In the second installment of this two-part series, HRCI CEO Dr. Amy Dufrane SPHR, CAE, looks at the previously staid state of compensation and what the recent rapid changes mean to HR.
While not on my playlist, I’m sure we’ve all heard the earworm-like chorus in the Twisted Sister song “We’re Not Gonna Take It.” It could have been the battle cry of the Great Resignation. Workers were discouraged, burned out and armed with new knowledge about how productive they could be working from anywhere other than the office.
According to the Bureau of Labor Statistics in May 2022, 4.3 million Americans quit their jobs. Even with that activity, 6.5 million workers received a job offer letter. According to new rankings from the annual Axios Harris 100 poll, 77 percent of Americans said it’s important that their employer allow them to work remotely when they want. The pay gap between women and men still exists and, underscoring the divide even further, compared to 87 percent of White men, fewer BIPOC women agree that they are paid fairly and in a comparable way to other colleagues across their company (68 percent) or at their level (71 percent.)
What should HR be doing to resolve inequities, disrupt old location-based models and ensure the organization can compete for talent without outrageous pay increases?
Read the Room: Building compensation strategies based on “the way we used to do it” is wasted effort. Millennials are the largest generation in the workforce, with Gen Z coming up strong; they are the present and future majority. Traditional rewards cannot address the non-traditional expectations of these workers. It’s been estimated that more than half of millennials and half of Gen Z are likely to switch to a more flexible job even if it means taking a pay cut.
Use Comp Creatively: According to a recent Harris Poll, 20 percent of employed Americans say their employer will compensate them if they relocate, and nearly a fifth say their employer will increase their salary if they move to a city or state with a higher cost of living. In those instances where work must happen onsite – for example, in the healthcare sector – creative compensation strategies can incent candidates and employees to engage and be retained.
Benefits That Matter: Regardless of the economic indicators, business-critical roles cannot go unfilled, and the quality of benefits can make a dramatic difference. Adding wellness stipends, lower deductible healthcare plans and mental health support to employees’ compensation picture communicates a culture of caring without redefining salary bands within job grades.
Trust and Transparency: Equal pay for equal work remains elusive. While HR’s efforts have been noteworthy in advancing DEI programs, full transparency into pay is probably the only way painful conversations will take place and change will ensue. Being open and fair about compensation practices can help employees understand how compensation decisions are derived but will also spotlight the gaps that can be addressed to ensure fairness and equity across the workforce.
Eliminating the blind spots in your compensation strategies is the most important first step. Data, analytics and HR technology, can play a big role in reimaging the future of pay, detecting bias and ensuring directional correctness. Lastly, if you’re not thinking about pay and how it impacts performance, retention and recruiting, you need to start now. The relationship between pay and your workforce is a daily journey that begins with steps, not miles.