This level of innovation and change is having a profound impact on businesses and their workforce.
The Fourth Industrial Revolution
There is a fundamental shift that has been taking place in the workforce over the last several years. The catalyst for this change is what economists call The Fourth Industrial Revolution.
In the past, the U.S. economy was centered around production and manufacturing. Then in the late 1960s and early 1970s, business started shifting to more automated production, using computers and information technology.
By the mid-2000s we started to see the blending of technology and devices. You might have heard the term “The Internet of Things.” In this age of tech-gadget fusion, you can use your cellphone to turn on your laundry dryer, or ask Amazon’s Alexa device to turn on the thermostat in your home.
What we see every day here at PayScale is that businesses are now competing for talent from every industry. When we speak with manufacturing companies, they aren’t just looking for machine operators and production workers; they’re looking for compensation data on software developers and other high-tech talent. They are now competing for talent with not just other manufacturers, but also from technology firms like Google, Apple, Facebook or any other technology vendor in their area, if not nationally or even internationally.
There Will Be Winners and Losers
At the heart of this change is innovation and technology that has made it easier for your competitors to replicate what you do faster than ever before. You build something today and six months to a year later, your competitor has it. Just a couple of months ago, Facebook launched a competing app to Snapchat. The result? Shares of Snap declined more than 4 percent.
The pace of innovation is so fast that your competitors can disrupt your business model drastically, threatening your existence as a business. Sound dramatic? Consider what happened to Blockbuster when Netflix came along. By the end of this year, Sears, Kmart and RadioShack may face the same fate as Blockbuster. All because they failed to innovate quickly enough.
Focus on Compensation
Lightning-fast innovation is causing businesses to think about where they can innovate and what business levers can they pull to remain competitive. These disruptive changes to business models are having a profound impact on the employment landscape.
What we find is that leading organizations have learned to focus more on who they are as a company, and how they use compensation as a business lever to retain top talent and boost productivity.
And while your competitors are putting pressure on your business, your employees know what their market value is based on information they can gather from a simple Google search.
The question that you need to answer is, “Do you have the tools and technology in place to get info on the latest compensation trends?”
“I am convinced of one thing—that in the future, talent, more than capital, will represent the critical factor of production.”
– Klaus Schwab, Founder and Executive Chairman of the World Economic Forum
The ability to attract and retain key talent is more important than ever.
In the past, when organizations wanted to improve output and become more productive they would invest in updating their physical operations and adding new machinery. Now, because of the demand for innovation, companies invest in their people to get more productivity out of their workforce.
In today’s competitive marketplace, successful businesses realize that human capital is their greatest competitive advantage.To thrive, your organization needs compensation tools that provide insight and drive innovation.Click To Tweet
Henry Ford and $5 a Day
There’s no more direct way to invest in your business than what you pay your employees. Henry Ford knew this. Early on, the Ford Motor Company was struggling to keep employees and had an extremely high turnover rate. The production line would stop and start, and became highly inefficient.
To address the turnover issue, Henry Ford upped his employees’ pay from $2.25 a day to $5.00 day. When he did that, productivity surged, and Ford doubled its profits in less than two years.
Compensation Is Much More Than Data
Having compensation data isn’t enough. We often hear from organizations who, in the past, made compensation decisions by collecting “free data” from various internet searches. The saying “you get what you pay for” comes to mind.
That’s why you need a platform that helps you manage and interpret data so that you can have a pulse on the market when making pay decisions for your employees, and ultimately make effective business decisions. See what PayScale’s modern compensation tools can do for you.
Tell Us What You Think
What’s the toughest compensation challenge facing your company today? We want to hear from you. Tell us your story in the comments.