What is the Future Outlook for Compensation and Why Does it Give a Competitive Edge for Recruitment?
The time when employees would joyfully work at their employment as long as they were paid enough is long past. If the epidemic and economic recession have taught us anything it is that employees demand more from their employers and jobs. As a result, the outlook for compensation in 2023 calls for more complete compensation packages with benefits and incentives that put employee welfare first.
Find out more about these changes and how they are predicted to increase the number of job applications, enhance employee engagement, and lower turnover—all of which are predicted to aid in recruitment.
Future Outlook for Compensation
Though companies tried increasing their compensation in an attempt to fill roles in the last year, they are quickly learning that simply increasing salaries is not enough. As employees demand more from their work, companies are expected to put more effort into developing comprehensive compensation programs for the long-term and short-term.
Rather than focusing on only improving the base salary or executive package, companies will also be improving other areas of the implementation of compensation plans, such as employee engagement, work flexibility, bonus strategy, reward programs, and perks and incentives structure.
Total Rewards Approach
Now more than ever, workers are realizing that there is more to work than just putting in the hours and getting paid. Work-life balance, benefits, and employee engagement are becoming the new focuses of compensation programs to help improve job satisfaction.
To achieve this, companies are becoming more attentive to their employees to find out what makes them stay and what drives some of them to leave. This has allowed companies to modify their policies to allow more flexibility and provide better work-life balance. This has also helped identify which benefits are valuable to employees, such as healthcare, especially in the wake of a global pandemic.
Last but not least, this has encouraged companies to maintain more active communication with their employees. By conducting regular surveys, huddles, and company events, employees get to voice their concerns and give management an opportunity to address them to improve employee satisfaction.
Hybrid Work Setup
The pandemic saw a shift from office work to remote work. The introduction of work from home has drastically shifted people's expectations of their work setups, with many expecting to enjoy the same flexibility post-pandemic.
As companies observe equal, if not greater, productivity from workers who work remotely, there is less need to have employees in the office. And with the economic recession pressuring companies to cut costs, many are quick to jump on the bandwagon and implement hybrid work setups to reduce rent.
Not to mention, some companies have changed their compensation programs to accommodate the new work setup. As more and more workers prioritize flexibility over work stability, many workers are hired as freelancers or contractors, which is also expected to reduce compensation costs.
Performance Based Incentives
As companies scrambled to fill roles in the past year, they realized that hiking up all employee compensation may not be the best solution. Moving forward, companies will be increasing efforts in performance management to incentivize good performance. By prioritizing the quality of work above all else, companies can experience better productivity and improved output.
By channeling their budget towards compensating those who deserve it best rather than uniformly increasing everyone's salaries, companies will find that targeted pay increases are likely to reduce their expenditure on compensation.
Competitive Edge for Recruitment
With the future outlook for compensation shifting from a salary-centric approach to a more comprehensive total rewards approach, recruitment is expected to gain advantages.
As companies adapt new compensation strategies in an effort to move towards a more inclusive, more flexible, and healthier work environment, they are more likely to attract more job applicants and find talent to fill their roles more quickly. To some extent, recruiters can have improved compensation packages do most of the heavy lifting when it comes to finding leads.
Moreover, improvements in employee engagement are expected to reduce the number of roles that need to be filled due to lower employee turnover. And with reduced effort comes reduced costs for recruitment for your business or organization.
Compensation Consulting to Improve Recruitment
Getting leads, interviewing, and offering jobs are hard enough without having to fill more and more roles by the day. Give your recruitment team a competitive edge by getting compensation consultants to help transform your company's compensation program.
At FutureSense, our compensation consultants have helped over 250 companies in the last 27 years improve their HR processes. Connect with us and let us future-proof your compensation programs for better employee satisfaction, retention, and recruitment!