HR and tech leaders have had to do a lot of adapting in recent years – and 2022 is no exception as the market continues to shift. With major tech companies like Meta, Uber, Netflix, Cameo, and more announcing layoffs and hiring freezes, companies big and small will need to pivot. There’s no better time to adapt your compensation philosophy to fit today’s changing and highly remote world. Read on to discover how to get started, and access insights discussed from a recent webinar featuring Welcome’s Co-founder and former Chief People Officer Rick Pereira and Welcome’s Head of Talent and Culture, Brigid Wixted.
First things first, what exactly is a compensation philosophy? At a base level, a compensation philosophy refers to the set of compensation ideologies and practices in place at a given company. From maintaining updated compensation data, determining the frequency of benchmarking and salary reviews, upholding comp practices through HR tech tools, etc., compensation philosophies can encompass a multitude of topics.
That being said, HR leaders’ definitions of their compensation philosophies can vary greatly. We surveyed 400+ HR and People leaders across the US and found that 75% of HR leaders regularly reference a documented compensation philosophy, but most have wide-ranging definitions of what it actually means for them.
Having a solid compensation philosophy at your company benefits everyone. Not only can your HR team and company at large maintain equitable hiring practices that benefit employees, but you can also improve your hiring and retention rates while enhancing your workflows.
Similar to how employees have made remote work non-negotiable, today’s job seekers and employees don’t view equitable practices and compensation transparency as nice-to-haves – they view them as requirements that they have come to expect from their employers. This means that having a well-developed and equitable compensation philosophy can help you attract more qualified candidates with efficiency as well as retain employees and top performers with peace of mind.
Technology has come a long way, yet a whopping 57% of HR leaders still rely on Excel spreadsheets to gather, evaluate, and analyze compensation data according to our 2022 Compensation Report. These manual processes zap your valuable time and energy, and using outdated data in this way leads to offers and salary benchmarking that isn’t truly reflective of the current market.
See what our Head of Talent and Culture, Brigid Wixted, has to say about the pitfalls of not utilizing real-time market data below:
“[Before using Welcome] 80% of our customers were creating their offers based on data that is now actually further behind the actual job market…teams are going to be spinning their wheels making offers that aren’t going to be accepted because they’re not based on live market data.”
Fortunately, real-time compensation data can help bridge this gap and ensure your team makes candidate offers and benchmarks employee salaries based on the most up-to-date and relevant market data available.
Caption: Welcome’s real-time compensation data also features Compensation Scenarios, so you can model various offer scenarios according to different factors such as salary, equity, benefits, and more. Try it for free here.
Understanding total compensation is often a complicated guessing game for candidates and employees, which can lead to confusion and time-consuming workflows that put your company at risk of losing out on top performing employees.
Did you know that the cost of replacing an employee is between 90% and 200% of their annual salary? Evidently, the time and effort it takes to retain current employees pays off.
Whether employees leave for higher salaries or more perceived growth at another company, they could actually be leaving thousands, if not hundreds of thousands of dollars behind if they don’t fully understand their total compensation and equity package.
Below, Welcome’s Co-founder and former Chief People Officer Rick Pereira explains the importance of employee retention, especially in this uncertain economy:
“High impact players on your team are now concerned and thinking,‘what does this mean for me’? This is the opportunity to be proactive to your employee base… Sometimes employees will leave because of $5,000 or $10,000 on their base salary. You want to really highlight the equity side of it and their benefits and perks.”
Caption: With Total Rewards, employees can have a clear understanding of their total compensation, access educational guides that explain how their equity works, and they can even view their estimated equity valuation growth based on projected growth rates over time.
Pay equity and equitable compensation practices are hot topics in today’s HR spaces. But how many companies and HR teams are actually walking the walk?
Our report found that almost half (44%) of HR leaders do not feel that their company has achieved pay equity. This isn’t to say that HR and People leaders are unbothered or aren’t trying to improve pay equity at their companies. Oftentimes, it’s a matter of not knowing where to start, or using outdated and ineffective methods in an attempt to get there.
Aside from making pay equity a core tenet of your company’s compensation philosophy, this is yet another instance of how real-time data can be a game changer. Your team may think the job offers you make and the salaries provided to current employees are fair, but if they’re not benchmarked against the most recent market data and your team’s internal data, there’s a high probability that the equity gap at your company has been widening.
When all is said and done, how does your company’s compensation philosophy stack up?
If you’re like most of today’s HR and People teams, there’s always room for improvement. Whether it’s by implementing real-time market data, better communicating total compensation and growth potential to employees, or taking dedicated steps to improve pay equity, there are plenty of helpful tools available to help you adapt your compensation philosophy to today’s remote world and the changing market.
For more insights from HR tech leaders Rick Pereira and Brigid Wixted, receive access to the live recording of their comp philosophy discussion and a copy of their presentation deck here. To try our free real-time compensation data, sign up here.
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