“Show me the Money!” (Jerry Maguire)
As organizations enter budget season, governments announce large inflation rate increases and the great resignation is underway, we are still managing our way through COVID-19. The pressure on people hasn’t let up by much, and this includes concerns about compensation. Leaders need to be aware that employees are expecting to see their 2022 compensation adjusted more than just a small cost of living increase.
Compensation is a blend of art and science and relies heavily on leaders and HR to understand how each role fits into the organizational structure, ensure internal and external equity, and fully understand which roles are comparable. With the base structure in place, leaders need to layer on more complex internal and external factors impacting pay.
Rather than wait until later in the year to rush through compensation planning, we can help you get ahead of the rush with a concrete plan designed with your organization and your employees in mind. Total Rewards need to be aligned with your organization’s culture, so don’t settle for cookie-cutter approaches to a fundamental pillar.
So, what needs to be considered in 2022?
- The Canadian Federal Government is predicting a 4.4% increase, with some items already up 5% (produce), 30% (oil & gas), and more increases to come. This is an 18 year high and could impact many households used to record low inflation.
- While more employees are working from home and saving on their commute, winter is coming, and employees will be paying more to heat their homes during the day and continue to use more electricity to run technology.
2. Total Rewards Communications
- Communicating the components of an employee’s total rewards (compensation) can help employers educate employees about compensation and highlight the actual full ‘value’ of a role.
- Organizations may also consider how to recognize the shifts in how we work now in their compensation plans.
3. Skills shortage
- Technology advances continue to demand new skills of employees (AI, Stack developers, and machine learning) and older skills (critical and design thinking, communication, and problem-solving). Reward planning can be beneficial in addressing these challenges
- The Great Resignation is impacting employers but it is different in Canada. Our resignations are age-related (Boomers), safety (Retail/Medical front-line workers), vaccination regulations, and incivility (increases in mental health concerns).
In times of change, it is also important to recognize what hasn’t changed. The need to be recognized and rewarded for loyalty, commitment, and taking risks for the organization is top of mind for employees. While money is important, a reward that is meaningful to employees will strengthen the working relationship. Studies show that once an employee makes enough money to cover living expenses and a little extra, cash isn’t the most important thing.
With more than 20 years of compensation experience in a variety of industries, we can help you develop your corporate compensation philosophy and communication plan. Start 2022 with the peace of mind that your compensation concerns have been addressed.
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