Low unemployment and a looming labor shortage means employers have to work harder to attract and retain top talent. Across gender and education levels, salary and benefits are the most important factors when job seekers are choosing an employer, according to research conducted by Randstad North America.
It is becoming a candidate-driven market again, and job seekers have more tools to determine if they are getting paid what they’re worth.
A recent survey by Gallup asked the question: “What do workers want most out of their job and their company?” The answer can help companies develop better retention strategies. It can also give insights into why employees may join the organization.
A Significant Increase in Compensation
At the same time organizations must focus on retaining current staff, particularly top performers and high-potentials. Most companies address this in several ways:
- Developing a Compensation Strategy – Organizations develop a compensation strategy to better understand how pay supports the overall strategy and culture of the company. A compensation strategy will describe targeted levels of competitiveness for salary, incentives and benefits; the organization’s approach to pay for performance; and how pay programs will be communicated.
- Compensation Market Competitiveness – Companies regularly assess the competitiveness of their compensation programs by comparing themselves to market. Consideration is given to who they compete with and who they hire from and lose employees to.
- Salary Plan – As my colleague Rich Sperling and I have stated in our presentations to senior management and human resource groups, merit increases to top performers and high-potential employees ought to be at least twice the amount given, on average, to fully-competent employees. For example, with an overall salary increase budget of 3 percent, 20 percent of employees can receive an average of 5 percent, while the remaining 80 percent receives an average of 2.5 percent.
- Incentive Compensation Programs – Companies are slowing moving to increasing the number of variable pay plans for two important reasons: 1) to reward employees for achieving corporate-driven objectives, and 2) to reduce fixed costs.