Over the last year and a half, employers held the power as employees hunkered down to wait out a tumultuous economy. Now, there’s been a dramatic shift as the world reopens, with Microsoft’s Work Trend Index reporting that “41 per cent of the global workforce are considering a job change in the next year.” Employees are discovering a greater scope of opportunities with fewer geographic limitations, leading to a resignation boom.
To attract and retain workers in this global job market, employers need to be strategic, empathic and able to move quickly. One key to success is having a solid, open compensation strategy, implemented with relationship-driven negotiation practices. Here’s why this is important and how you can get started.
The Tipping Point
“In the past people were like, ‘Well, I don’t know what I’m worth or what I should ask for’ because there were just no resources accessible,” says compensation strategist Annika Reinhardt of Talent Collective. “Now, there’s data everywhere. Is it great data? That’s questionable, but people can at least get an approximation, seeing that they can ask for more.”
There’s a vast array of compensation data available now, whether it’s through free information that’s loosely accurate to more reputable paid results. At the same time, conversations about salary between friends and colleagues are becoming less taboo, as workers realize that pay transparency usually works in their favour. The result is a more informed workforce who has greater insight into the pay scales available to them in a broader job market.
“There’s also a little bit of a risk factor in that, if people don’t have full context, it makes it very challenging for organizations,” says Reinhardt. “If companies are not transparent in-house as to how they’ve built their comp structures, where the market data is coming from, how you’re progressing within your salary and how promotions are made up, they’re always going to be held hostage.”
Building a Transparent Ladder
A strong compensation structure with clear salary bands (a.k.a. ranges of pay) can help you have an open conversation with current and potential employees about where they stand and how they can advance within your company. Reinhardt refers to it as a “compensation philosophy,” where you don’t necessarily have to disclose what individual team members are earning, but you provide clarity on what is available and what’s required at each step to earn more.
Reinhardt believes that being clear on your compensation philosophy conveys the message that this is “how we’re valuing and rewarding you, how you’re making progress. Here’s what we need to see. And here’s how you can move forward.”
This doesn’t just enable employees to understand why you’re compensating them at a certain level, but it also clearly illustrates what is needed to progress within the organization. This demonstrates your commitment to developing in-house talent and your recognition that many team members want to grow — and they can expect to do so with your organization.
It’s Not Just About the Money
Showing your team that you are working with them to achieve their goals is particularly relevant when many employees have felt stuck during the pandemic. The obvious path to change is to leave and start somewhere new, but that may not ultimately be the solution that all employees need or even want.
There are many compensation levers available to create a plan that engages and motivates talent. This is especially relevant when bringing back into the workforce workers who exited during COVID — statistically more women than men. Some people are less concerned with money and prefer flexible schedules, robust benefits, rapid advancement, invigorating team culture and more. Valuing someone goes beyond boosting their paycheque. There are several options to improve an employee’s work experience and incentivize them to stay.
Developing collaborative relationships with your employees that are built on trust and respect will help you learn what motivates them and how you can provide compensation that resonates with their needs. Reinhardt frames salary negotiations as a conversation between two parties seeking to agree upon a mutual benefit, rather than the old school approach that’s more like a battle to be won or lost.
“Really listen in to what your conversation partner actually wants,” says Reinhardt. “What are they trying to achieve?”
Active listening skills are essential here in to get honest, useful answers that you can learn from and adapt to. Empowering employees by making them feel safely seen and heard gets you closer to understanding who they truly are and how you can keep them happily on-board your team. This applies to new employees too, as you seek to inspire and excite them about being part of your company’s culture and growth.
It Takes Two
“Both parties have a role to play,” says Reinhardt. “Companies should take the higher road and be more open, transparent and upfront, but also as an employee, or as a potential candidate, there’s nothing wrong with saying, ‘so, I’d love to learn more about your compensation philosophy.’ ”
The more we expect these policies to be in place and can ask for information about them, the more insight companies will have into what is hitting the mark and what isn’t. Creating fair, equitable workplaces requires both sides to communicate about compensation, forming a new standard more effective at helping organizations and employees achieve their goals.
Erin Skillen is the founder of content4good, where she collaborates with businesses and organizations to foster employee engagement and well-being, diversity, equity and inclusion and empathic leadership.