There’s a basic business principle that says if you want to be successful in today’s marketplace you have to give your customers what they want. This is being applied to the issue of employee compensation and benefits. In order to attract and retain talented individuals, the trend in the US is moving away from a one-size-fits-all approach, towards an individual contract environment. An environment that includes important “intangibles” like strong company vision, great management and the chance to work with top-quality teams.
Savvy HR professionals in the US know that despite recent widespread and high-profile layoffs, there are still more jobs than suitable people to fill them and this situation is not likely to change soon. The US Bureau of Labor Statistics predicts a 26 million shortfall between the number of jobs vacated and created in the US economy over the next 10 years (an estimated 55 million) and the total potential employees available (29 million).
The war for talent is therefore anything but over, with the greatest demand being for individuals who are technologically literate, commercially astute and attitudinally agile. These individuals have the bargaining power to demand more of what is personally motivating and valuable to them.
“We have been personalising compensation and benefits packages for years for CEOs and the people who report directly to them, but as the talent issue becomes tougher and tougher we are starting to see lower-level executives request – and get – perks that fit their personal goals and objectives,” says Brent Longnecker, vice-president of Deloitte & Touche subsidiary Resources Connection. He has 17 years’ experience in consulting, design and implementation of innovative performance programmes and is a compensation expert for the US Department of Labor.
“It’s not just about high-tech experts any more but people with key interpersonal skills who will lead organisations into the future. As demand for such employees outstrips supply, we’re going to have to set a premium on attracting and retaining them,” says Longnecker,
Liz Ryan, an HR professional and consultant for the past 18 years, agrees. Until recently she was vice-president of HR at Ucentric, a home networking company based in Boston.
Says Ryan, “We are going to see a big distinction between two types of employees, with the top performers treated very differently and more individually rewarded than unexciting place holders who do little to add to the success of a company. One of the key ways to reward key individuals is with non-tangible compensation and benefits. Having a great mentor as a boss, inspiring leadership, an appreciation culture – all of these things are increasingly important.”
To get a better understanding of how varied employees’ desired deals might be, a recent Towers Perrin Talent Report sub-titled, New Realities in Today’s Workforce asked respondents about their priorities. Of the top answers, 42 per cent said work-life balance is a priority and 28 per cent were most interested in long-term skills development.
“Research we have conducted shows that, for three years in a row, personal and professional development come out high on the list. Yet less than a third of companies have career development programmes,” reports Linda Pittenger, president and CEO of People Cubed, a Gartner HR consulting firm.
“I separate benefits into two categories. Concierge services and daycare are employee satisfiers that make people happy but are not the reasons why they join or leave a company. What’s really important to people today – and what drives turnover – are things like career development, leadership vision and mission and having a great boss.”
But what if you work in a multinational corporation where pay and perks are designated by a higher power and the HR function is just to administer them?
“If HR professionals want to make an impact on the issue of retention they must use whatever compensation and benefits leverage they do have,” implores Ryan.
“It’s always possible to exert an influence with regard to intangible rewards – it’s just a question of finding out what’s important to a person. Maybe it is arranging for their manager to give them more stretching assignments, or have more flexibility in the hours they have to be in the office.”
Linda Pittenger says the HR community needs to have a greater appreciation of the importance of employee life-cycles. “The average IT professional used to stay with a company 48 months; now it’s more like 34 months. It’s time to blow up the HR boxes and understand that each employee contributes a different level of worth to the success of the organisation during their engagement – and reward them accordingly.”
Brent Longnecker believes HR professionals who resist the tailored approach are missing a golden opportunity for their own professional development. “If HR professionals want to be invited to the strategic round table, it’s on this issue they will shine. Tailoring compensation and benefits according to an individual’s talent and value is challenging and involves much more work and creativity than a one-size-fits-all approach. But now is the time to stop being so tactically reactive and show the CEO, board and shareholders how much HR accounts for a company’s revenue.”