Building a Compensation Plan for Better Retention
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With the global economy teetering on recession in the wake of climbing inflation, it’s critical for business leaders to evaluate employee compensation as a way to maximize employee retention. In this webinar, Nick Gavronsky, Sr. Director of Product Management at BambooHR and Cassie Whitlock, Director of HR at BambooHR, will offer their expert guidance on how to develop the right compensation strategy to help you attract and retain top talent. Subscribe to our BambooHR webinar series: http://bamboohr.com/HR-Unplugged
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Building a Compensation Plan for Better Retention
- 1. Building a Compensation Plan for Better Retention Compensating Smarter
- 2. Nick Gavronsky Co-founder at Welcome (BambooHR company) BambooHR makes it easy to communicate compensation to candidates and employees and make better decisions with real-time compensation data Cassie Whitlock Director of HR
- 3. ● Why it’s more important than ever to come up with a compensation strategy and communicate with candidates & employees ● How better compensation data can help throughout the employee lifecycle ● How to enlist executive support ● Steps to build a solid comp plan Agenda
- 4. The Market at a Glance
- 5. Developing a modern compensation strategy is a huge challenge. Investing in compensation data is critical to inform your strategy as you manage the shift to remote work and today’s volatile environment.
- 6. 70% of HR teams invest in 4+ data sources that are not real-time nor inline with the current market environment. 90% of teams don’t have a compensation strategy for remote work—a huge gap that needs to be filled. And it’s only getting harder…
- 7. You need tools and data to help you navigate market volatility and uncertainty, with cost and retention as key drivers World shut down, unemployment spiked, and everyone shifted to remote work. Remote work As COVID stabilized and remote solidified, teams starting scaling and hiring at a blistering pace. Hiring boom With the highest rates of turnover seen in the technology sector due to lack of pay transparency. Great Resignation Teams need to make better comp decisions and retain best talent due to current market volatility. Economic uncertainty
- 8. Good compensation data is hard to find. But why?
- 9. Because you have been left in the dark ages. ● Reliance on stale, self-reported data ● Manual workflows and spreadsheets ● Googling for compensation trends ● Inability to communicate total compensation ● Misunderstanding of total compensation ● Lack of integrations with HR systems ● Challenges managing pay equity
- 10. Communicating compensation has never been easy Educating candidates and employees on the rationale for how they are paid will help you better compete for and retain talent.
- 11. 40% of compensation is non-cash (benefits, perks, equity)—aspects of compensation that are overlooked and misunderstood. 95% of employees don’t understand their total compensation and rationale for how they are paid.
- 12. 75% of employees would consider leaving their current job for a salary increase. 23% of employees describe negative emotions regarding their compensation. This lack of understanding leads to a higher likelihood of attrition
- 13. Communicating compensation is hard. But why?
- 14. Because you lack the tools and your talent lacks the understanding. ● No tools to easily manage total rewards ● Poor candidate and employee experience ● Misunderstanding of total compensation ● Lack of integrations with HR systems ● Manual spreadsheets and calculators
- 15. The Impact of Real-Time Compensation Data
- 16. Enables you to make better decisions throughout the employee lifecycle
- 17. Compensation strategy Recruiting and hiring Compensation evaluations Retaining top talent
- 19. Smarter Compensation = Business Results The total cost of a company’s workforce can average nearly 70% of operating expenses. In other words, your payroll has a major impact on your bottom line.
- 20. The impact of an unsound compensation strategy and lack of leadership buy in: High turnover Turnover can cost the equivalent of up to 12 mos of an employee’s salary. Low acceptance There is no way to know if you are paying competitive market rates. Pay inequity Responding to one single employee rather than the entire workforce.
- 21. Steps to Take
- 22. 1. Create and communicate a compensation philosophy and strategy.
- 23. 2. Clearly communicate total compensation.
- 24. 3. Create a clear process.
- 25. 4. Decide on your level of salary transparency.
- 26. 5. Train your managers.
