New Generation: Employee Compensation
Due to the job market expanding and increase in competitiveness of prospective employees, unemployment is seeing record lows over the past few years.
Companies are finding it hard to compensate employees, making it difficult to keep them loyal to the company or attract them in the first place. Survey (2019 Global Human Capital Trends) shows that only about 33% of companies felt ready to address this situation.
In the past, compensation and rewards revolved around one thing: money. People look for jobs to get money so the simple solution would be to give them more. This was true back then, however, more
employees are looking for more than a big paycheck. Surveys show that a major factor in job satisfaction isn’t money, but instead is the value they perceive and the appreciation they feel from the management. Value translates to the nature of the work and the opportunities they can get from it.
They want to feel that they can learn from their job, secure promotions in the company, and have an impact beyond their workspace. Appreciation on the other hand, would stem from management’s attitude towards their employees. Simply put, an extra zero in their paychecks does not feel gratifying for today’s employees and would not be an adequate reward.
Companies need to adapt to the changing environment and find creative ways to reward employees to keep their loyalty and attract prospective employees, they need to distinguish themselves from those who simply offer a decent commission, and emphasize benefits they provide which tell employees and prospects: “this is why you should work for us, this is what we can give you.”
As cash rewards aren’t memorable enough and money feels mundane. It’s more memorable and exciting for employees to get non-cash rewards and be able to talk about it with co-workers. These could be anything from extra vacation days, monthly membership to a local gym, or a new phone. Sometimes, a simple thank you from the management is all they need to feel distinguished and recognized. It motivates them and studies show that it leads to increased work proficiency. A handwritten personalized note that comes with the paycheck alone can go a long way in making employees feel more appreciated.
Human Resources should be at the forefront of developing new ways of compensation. They must be a channel for communication between employees and management so that they know what reward would be valuable and what management can actually give. They should be knowledgeable on all legal parameters around giving proper compensation and provide fair metrics to measure work performance. Benefits need to be equitable for them to be effective.
Money is no longer the main driving force of employees. It is important that they feel appreciated in the workplace and that the work they do has actual value. Companies need to adapt so that they can continue to attract high value employees and keep a coherent and talented team.
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