Now that the economy is starting to turn a corner, employees who fell victim to pay cuts are itching for a return to their pre-recession salaries. Many companies are starting to show some inklings of reinstating salaries, but are doing so at a snail's pace. While revenue growth is uncertain for the next year (at least), CEOs are wary of increasing overhead costs. According to Ravin Jesuthasan, a managing principal at Towers Watson, "It's very unlikely [companies] are going all the way back to help people make up for lost ground."
At the same time, a new study from Hay Group reveals that compensation and rewards are top concerns for corporate boards and senior executives, now that the recession has shaken up the playing field. As companies scramble to hire and retain top talent, it's imperative that they find a way to reward employees appropriately. Of course, this needs to be done in a way that doesn’t lose sight of their concerns over profitability. But with such a competitive market for talent, it's time for companies to step up to the plate.
As Nick Boulter, Hay Group's global managing director of reward services states, "The trauma of the global downturn for multinational businesses means many are struggling to re-build profitability … Reward strategy is now driven in the Boardroom as executives recognize that the war for talent knows no boundaries, so strategies for retention, motivation, engagement and performance improvement are integral to competitiveness."
Installing/revising variable pay programs is at the top of many companies' to-do lists, as they offer a range of incentives (some financial, some not) for superior performance—including bonuses, global mobility and improved development opportunities. These programs also help link the performance of the individual to the performance of the company overall, thereby motivating employees to produce their best, while maximizing the company's own profitability.
According to Hay Group's study, the current "war for talent"—and therefore the primary recipients of company reward schemes, for now—focuses primarily on three groups of employees: high performers, high potentials and "mission-critical" roles. How's that for incentive?
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