It’s never been a good idea to allow your organization’s compensation strategy to go stale, but today’s economic upheaval has made this subject a focal point in a historically competitive job market.
If your organization hasn’t already felt the effects of the current labor shortage, you’ve certainly heard about it. Resignations are currently at the highest rate ever recorded, up 13% compared to pre-pandemic levels. According to the Labor Department, most industries across the nation currently have more job openings than there are people with prior experience in that sector.
At the end of the day, employees often weigh their level of compensation above any other factor in their employment decisions. An organization can have an incredible culture, mission, and benefits package, and still hemorrhage talent if pay isn’t keeping pace with the market. Most employers think their employees are fairly compensated (73% of them according to data from PayScale). Meanwhile, 64% of employees report that they’re being paid below average market value. It isn’t enough to trust your gut on this.
Aside from staying competitive through this economic turmoil, there are a myriad reasons for organizations to clear off that dust, reasons that have been with us for a while. Poorly maintained compensation strategies can leave even the most well-meaning of organizations susceptible to fines and/or lawsuits if they’re found to be discriminating in pay on the basis of race, gender, or any other protected class (intentionally or not). Productivity can suffer from poorly devised or outdated incentive programs. Inefficiencies in timekeeping can reduce revenue. The list goes on and on, and they can all add up to impact engagement, retention, and ultimately your bottom line.
Organizations are often reluctant to dive into these potential issues because they’re overwhelmed by the number and complexity of things that need to be taken into consideration. What’s needed is a little clarity and guidance.
We’ve taken the time to put together a Compensation Strategy Checklist that breaks all of this down into its component parts: policies, strategy, management, and compliance. This checklist will allow you to quickly assess your situation so that you can either act on areas of weakness, or rest easy knowing that everything is good to go.