- 28. Follow BambooHR on social media: bamboohr.com/blog
Editor's Notes
- Cassie
- Cassie - Intro for Cassie and Nick Reach out and connect on LI Over 20 years in technology, HR in the SMB space - leading the HR Nick - a deep background in technology, product development and a serial inventor as he has co-founded several businesses Favorite things is his financial analyst background - I love data which is something we are covering today, compensation and the power of data and technology behind your total rewards strategies.
- Cassie Access to slides? Available ondemand? Follow-up email Drop questions in chat
- Nick How you set your strategy How you communicate it and get executive buy in
- After economic uncertainty → SEED QUESTION #1 BEFORE MOVING TO NEXT SLIDE: Why is real-time data so important in today’s environment?
- Why is good comp data so hard to get and understand?
- NICK: Handoff for Cassie’s experience as an HR leader CASSIE: Discuss her own perspective as an HR leader.
- Lack of understanding around non-cash comp Cash is still king for most employees bc it’s black & white 62% of employees say they’d rather have a higher salary than equity, bonuses, or profit sharing. (source: BHR 2022 Comp Trends report) Equity 95% of employees don’t understand equity Why is equity an important part of compensation? Recruiting teams have a tough time articulating it
- SEED QUESTION #2 BEFORE MOVING TO NEXT SLIDE: How do companies stay competitive to candidates when they might not have the financial means to provide a higher salary? Employee perspective on comp: 23 percent of employees describe negative emotions regarding their financial compensation at work Compensation is a big reason why people leave 75% of employees would consider leaving their current job for a salary increase. (source: BHR 2022 Comp Trends report) Which also leads us to the issue that people are not great at judging their own worth in terms of market value. According to a 2021 survey from Payscale, 51 percent of workers who are paid at or above market believe they are paid below market. This leaves leadership teams and managers with the tough task of correcting this misperception in a way that doesn’t dismiss the reality that many employees are feeling undervalued and unhappy. (But do they always have all the right information to be able to have those conversations? Probably not.)
- Why is good comp data so hard to get and understand? CASSIE: Making sure each company thinks about the right level of transparency for their organization, and being thoughtful about the maturity and infrastructure in the organization to support it.
- CASSIE: Speak on why it’s difficult for employees to understand this landscape. Tactical example - using top end of pay bands and how EEs want to be at the top but don’t understand how it is used for career growth and unique work/qualifications
- Layoffs, hiring freezes The cost of employee turnover Double-digit inflation Remote/hybrid work
- During recruiting and hiring Speed is critical Offering a fair/competitive offer Both sides (candidate/company) feel it’s fair Regular re-calibration during employee tenure Setting up a clear process for comp evaluation When your designing your comp strategy To understand what to pay? During recruiting and hiring Speed is critical Offering a fair/competitive offer Both sides (candidate/company) feel it’s fair Compensation Evaluations & Retention of your top performers Again, good data means you can offer competitive salary increases based on high performance (and not under/overpaying)
- Leadership support investing in real-time, and accurate compensation data is critical for business success, and for providing the right employee experience–from the offer stage through employee onboarding and retention.
- When compensation is managed carefully, it aligns people’s behavior with the company’s strategy and generates better performance. The total cost of a company’s workforce can average nearly 70% of all operating expenses. In other words, your payroll has a major impact on your bottom line. SEED QUESTION #3 BEFORE MOVING TO NEXT SLIDE: What are some tips to get executives on board to support a better compensation plan? CASSIE: Also talks about leadership alignment.
- Share internal data or anecdotes about loss of key talent due to comp missteps Share how comp plan will reinforce company culture and solidify position as employer of choice Pitfalls to be aware of/avoid (scenarios) How pay inequity creeps in - responding to one single employee rather than the entire workforce
- Steps to take
- Create and communicate a comp philosophy + strategy (what is it, how do you do it)
- Emphasize total compensation + don’t forget the total package (culture, mission, etc)
- Create a clear process (i.e. who initiates the comp conversation and when)
- Decide on your level of salary transparency.
- Train your managers SEED QUESTION #4 BEFORE MOVING TO NEXT SLIDE: What do you think are crucial aspect(s) when it comes to developing a compensation philosophy and strategy?
- CASSIE - BHR has a lot of resources to help your business do great work
- CASSIE Look for more resources coming your way including the link to this webinar as well as other materials soon