In September, Rich Sperling and I made two presentations at the Illinois SHRM Conference. A total of approximately 65 conference attendees participated in the two seminars.
At the end of each session, we asked the participants two questions: “What is the most significant compensation issue(s) that you are facing in your company?” and “Why is this important to senior management?” In this month’s Compensation Alert, we will provide you with a report on the results of our quick survey of compensation trends from conference participants in 2015 and 2016.
What is the most significant compensation issue(s)
that you are facing in your company?
Survey Year
Topic 2015 2016
Not at market/low pay/high pay 25% 33%
Pay for performance 25% 0%
Approach to pay lacks structure 18% 42%
Communicating pay 9% 17%
Other 23% 8%
Not paying at their targeted market competitiveness level emerges as the top issue reported facing organizations. Competitiveness generally represents at least three issues: (1) the ability to attract capable employees; (2) the ability to retain top performers and high-potential employees; and (3) the need to treat employees fairly which touches on gender equality, minimum wage, and compression. Addressing competitiveness involves having a well-articulated compensation strategy, including competitiveness targets, understanding how competitive the organization is currently paying, and developing a plan to move to targeted levels.
Pay for performance, not surprisingly, is equally reported as an issue as several of our SHRM presentations centered on taking care of top performers. Approaches to differentiating performance are well established. Although salary increase budgets recently have been modest, addressing this issue is not about budget, but the will to differentiate rewards.
Those reporting a lack of structure either believe they need a more formal approach to salary grade structure and salary ranges, or want to move from a bonus program to a more formal performance incentive plan.
Communicating pay is an issue that is neglected at most companies. Organizations spend significant efforts communicating benefit programs, but exhibit modest efforts explaining their salary and incentive programs.
Why is this important to senior management?
Survey Year
Topic 2015 2016
Retention/turnover 57% 10%
Competitiveness 32% 70%
Communicating compensation 0% 20%
Other 11% 0%
Responses in 2016 report a shift of senior management towards competitiveness which, as discussed above, includes retention. The issue of competitiveness represents a heightened focus as the result of lower unemployment and a steadily increasing economy, coupled with low inflation and conservative salary increase budgets. One result is an increased interest of organizations to implementing incentive programs to aid in taking care of top performers and high-potential employees.
The two topics we presented at this year’s Illinois SHRM Conference were titled: “Compensation Strategy – Develop, Communicate and Use” and “Use ROI to Get Compensation Programs Approved”. We will be glad to discuss either of the presentations with you.
Contact Us
Please contact me at nlappley@lapppley.com or (847) 864-8979 to discuss any questions you may have from this eNewsletter. Feel free to forward this email to anyone else who may be interested.