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Dive Card:

• While employees identify pay as the number one reason they join and stay with a company, only about half of employers surveyed said they were effectively deliver on their payroll programsaccording to a report released on October 23 by financial services firm WTW.
• WTW said the disconnect is likely the result of talent shortages, generational shifts, new working models, the global pandemic and high inflation that have affected the workplace in recent years. Part of the problem may also be ineffective communication, the report noted. Fewer than 1 in 4 of the nearly 1,900 companies surveyed said they are good at explaining how workers’ pay is determined.
• “Organizations have likely been unable to focus on the factors that drive pay program effectiveness in recent years given recent labor market dynamics,” said Lori Wisper, managing director and global solutions leader for work and rewards at WTW. a statement.

Dive Insight:

The WTW report identified six core objectives related to compensation program effectiveness: increasing employee attraction, increasing employee retention, promoting fair compensation internally, providing competitive compensation, aligning with business strategy, and rewarding employees for performance.

As economic conditions have improved and labor market pressures have eased, companies should make changes to address the factors that play into payroll program effectiveness, Wisper said.

One such problem the report identified was wage compression, which more than half of employers said is a problem and about the same proportion of employers said will become a problem in the next few years.

“Companies should start by updating their compensation philosophy, as it is critical to compensation program effectiveness and can contribute to improved retention of key talent, employee productivity and financial performance,” Wisper said.

Companies that updated their compensation philosophies in the past five years did so to attract and retain employees, improve the staff experience and make gains on pay transparency, among other things, according to the report.