Your organization’s compensation programs represent the foundation of what you offer your employees. As such, they play a significant role in shaping your organization’s ability to recruit, retain and reward talent.
Although we are still in the midst of a global pandemic, organizations are already anticipating that they may see a spike in turnover as employees contemplate potential job or career changes. So now, more than ever, you need your compensation programs to be firing on all cylinders to ensure your organization can retain top talent.
Three central factors are expected to drive an increase in turnover when things get more settled:
• Some employees may want to recoup lost compensation – either from furloughs, smaller or no salary increases and/or smaller or no bonuses. This may prompt them to look for higher-paying positions or positions in companies with a greater ability to consistently pay out bonuses.
• Some employees may feel their organization did not do enough to keep them safe or engaged through the pandemic. They may be feeling isolated or that the organization has done a poor job in acknowledging their contributions in such unprecedented times. This may prompt them to look for positions at organizations they see as having better employment and people management practices.
• Finally, some employees may have leveraged periods of extended solitude to revisit what they really want out of their career, or out of life in general. This may prompt them to consider making major changes in their lives – including with respect to where they live and what they do. Some may consider entirely new types of work that they may find more meaningful or fulfilling.
To enhance your organization’s ability to recruit, retain and reward talent, it is important to examine your approach to compensation management. Some good questions to consider include:
• Do you pay employees a competitive salary or wage relative to market practice? When did you last conduct a review of internal pay levels?
• Have you been experiencing any challenges in recruiting and retaining talent? When employees leave your organization, do you know what they are choosing to exit? Do you know where they go?
• Do you have clear and consistent guidelines for managing pay or is your organization’s approach more discretionary? Have any employees expressed any concerns about pay fairness?
• Are you taking the necessary steps to ensure you are compliant with employment legislation, particularly legislation that relates to your pay practices?
If you want to ensure your compensation programs are delivering optimal value to your business, here are five best practices that can help you get there:
1. Conduct a review of your internal pay levels versus competitive market practice and then leverage this data to develop or update your salary ranges and wage scales accordingly. This work will help you identify individuals who are paid low to market and who may represent a flight risk. Develop a plan to close gaps to market in a reasonable period of time.
2. Review your existing performance management process or establish a performance management process that ensures employees are clear about what is expected of them and how they can best contribute to the success of the business.
For many organizations, the pandemic has led to significant changes in how and where people work. This has led many to simplify how they address performance management, so it emphasizes regular conversations with employees and an agile approach for responding to shifting priorities.
3. Develop a pay-for-performance strategy to ensure you can recognize and reward your top contributors appropriately. If you have a lean – or no – budget for delivering salary increases, you may need to establish or refine other ways to acknowledge top talent. This could include utilizing cash or non-cash recognition, or leveraging special development opportunities to demonstrate that you value your people.
4. Ensure you are compliant with any applicable provincial or federal pay equity legislation. The Ontario Pay Equity Act covers all employers with 10 or more employees unless they are federally regulated. Meanwhile, federally regulated employers with 10 or more employees will be covered by new federal pay equity legislation that is slated to come into force later this year.
5. Define how your organization distinguishes itself as a desirable place to work. Make sure you embed these types of points in your ongoing communications to employees.
While these are challenging times for many businesses, by taking the time now to revisit your approach to compensation and related programs and processes you can lay the foundation for future organizational growth and success.
– Claudine Kapel