That’s what we call market-based compensation in today’s economy.
I am the first to say that money is not everything, and it is NOT usually the primary driver of employee engagement. But at the end of the day, it’s extremely important in not only attracting, but retaining your best talent. Leave it to chance, and your best and brightest may just be headed for the door, not necessarily because they are looking, but because they are being sought after.
Compensation has always been a hot topic for HR pros and done formally in larger organizations, but in the past year, we have seen a strong uptick in smaller organizations taking an intentional and strategic approach to compensation as well. Understanding where the organization sits around market data is critical for maintaining competitiveness, especially given our tight labor market, and skyrocketing cost of living.
In the past week, we have completed compensation studies for two clients in very different industries. While their size, industry, and philosophies were quite different, in both projects, we spent a great deal of time crunching numbers and analyzing benchmarking reports. We not only looked at pay data, but we took a holistic approach examining their benefits, perks and other rewards. Most importantly, we spent a significant amount of time speaking with the executive leaders of these organizations to understand their philosophy around compensation, pay equity, and how it fits into their organization’s goals, strategy, and values.
Going through a compensation study admittedly can be an arduous process if it has not been done formally before. But done regularly, the process becomes easier to execute, and it allows leaders to be much more agile around responding to changing market conditions.
If you have not done a formal compensation analysis, it’s time to saddle up, sharpen your pencil, and fire up those pivot tables. There is no time like the present to be intentional about driving a fair, equitable, and competitive compensation strategy that will attract, and best of all, retain your top talent.