PayScale titled its report Attack of the Out-of-Date Comp Plan (cute, huh?), because they believe:
- Compensation data gathered in real time (versus “aged” data) is needed to make the best compensation decisions; and,
- No company can afford to not understand that, lest said company find itself a victim of its own out-of-date business practices. (At least that’s what I think they believe.)
Employees are looking for a better deal
Here’s a quote from the press release:
Increasingly, a company’s ability to get compensation right is a prerequisite for achieving its growth projections,” said PayScale’s Vice President of Marketing, Tim Low. “Compensation data that reveal the realities of specific talent markets allows companies to attract their most desired prospects and retain existing employees who might otherwise be looking for a better deal.”
(And let’s be honest: Darn near everyone is looking for a better deal these days.)
The report contains input from more than 5,500 business leaders and reveals current attitudes about compensation, hiring, and retention as well as a significant amount of “been there/done that” from 2014.
Wages continue to rise slowly
For example, the report shows 2014 as the year that:
- Most companies added to staff. Some 55 percent of companies reported in-creasing their workforces in the past 12 months.
- Too many open positions went unfilled. Half of employers reported having more positions than qualified applicants to fill them, and 35 percent reported having an open position for six (6) months or longer.
- Wages continued to slowly (and I mean sloooooowly) rise for most positions. Some 85 percent of employers gave pay raises in 2014, but most of those raises were less than 5 percent.
- Most employees who left their jobs left for “personal reasons” or for more pay. (Seriously, is there any other reason to voluntarily leave a job?)
- Employees continued to worry their pretty little heads about retention. Almost two-thirds (63 percent) of all employers, regardless of size or industry, reported retention as a key issue. (And I still maintain most aren’t doing a thing about that, but what do I know?)
But enough about the past! Here’s what the report says about employer expectation for 2015:
- Most employers are looking forward to more, more, more. Three-quarters (73 percent) of companies expect to earn more, and 50 percent expect to add staff.
- HR technology will be in the budget. A quarter (25 percent) of companies will purchase a performance management system, while others will begin experimenting with electronic applicant tracking (please say it ain’t so!), human capital management, workforce analytics, compensation, employee engagement, and social recruiting software/systems.
- Employee retention will remain a primary concern. Fifty-seven (57) percent of employers are concerned about retaining employees. (And again, I say, what are they really doing about that?)
- Sourcing top talent will continue to present challenges. I’ve written numerous times that I’m all but convinced the “skills gap” largely exists in employers’ imaginations, but apparently no one is listening. (I’m OK with that, thanks.) As an example, 51 percent of survey respondents agreed with the statement “There is a lack of qualified applicants for our open job positions.” Engineering, IT, and management positions were reported as those hardest to fill.
- Pay raises will be awarded to most employees. A whopping 89 percent of companies plan to give pay raises.
Here’s a sampling of some business best practices culled from the report.
- Nearly all — 91 percent — of companies give performance reviews. I confess to all kinds of suspicions about this statistic, because I read it and begin to think things like “Sure they give them, but that’s like saying I cook dinner for my family. I do … about twice a week.”
- Another 38 percent of companies provide “Total Rewards Statements” for their employees.
- About a third (31 percent) of employers conduct engagement survey annually, while another 13 percent conduct surveys more frequently. Thirty-two percent never conduct engagement surveys, and 24 percent conduct them “as needed.” As needed? Would that be after morale is in the toilet, sales have decreased for no discernible reason, and voluntary turnover has reached noticeably high levels? I’m just asking. Anyone who cares to help me out here is free to.
- Forty-one percent of companies have a formal compensation strategy, while another 41 percent are working on it. Uh huh.
- More than half (57 percent) of companies don’t train managers to have tough conversations with staff about compensation. Thirty-nine percent do, but 4 percent are unsure. Well, kudos to those companies who do train managers, because think about it — we’ve had a rough six years since the dawn of the Great Recession, and I’ll bet many managers were tasked to participate in tough conversations with employees about pending layoffs, benefit cuts, hiring freezes, and so on. Managers shouldn’t have to initiate those talks without preparation. And even in relatively good times, there are always average performers who think they’re great and great performers whom the company can’t afford to pay more. Who’s going to break the news to those folks? Hopefully someone coached to do it well.
- Forty percent of companies either have (24 percent) or “are working on” (16 percent) a transparent wage policy.
- HR does not report to Finance, for the most part, and apparently both parties like it that way. When asked whether HR should report to Finance, 64 percent of respondents said “no.” I’ve reported to Finance twice and didn’t have a problem with it. I learned a lot and was able to teach some, too.
A report worth checking out
The PayScale 2015 Compensation Best Practices survey consist of 5,500 respondents mentioned earlier, and 3,846 were from the United States and 697 were from Canada. Half (50) percent of respondents identified as Managers, and 24 percent identified as Vice President or C-Level. Most respondents identified as Human Resources Professionals (56 percent), but 16 percent identified as Executives (such as CEO, COO, etc.).
The report contains a lot more than I can cover in this article, and some of the data vary depending on industry and company size (small, medium, or large), so I suggest you check it out for yourself!