, today’s retention-driven compensation strategies must also acknowledge the wants and needs of the lingering Baby Boomers.
Employees on Compensation
Now that we know what employers have on the agenda, let’s hear from the employees themselves. According to a nationwide TechnologyAdvice Research survey, “How Much Do Perks Matter?” the answer is: more than you may think.
More than half of employees (56 percent) revealed that they’d choose certain perks over a salary increase. So, what perks topped the list? Flexible/remote work opportunities (31.8 percent), gym membership/reimbursement (24.1 percent), and free food (19.4 percent). Rounding out the bottom of the survey were a casual dress code (11.8 percent), mentoring or development programs (8.6 percent), and recreational games (4.4 percent).
Meanwhile, another study reveals that a whopping two-thirds of employees would opt for a better boss over a salary increase, while a June 2015 report from HR and payroll platform Namely reinforces the importance of targeted, strategic compensation planning by revealing that 57 percent of employees report that they’d accept lower compensation for better benefits.
While money indeed talks, growing evidence suggests that it may not have as loud a voice as it did in the past. So, how can today’s employers give employees what they want? The key lies not only in better access to data, but also in improved communication and transparency between both parties. The results? Organizations which use data-driven insights to bridge the gap will be well-positioned to overcome the challenging job market in order to recruit and retain the best and brightest talent.
To know more about how Witty Parrot can help HR professionals and recruiters stay on message and consistently deliver a vibrant, compelling candidate and employee experience watch the video below.