28 March 2023
The “Great Resignation” still has a driving effect on the Talent market and tremendously impacts retention and employee expectations. 12% of international employees quit their jobs in 2021, and 20% changed jobs in 2022. *Workforce Insights Randstad 2022
In my last article published on February 2023, I summarized the vision of a group of leaders from diverse industries and geographical locations on how they have personally experienced the top 3 employee retention factors, and we focused on training and personal development.
Another leading factor in employee retention that guarantees employees a sense of security and recognition for their hard work and dedication is compensation packages.
Compensation, including salaries and benefits, has always been one of the main reasons employees stay or quit, and while other reasons are contributing to an unprecedented surge in turnover, compensation is still the main driver of change. While employees seek more intangible benefits in their job searches, compensation remains critical in engaging and retaining employees. It depends on the position level and industry, but more and more companies tend to keep employees happy not necessarily by a pay increase but through perks that make their home life more manageable and enhance their work-life balance. Flexible work schedules, remote work options, and employee discounts are among the most popular.
Your compensation plans should support a Sustainable Talent Management Strategy. A practical and cost-effective compensation plan meeting the business and Talent market needs is crucial to creating an efficient Talent Management Ecosystem.
The direct link between competitive compensation packages and higher retention rates is still as strong as it has always been. Organizations with competitive compensation packages are more likely to hit high employee satisfaction levels resulting in attracting and keeping top talents. According to a report by lattice.com library, compensation is the primary driver of employee turnover, with 55% of employees quitting to take jobs with higher compensation.
One of the best practices recently implemented by an increasing number of businesses is setting a pay grade based on job duties rather than a job title because the pay for job titles can vary drastically.
Although this practice might seem more challenging because it is not easy to quantify the hard and soft costs, it is worth the investment. Investing in Talent retention through smartly enhancing compensation attractiveness is difficult, but ROI can be evaluated. The payback in financial terms reflected through several metrics, including turnover data, promotions/transfers from within versus outside recruiting, number of grievances filed, absenteeism, discrimination, and complaints, among others, is rewarding. In addition, more organizations are conducting job analysis and evaluations which helps companies base their decisions on factual data, supporting fairness in the workplace. Creating a pay structure, researching the market’s industry-approved pay, conducting employee surveys, and efficiently communicating compensation policies and market research to employees are, among others, essential components of post-pandemic successful compensation strategies. The one size fits all traditional compensation philosophy is outdated, and customized benefit programs are taking over. This more brilliant strategy helped to reach more qualified candidates instead of reducing benefits to cut costs.
Now more than ever, employee retention significantly impacts organizations’ performance, profitability, and long-term success because retaining qualified employees is more efficient than training and onboarding new hires.
On top of the high cost of turnover, the time and effort managers must spend on a complex recruitment process makes it harder for them to focus on other aspects of their roles and continue developing their current staff.
In times of challenge, relying on a competitive physical team of global recruiters for research and mapping, with a well-established local, regional, and international network can guarantee your organization designs attractive compensation packages, sources, selects and grows the best Talents on time, while allowing your leaders to focus on what they do best.
When you achieve high retention rates, your senior managers will spend less time and effort chasing sophisticated recruitment processes and more time helping employees thrive.
About the Author:
Yasser Seoud, Managing Partner North Lead – Canada (Member of AIMS International)
Yasser Seoud is a Canadian multilingual executive who has been a Director and VP for diverse organisations in multiple geographical locations. With a global executive background, he was a decision maker for international organisations where he lived and worked in Johannesburg, Cairo, Madrid, London UK and Toronto.