Talent is being lost due to the lack of creativity in the field of benefits you offer to your employees. How to attract and retain talent?
How to link business strategy with compensation strategy?
This is the holy grail in any organisation. How to ensure employee compensation is aligned with the business strategy in order to improve productivity and increase the profit margins.
In order to simplify a complex question, I agree with my colleague Mike Henezi (Vice President and senior consultant of Apri Insurance Services) on emphasising in the three steps needed for linking the company compensation to the business strategy.
- Identify the top business objectives first
These objectives will vary depending on your current priorities and the age of your business.
If your company is still relatively young and in the growth phase, your top objective might be to increase your market share. If your company is more established, your top objective might be to become more productive and get more work done with your current workforce, and so on. It all depends on the company and business priorities.
- Now define what are the desired employee behaviours
While you know exactly what the company objectives are, the employees might not. Employees need to be guided towards behaviours that will help the company meet its objectives.
Here, it would be recommendable to create a list of any employee behaviours that will push the company in the direction it wants to go. If the top objective is to become more innovative, desirable behaviours may include things like coming up with new ideas for products. If the main objective is different, behaviours would be different.
- Then you are ready to design the appropriate company compensation plan linked with the company business strategy
Since you already know what your top objectives are, and what behaviours you want to incentivise, this is simpler than you may think.
Survey the employees to find out what types of incentives they would value, and then choose the most appropriate incentives for your company (bonuses, extra vacation days, profit sharing, stock options, etc.). If you are not sure what to include, consider partnering with compensation specialists.
Always remember that this is not set in stone. Companies are alive, we live in a very fast and dynamic world in which company’s top objectives change all the time. It is important to review the top business objectives regularly in order to adapt to the desired behaviours and the compensation plan.
How is artificial intelligence reshaping the C&B landscape?
Artificial intelligence in compensation & benefits management automates tasks that require manual actions to deliver an improved employee experience, combined with machine learning which recognises patterns, predicts performance and explains drivers and influencers to optimise compensation models and incentive plans, and increase employee and sales performance and retention.
Machine learning-based AI can help companies use compensation analytics to identify their employee challenges and predict trends. This will give businesses invaluable opportunities to address employee needs and optimise compensation and incentives for targeted populations, resulting in higher employee engagement.
By taking advantage of AI to make compensation fair—based on a variety of rules including education, experience, certifications and more—businesses move closer to closing pay gaps.
Natural-language processing can help with employee sentiment detection and react quickly to retain and engage employees.
What can we expect in the future for C&B?
It is essential to start rethinking what compensation and benefits means to the employees. Gone are the days where cash is the king. In a shrinking pool of talent that has adequate future-ready skills, employers need to be creative and holistic in the benefits they offer beyond the traditional C&B models to attract and retain star talent.
According to the lastest Global Benefits Surveys from Mercer, AON and TWT, managing their health is a top priority for two-thirds of employees in Asia. Moreover, more than half suffer from elevated levels of stress.
While employer’s endeavour to engage their staff in an increasing array of non-traditional benefits, there is still a disconnect with employees according to the survey. Finding the “right” programmes and leveraging technology will be the key as employers start to take a more strategic approach towards health.
The latest research conducted by the Society for Human Resource Management says that over 40% of employees consider wellness and health-related benefits as the next best thing after cash in order to retain and attract talent.
This is ultimately based on supply and demand. HR is increasingly looking at what employees really want and need when it comes to benefits and then tailoring individual solutions while balancing business interests. This means that prevention is better than a cure.
Borja BURGUILLOS, currently the Global HR M&A and Head of Rewards at BASF has more than 13 years of experience as Global HR Executive, as Management Consultant and in Global HR Strategy corporate roles.
Specialist in the Rewards field and with strong analytic and strategic thinking. Experience in large projects about HR M&A, Transformation and Compensation & Benefits harmonisation. Passionate about what is next in HR, tech and startups.