Compensation Conundrums Multiply in 2015

Compensation Conundrums Multiply in 2015Compensation Conundrums Multiply in 2015Compensation Conundrums Multiply in 2015 RossheimIn the competitive environment of 2015, you may have to offer signing bonuses to lure top talent. Coming up with the cash may not be an issue, but what do you do about potential resentment among valuable employees you hired during the recent years of sluggish recovery, with no such bonus? Lets explore this and other pay conundrums as economic growth accelerates and compensationreturns to the front burner.Salary increases are stagnant. The more companies shift to variable or performance-based pay schemes, the less room there is in compensation budgets for old-fashioned annual raises that beat inflation.With annual base-pay increases projected to barely inch up to near 3 percent in 2015, were stuck in the world of cost-of-living salary increases plus variable pay, says Ken Abosch, a partner at human resources consulting firm Aon Hewitt.On the cusp of a power shift. Many expert observers arent convinced that labor market conditions have given employees enough leverage to bring about larger pay increases. We havent quite reached the point where power has shifted from buyer to seller, though were moving in that direction, says Abosch. Its taking longer to hire and some positions are hard to fill.Many employers are holding firm on pay strategy. With unemployment still hovering above pre-recession levels, the overhanging supply of labor in many skilled occupations continues to constrain pay increases, some say. The question for employers is, how long can they hold out?Were a number of years out from the recession and the job market is better, yet theres enough talent out there that organizations dont feel they need to change their compensation strategy, says Elissa Tucker, research program manager for human capital management at business research nonprofit APQC.Companies are saying, we will make substantial changes in comp only in those area s where we feel we have to.Recruiters Its a candidates market. Conversely, perhaps because theyre hired to turn up talent thats in high demand, recruiters tend to see candidates making lots of progress on pay.After many years of stagnation in the job market in terms of employee compensation, its finally an employees market, says Frank Green, president of staffing and recruiting firm ExecuSource.Retention worries could spur bigger pay increases. The prospect of having to give widespread, substantial pay increases just to keep workers has engendered twin worries employee retentionand profitability. The most important objective guiding 2014 compensation decisions was retaining top employees, chosen by 63 percent of respondents in PayScales 2015 Compensation Best Practices report.Workers big motivation to change employers. One pay-equity condundrum for employers Long-term employees who feel theyve fallen behind on pay. Companies havent kept up internally with comp, so 10 percent to 20 p ercent increases are common if you move to a new company now, says Green.Signing bonuses are back, like them or not. Sign-on bonuses are back in spades, says Sally Stetson, co-owner of search firm Salveson Stetson Group. Frank Green isnt happy to hear a candidate dig in her heels on getting a signing bonus.Were seeing signing bonuses, but theyre always difficult to negotiate, says Green. Clients want the signing bonus to come through us, so it doesnt roil internal staff who didnt get a signing bonus.The match game, redux. Employers are more determined than ever to hire the right employee, but theyd better be prepared to make an offer to the right candidate right now. More candidates are getting multiple offers at the same time, says Stetson. And companies are much more amenable to matching outside offers. Theres so much downtime if they lose someone. Other companies philosophically dont like to do it.Stock options have selective appeal. An equity stake in your employer still holds s trong appeal for some workers. Candidates want to be a part of something, and options can give them a tangible feeling for that, says Green. Options are more attractive to very young candidates who didnt live and work through the tough times of the 2008 financial crisis and aftermath.Millennials Show me some lovewith money. Brought up on positive reenforcement then wracked by recession, Millennials have a complex relationship with their compensation. Millennialshave a need for frequent recognition and feedback, so its likely that they expect pay to be feedback on their performance, says Tucker.Wanted Comp experts. With all the pay conundrums that employers face in 2015, professionals who understand both human and technical dimensions are in high demand.Weve seen chief HR officers compensation increasing, says Stetson. Which just shows that attracting and retaining talent is becoming a bigger issue for companies.