Trust, or lack thereof, between HR and managers is the compelling theme in the 2018 Compensation Best Practices Report.
A whopping 85 percent of managers have confidence in their ability to explain the rationale behind pay decisions to employees but only 37 percent of organizations share that confidence in their managers. However, managers are still the ones having those compversations. This, and much more, is detailed in this year’s report, The Great Divide: How A Lack of Trust Is Driving HR and Managers Apart.85 percent of managers have confidence in their ability to explain pay decisions. Only 37 percent of organizations share that confidence. Click To Tweet
Retention Is a Growing Concern But Not Enough to Stray Far from 3 Percent
Even more organizations (59 percent) called out employee retention as a major concern for 2018, compared to 56 percent for 2017. However, while 84 percent of organizations plan to give base pay increases in 2018, the average increase isn’t expected to change much from 2017, with 73 percent of employers estimating an average of 3 percent or less. Of course, employees in competitive jobs or who are outperforming their peers may be commanding much more. The highest base pay increase given to an employee was greater than 10 percent for 40 percent of orgs with 13 percent of orgs giving an increase that was 20 percent or higher.
The Ever-Changing Market
More than half of organizations (52 percent) have completed a full market study within the past year and 17 percent price individual jobs in the market at least weekly, up from 13 percent in last year’s survey.
Employers Counting on Variable Pay to Hire and Retain
Seventy-one percent of organizations offer some form of variable pay (bonuses, commissions, etc.) Interestingly, the number of organizations offering spot bonuses decreased year-over-year from 46 percent to 39 percent while individual incentive and hiring bonuses increased, 67 percent vs. 64 percent and 34 percent vs. 27 percent, respectively.
Pay Equity Top of Mind But Not Top of the To-Do List for 2018
Top-performing organizations are more likely to report that they’re actively addressing workplace inequities than typical organizations around gender (35 percent vs. 26 percent), race/ethnicity (28 percent vs. 23 percent) and other protected classes (26 percent vs. 20 percent). That said, 63 percent of top-performing organizations have no plans to conduct a race or gender pay equity analysis in 2018 (vs. 66 percent of typical.)
These are just a few of the insights we uncovered from more than 7,000 HR and business leaders in the U.S., Canada and abroad from every industry and all organization sizes. We are hosting a webinar on February 21st to share these and other findings from the 2018 Compensation Best Practices report. We hope you’ll join us.
Can’t wait? Download the report today!
Tell Us What You Think
Do you trust your managers to have tough conversations about compensation? We want to hear from you. Share your story in the comments.