Every great athlete or championship team needs a great coach. Businesses are no different.
- Sometimes, HR is like a coach for learning and development (L&D) — a relay team that’s passing the baton of knowledge and training throughout the organization.
- Other times, HR is a coach for talent acquisition — a team of archers keenly targeting their recruiting and hiring efforts for optimal precision.
And then, as we’re talking about in this post, sometimes HR is a coach for total compensation — supporting the team that ensures individuals and their teams are appropriately supported through a complex arrangement of pay, benefits, recognition, perks, and rewards.
In short, HR supports total comp leaders to motivate and engage employees, boost retention, and protect the company brand. And one could argue that as a result of the pandemic and its impact on employee attitudes and expectations toward compensation and benefits, getting compensation right is more of a challenge now than it’s been in quite some time.
Companies across the U.S. economy are raising pay to recruit workers in a tight labor market. The wage increases are “rippling through firms and prompting employers to rethink pay for existing staffers,” in the words of The Wall Street Journal.
One unwanted repercussion of higher wagers for new employees is what economists call wage compression. It’s what happens when pay for new hires or entry-level positions approaches the pay that veteran or senior employees earn. Wage compression, the WSJ argues, “poses a financial and management challenge for employers, and has gained new urgency as companies fight to attract and retain employees amid record-high rates of job-quitting.”
Wages aren’t the only piece of the compensation equation that has been affected by the pandemic and the shifting economy. Earlier in 2021, Sambhav Rakyan, Willis Towers Watson’s global business leader for data services and compensation software, identified what would be the year’s top five employee compensation trends:
- Restructured pay for remote working: According to Willis Tower Watson’s Flexible Work and Rewards Survey: 2021 Design and Budget Priorities, in the next three years, 61% of organizations could make remote working a permanent policy.
- Differentiated rewards for critical digital talent: Not only did the sudden move to telecommuting force many organizations into accelerating their digital transformation plans, it also helped make clear the gaps in digital roles and skills, Willis Towers Watson argues.
- Doing right as a company to do well as a company: Despite the chaos of the pandemic, investors still held leaders in business and government accountable for their environmental, social, and governance (ESG) promises.
- Protecting employee data: Remote working has proved the importance of cybersecurity; many organizations found themselves ill-equipped to protect confidential data from vulnerabilities in the virtual world.
- Measuring return-on-investment (ROI) on compensation spending: Evaluating compensation actions holistically — rather than by individual programs or policies — can improve an organization’s understanding of their cumulative impact.
But wait. There’s more to total compensation than all of that. There’s benefits. Yes, those are also being reprioritized and reshaped.
A recent Gartner study found that 68% of organizations have added or increased at least one category of benefits to help employees during the pandemic. The coronavirus has caused almost all employees to suffer increased levels of stress and, according to Gartner, mental wellbeing is one of five areas that a majority of companies are prioritizing and enhancing. The other four are:
- Hazard pay
- Medical benefits
- Child care support services
- Transportation services
Which brings us back around to the importance of HR as a valuable coach to the entire organization. HR is in a critical position to support their colleagues in total compensation by helping employees to stay healthy and feel supported physically, emotionally, and mentally, including the increased demand from employees for physical fitness programs.