The future of work is here and now. Compensation program accounts for a considerable proportion of an organization’s operating expenses. It is crucial to achieve a balance between building a good compensation program that supports a firm’s potential to recruit, retain, and engage talent, displaying strong fiscal governance and delivering preferred bottom-line results. Enter 2022 planning; here’s what HR investments and compensation activities organizations should focus on to modernize their compensation and benefits strategies. When it comes to planning for 2022, firms need to think of the following aspects:
- Rethinking current business operations
- Improving compensation practices and pay strategies
- Administration of new kinds of benefits programs that provide security and flexibility for talent attraction and retention
Understanding the big challenge
One of the most significant challenges that HR is currently facing is a talent shortage, which has resulted in a significant shift in strategic priorities in the workplace when combined with the pandemic. Employee experience, leadership development, learning transformation, and people analytics were the top HR priorities in 2020. However, by 2022, the emphasis will shift to employee well-being/mental health, employee experience, and managing remote workers. According to a Willis Towers Watson report, salary increases in most countries worldwide are expected to be higher in 2022 than 2021. Companies will need to pay handsomely to retain their top talent due to the buoyant job market and difficulty engaging employees remotely. Businesses that use multiple strategies to incorporate multiple employee groups are likely to be more successful in navigating the dynamic and complex business environment.
According to Mercer’s National Survey of Employer-Sponsored Health Plans 2021, health benefits spending will return to normal, pre-pandemic levels in 2022, increasing by an average of 4.7 percent over 2021 healthcare costs. Employers will continue to face increased organizational costs. Optimizing medical plan design, financial strategy, and delivery mechanisms is a good place for employers to address some of these challenges. Long-term solutions include providing comprehensive health care and wellness benefits to all employees and their families. An excellent way to actively promote wellness in the organization is to assist employees in understanding their health risks, educate them on ways to improve their health, and encourage practices of health and mental well-being behaviors.
Pay equity is an emerging issue. Equal pay is about identifying biases in compensation or racial pay gaps and resolving these gaps to ensure equal pay for employees performing similar work. According to data from the U.S Bureau of Labor Statistics in 2020, women’s annual earnings were 82.3% of men’s, and the gap is even wider for many women of color. There are many legislations being introduced to keep a curb on pay discrimination. In the United Kingdom, employers with more than 250 employees are required to report annual pay gaps. Employers in both Italy and France are required to disclose information on pay disparities. The EU proposed legislation in March 2021 to ensure pay transparency for employees and improved access to justice for victims of pay discrimination. With a growing number of legal hurdles expected, corporations are actively undertaking analyses to ascertain where pay differences or pay trends exist based on gender, race, and age and developing measures and programs to address these pay disparities. Promotions, pay raises, and equity adjustments are examples of potential steps. Most of these are being implemented already; there is more priority being given now than before.
Offering Variable pay
Businesses can use variable pay to incentivize performance, with much less emphasis on fixed pay in the form of annual pay rises. Annual Pay increases or incentives, quarterly bonuses, spot recognitions, and team awards—or a combination of these—are examples of variable pay techniques. Assessment and benchmarking are essential factors in transitioning from an existing pay program to using variable pay to reward performance. An excellent way to start is to do a competitive analysis and comparison to understand current pay programs offered by organizations in the market. To determine the market value, organizations must conduct a market analysis on all or most organizations.
Transparency in Compensation
Transparency on compensation is becoming increasingly important. HR professionals must now develop strategies that promote equitable compensation and think of ways to communicate the above process effectively to employees. Companies are sharing salary information with employees more than ever before, including pay information, compensation package, salary band, and pay equity comparison between similar positions with key rivals in the marketplace and internal positions.
Flexibility as a perk
Working remotely and flexible working is becoming the norm as competitive benefits to offer to recruit potential talent. These benefits were only a norm of startups which is now becoming standard offerings for businesses of all sizes. Many employers are worried about informal or flexible vacation policies; however, this benefit has worked brilliantly for companies like HubSpot, Dropbox, Github, and others. A workplace that encourages autonomy, flexibility, and trust will attract and nurture the next generation of talent while fostering a culture of employee-centric benefits.
How Multiplier is helping administer payroll and benefits globally
A one-size fits all approach to compensation and benefits cannot work in the current world of work. With these trends coming into play, it gets more complex when it comes to attracting and retaining top talent across the globe. It is important to stay compliant when it comes to administering these International benefits and compensation by adhering to local country laws. That’s where you can turn to Multiplier. When you partner with us, you can ensure that the compliance aspects of employment, payroll and statutory benefits are taken care of seamlessly and keep your employees motivated with the benefits they require to make your business successful.