2022 Compensation Trends: Pay Transparency, Distributed Workforces & Total Rewards
2022 Compensation Trends: Pay Transparency, Distributed Workforces & Total Rewards
Learn more
Next page
1. The Market is Moving Towards Pay Transparency
Pay transparency has become a hot-button issue as more states introduce legislation requiring employers to disclose salary ranges and promotion opportunities to current or prospective employees. Many of the CHROs in our community are leading that culture shift. Some have already published salary ranges and benefits information on
Next page
1. The Market is Moving Towards Pay Transparency
their job postings, while others are taking a more conservative approach or avoiding select geographical hiring markets in the short term while things play out.CHROs agreed that a clear compensation philosophy, with buy-in and support from the leadership team, is essential to communicating pay transparency effectively. They
Next page
1. The Market is Moving Towards Pay Transparency
also pointed out that whether you choose a soft rollout in certain geographical areas or a full rollout, it’s important to engage your employees in the process, clearly laying out for such employees how their current pay is formulated and the various promotion opportunities they can consider to further their careers.
Next page
2. Merit-based and Geo-differential Raises
CHROs have traditionally relied on industry and competitive benchmarks when developing compensation packages, combining “science and art.” However, the market is now moving faster than ever, making benchmarking more challenging – flipping the ratio to be much more art than science.
Next page
2. Merit-based and Geo-differential Raises
Merit-based and cost-of-living pay raises have gone up by nearly double across the board this year. To support retention without over-inflating salary budgets, CHROs have been looking more closely at employee performance ratings to see where they can afford to offer above-market raises. From there, they’re leaving it up to the
Next page
2. Merit-based and Geo-differential Raises
managers to choose how to distribute those raises.
Next page
3. Higher Salary Demands From New Hires
A good part of the conversation focused on the challenges of hiring in a candidate’s market. Even with competitive compensation packages, CHROs are encountering more aggressive salary negotiations from job candidates. In response, many are offering larger equity offerings and sign-on bonuses if they can’t meet their salary requirements.
Next page
3. Higher Salary Demands From New Hires
Several CHROs noted that during these negotiations, it’s essential to establish firm cutoffs for when a candidate’s demands are too high; and be willing to walk away when it’s not a fit for all of the factors that the company needs to consider.
Next page
4. Revisiting Total Rewards
As compensation becomes a more vital lever for both recruitment and retention, CHROs are taking a closer look at their total rewards package, realizing that a one-size-fits-all approach won’t fully communicate the value of the compensation package. Many CHROs are structuring different total rewards based on the stage of growth the
Next page
4. Revisiting Total Rewards
company is at, the level of seniority, and the types of equity that can offer the most upside to an employee.Another hot topic of debate was the subject of bonuses and whether they are still an effective means of incentivizing performance. Several CHROs noted that bonuses could have diminishing returns for top performers, who might
Next page
4. Revisiting Total Rewards
otherwise prefer an increase to their base salary. Of course, eliminating bonuses or creating a stretch goal structure can quickly alter the dynamics of not only your compensation strategy but overall financial performance, which is why it should be a conversation between the CHRO and CFO.