About half of the world’s employers report that they are effectively meeting each of the six main objectives of their compensation programs, as it is the most frequently cited reason why employees come and stay with an employer.
This is according to the 2024 Pay Performance and Design Study conducted by WTW, a global consulting and brokerage company, published on its website.
The survey found that among the top six objectives related to the effectiveness of compensation programs are employee attraction, employee retention, promoting fair compensation among employees, promoting competitive compensation compared to employees in other organizations, alignment with business strategy, and rewarding employees for performance. this year, about half of employers report that they are effective on two of these goals, and less than half are effective on each of the other four.
However, related research shows that 48% of employees cite pay as a top factor in attraction and retention – the most frequently cited factor for both, and more than half of employees (56%) would consider another job offer for better pay.
“Organizations may not have been able to focus on the factors that affect pay program performance over the past few years, given the recent dynamics of the labor market,” said Lori Whisper, managing director and global head of Work & Rewards solutions at WTW.
This gap is probably due in part to the changes that have affected the nature of work over the past few years. Labor market conditions such as talent shortages, generational change and new work patterns have contributed, as have socio-economic trends such as the global pandemic and high inflation.
In addition to these external factors, the lack of internal communication affects the overall effectiveness of the payment. Fewer than one in four say they effectively communicate how employee pay is determined. What’s more, more than half of employers (58%) believe that declining wages are a problem, and the same percentage believe that it will become a problem in the next few years.
Among companies that have updated their compensation philosophies in the past five years, the most commonly cited reasons for these changes are improving engagement or retention (69%) and improving the employee experience (51%). Other reasons include ongoing or regularly scheduled reviews and updates (47%), increased employee understanding (45%) and increased pay transparency (44%).
