Canadian HR Reporter

By Wendy Brown T oday's workforce is changing dra- matically, and as competition grows for certain jobs and the economy improves, retention is a top pri- ority for many employers. Compensation can be a strategic diff erentiator to both attract and retain talent, and meet busi- ness goals. Retention a top concern This year, 56 per cent of organizations agreed or strongly agreed employee reten- tion is a major concern for their company, according to PayScale's 2017 Compensa- tion Best Practices Report, which gathered information from 7,700 respondents in the United States and Canada. So, what are they doing about it? e top three areas of focus to retain top talent are off ering learning and development op- portunities (58 per cent), a merit-based pay plan (57 per cent) or a discretionary bonus plan (33 per cent). While the data is similar to last year, there is a notable decline in the use of perks in 2017 (23 per cent versus 28 per cent in 2016). In this era of increased job market mo- bility, it has become common practice for employees to obtain an off er at another organization. e top three reasons for attrition are personal reasons (62 per cent), professional advancement (60 per cent) and compensa- tion (57 per cent), found the survey. If someone is thinking of leaving, do or- ganizations make a counteroff er? While 35 per cent said no, they wouldn't, most or- ganizations (53 per cent) said they would counter, but only for high-performing employees. Using comp as a strategic diff erentiator Top-performing companies view com- pensation very differently from typical companies. Compensation isn't an "exercise" that happens on an annual basis, it is part of the fabric of the culture, something to be con- stantly calibrated and refi ned. ere is no such thing as a "fi nished" comp plan, only continuous adjustments to keep pace with ever-changing conditions. • Top-performing companies are more like- ly to pay diff erently than typical companies for competitive jobs (56 per cent versus 50 per cent) and more likely to reference data for specifi c jobs at least annually (75 per cent versus 69 per cent). • Top-performing companies are more like- ly to have completed a full market study in the past 12 months (62 per cent versus 52 per cent). •Top-performing companies are more likely to have a compensation team (44 per cent versus 30 per cent). Additionally, the prevalence and variety of variable pay have increased over time. About 74 per cent of all organizations sur- veyed said they off er some type of variable pay. at number is even higher among top-performing companies — which are more likely to incorporate variable pay in the compensation strategies (82 per cent versus 73 per cent of typical companies). e larger the company, the more likely they are to provide variable pay — 85 per cent of enterprise companies off er variable pay, versus 69 per cent of small companies. Variable pay is also becoming more fre- quent. While it's still most common to pro- vide bonuses or incentives on an annual ba- sis (56 per cent), that number has decreased signifi cantly since last year's survey (67 per cent). Companies are more likely than last year to provide bonuses or incentives on a quar- terly (16 per cent) or monthly (10 per cent) basis. Organizations use a whole host of vari- able pay options to reward employees, some of which are more typical than oth- ers. While individual incentives remain the most common (64 per cent), one-quarter of organizations are using team incentives. Spot or discretionary bonuses remain pop- ular (46 per cent) as well. Top-performing companies are more likely to give bonuses overall — specifi cally, individual incentive bonuses (71 per cent versus 62 per cent of typical companies), team incentive bonuses (32 per cent versus 24 per cent of typical companies) and mar- ket premium bonuses (six per cent versus four per cent of typical companies). Communication is crucial. How people perceive their pay matters more than what they're actually paid. If an employer pays lower than the market average for a posi- tion, but communicates clearly about the reasons for the smaller paycheque, 82 per cent of employees surveyed still felt satis- fi ed with their work. Transparency Communication isn't all or nothing. ere's a whole spectrum of options for how trans- parent to be about pay (see sidebar). Currently, 31 per cent of organizations identify themselves as being transparent (a level three or greater). Nearly half (49 per cent) of all organizations aim to be that transparent in 2017, and it's not as much about sharing pay amounts as sharing pay rationale and clearly connecting the dots between culture and compensation. Top companies are far more likely to share a total compensation statement with employees — a good practice to build trust and understanding — and are a great exam- ple of how to be more transparent around pay without posting everyone's salary on the wall. When it comes time to communicate about pay, managers are often the ones do- ing so, but the results are not encouraging: • Only 19 per cent of organizations said they are "very confi dent" in their manag- ers' abilities to have tough conversations about pay. • Only one-third of organizations off er man- ager training on how to talk about pay, and the training doesn't always include basics on compensation or how to deliver specifi c compensation news to employees. e moral of the story, then, is to start with your organizational objectives, con- sider your culture and your workforce, and use the right combination of transparency, incentives and manager training to moti- vate and engage employees. Make a plan, but be fl exible about the specifi c needs of the employees at your specifi c organization. Wendy Brown is PayScale's director of content marketing in Seattle, Wash. For more informa- tion about PayScale, visit www.payscale.com Spectrum of transparency 1. What "Here's what you get paid." Paycheque 2. How "Here's how we use market data to determine your pay." Data: Market study 3. Where "Here's where your pay falls and where you can go." Plan: Strategy pay ranges 4. Why "Here's why we pay like we do." Culture: Manager training 5. Whoa "Here's everything you want to know about everyone's pay." Open salary: Publishes ranges and salaries It's not so much about sharing pay amounts as sharing pay rationale and clearly connecting the dots between culture and compensation. Credit: ImageFlow (Shutterstock) COMPENSATION FEATURES Right combination of transparency, incentives and manager training motivate and engage employees

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