We’ve had some tumultuous times (to put it mildly). And it’s apparent employees have used this time to reimagine a more certain, more fulfilling work life. It’s now time for employers to use this as an opportunity to reimagine their compensation structure to provide both.
The dynamics of the job market may have recently changed due to pandemic layoffs followed quickly by the Great Resignation, but compensation uncertainty is not a new challenge. Studies conducted by SHRM date back to 2014 and 2016 on this very issue, finding that nearly 60% of employers believe that either most or virtually all of their employees do not understand the organization’s pay policy. That’s a lot of employees wondering if they are being compensated fairly or not. With high demand for employees, questioning the fairness and transparency of their compensation may be all the impetus they need to look elsewhere.
Employees tend to not read the compensation materials provided. In fact, up to 80% of employers reported that employees do not open or read the information in their packages. For those who do open it, nearly 50% don’t understand the information, and 31% do not perceive value in their benefits at all. These are staggering percentages, the underlying foundation of which likely rests upon some combination of the following factors.
Employees often fixate on cash in hand, paying little to no attention to the value of their benefits. Whether it’s because we are a society of instant gratification or due to a large percentage of employees living paycheck-to-paycheck, the challenge exists on how to refocus attention on total compensation. Many employees look only at their short-term challenges (paying bills) and the solutions that get them there the fastest (paycheck). In doing so, they minimize the value of long-term preventive measures, such as health insurance or proactive planning, such as retirement investments or equity in the company. But, when presented in an informative way, employees will grasp that benefits and equity actually add to the monetary value of their overall comp package.
Let’s face it: the information that comprises a compensation package is somewhat convoluted. Complex rules and requirements and legal jargon are confusing for most people. Rather than feeling inferior for not understanding the detailed clauses, some employees would simply prefer to assume that everything is okay and move on. Yet, while they may outwardly accept it, the uneasiness remains just below the surface.
Some employers attempt to alleviate concerns by providing compensation tools and resources, with the best intentions. But when these so-called solutions are deemed as complicated as the content itself, they make a bad situation worse — doing little to ease employees’ minds or clarify the materials.
Download our guide on building a compensation structure that is equitable, transparent, and easy to put into place addresses what employees are struggling with most. You have an opportunity to provide some certainty and clarity at a time when employees need it most. And in doing so, you will not only find top talent, but retain them long-term.
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