Compensation is now an employee top priority. How is it affecting your engagement and retention?
2023 was a year of constant challenge for HR leaders, who dealt with everything from return-to-office mandates to talent shortages and cost of living pressures. As we face a new year, rising inflation and sporadic layoffs mean those pressures aren’t going away, employees are faced with significant uncertainty.
In this environment, compensation will be top of mind for most employees. Organisations will need to renew their focus on compensation – both in terms of base salary and benefits – and what it means for attraction and retention.
According to The Achievers Workforce Institute’s 2024 Engagement & Retention report, better compensation is the top reason that employees start to job hunt. Twice as many people are saying they will job hunt in search of better compensation in 2024 compared to 2023. With this in mind, employers need to look at their total compensation package and assess how well it meets employee needs in the current environment.
“We came out of the pandemic thinking ‘great, we’ve dealt with that’ – and then all of a sudden we have inflation, interest rates and increased cost of living,” Mark Barling, RVP Sales at Achievers tells HRD.
“The traditional view of compensation is still incredibly material and meaningful for every employee. However, an employer shouldn’t be looking at compensation exclusively through historic eyes.
“There is an opportunity to help reframe how compensation is viewed, and to offset any factors that are contributing to an employee thinking about leaving.”
Barling notes that in addition to salary, part of compensation extends to how well you feel you belong, how you are recognised for your work, and how psychologically safe you feel in the workplace. He notes that there has been an evolving orientation towards a ‘total compensation’ approach where it’s not just about pay, but also about the ‘emotional salary’ that your employer brings.
With more employees valuing the security of employment, he also warns HR leaders not to leave their engagement and retention efforts behind.
“HR leaders run the risk of ‘turning the tap off’ when thinking about how best to engage their employees, but this is not the time to do that,” he says.
“If you take your foot off the gas for employee engagement, you’ll be at risk of losing your best employees when the market does pick back up again.”
The Achievers Workforce Institute’s 2024 Engagement & Retention report will be released in January, and Achievers will be hosting a webinar in partnership with HRD focusing on compensation strategy.
Attendees will hear from industry leaders about how they are using recognition and engagement initiatives to impact their bottom line, and how organisations can make a meaningful difference, build trust and demonstrate value to employees by balancing their emotional and financial needs.
To sign up for Reframing employee R&R to extend your compensation strategy, running on 23rd February 2024 at 11am-12nn AEDT, click HERE.
