Dive Brief:
- Employers, facing increasing pressure to improve their pay-for-performance programs and ensure fair pay, are revamping their compensation and performance management strategies, according to the results of a new Willis Towers Watson (WTW) poll, the 2018 Getting Compensation Right Survey. The 1,949 employers that responded cited the factors driving the change as cost, manager feedback, a changing marketplace and employee feedback.
- Fifty-three percent of employers said they plan to make their pay decisions more transparent within the next three years. Other planned changes included revising their annual planning incentive plans and increasing base pay; increasing the use of technology in making pay decisions; using a more future-focused way to manage performance; and adding recognition programs to reward workers.
- Employers generally gave themselves high marks for having formal processes in place to prevent bias or inconsistency in their hiring and pay decisions, WTW said. Nearly two-thirds of respondents said they've established formal processes across a range of areas, including annual incentives, hiring decisions, starting salaries and base pay increases.
Dive Insight:
Employers are already seeing some of the changes that will define the workplace of the future, and some are responding, taking steps to improve performance management and pay practices. They're creating cultures of transparency and inclusivity. And they're listening to employees, who want new skills, more flexibility, recognition and evidence that they're being paid fairly.
When it comes to pay equity, some have dedicated millions to closing their gender pay gaps, and such efforts often start with a pay audit. "Employers contending with fair pay and gender gap issues should conduct a gender pay equity review, which can help them better understand whether they have fair pay issues, where they exist, and their underlying causes," said Mark Reid, global leader, executive compensation for WTW, in a statement.
Employers will have to work to identify which efforts will best serve their individual recruiting, engagement and retention needs. "As more organizations define what fairness, inclusion and diversity mean to them," Reid said, "today’s reward leaders must understand how to tangibly impact this agenda through reward program design and delivery."
