Money talks on attraction and retention but employees not sold on pay programs: WTW
Willis Tower Watson’s (WTW) new Pay Effectiveness and Design Survey has found discrepancies in the effectiveness of pay schemes among global employers. UNLEASH talks exclusively to WTW Senior Director of Work and Rewards, David Helier, to find out how HR leaders should approach improving pay programs.
Just one in three of the core components of pay effectiveness are currently being met by employers.
Meanwhile, employees still view pay as the top factor when joining or staying with employers.
UNLEASH speaks to WTW’s David Helier to get the inside story of its latest research into pay effectiveness.
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Employers and employees are at odds over the effectiveness of current pay programs, according to the 2024 Pay Effectiveness and Design Survey from WTW, which surveyed 1,900 companies, representing more than 30 million employees across 65 countries.
The report found that of the six core elements that comprise pay program effectiveness – attraction, retention, fair compensation, competitive compensation compared to competitors, aligning with business strategy, and reading current year performance – around half of employers said they are effective in two of the six areas.
Less than half of employer respondents indicated that they are effective at each of the other four factors.
Commenting on the research, Tom Helier, Senior Director, Work and Rewards at WTW, tells UNLEASH that pay is simultaneously both a top expense for employers and the most significant reason that candidates choose to either join or stay with an organization.
“HR leaders are tasked with a tricky balancing act – designing reward plans that align to important business goals, while delivering fair and competitive pay that employees understand and value,” Helier comments.
It’s where business acumen meets empathy, driving both retention and results.”
Getting to grips with business and employee priorities
Within its research WTW noted that the disconnect between pay schemes and employee expectations is due, in part, to changes that have affected the nature of work in recent years.
These include shifts in labor market conditions, such as talent shortages, generational shifts, and new work models, as well as socio-economic trends such as high inflation and the COVID-19 pandemic.
WTW also found that a lack of internal communication is having a detrimental impact on pay effectiveness.
Less than one in four employers indicated they are effective at communicating how employee pay is determined.
Meanwhile, over half of employers (58%) think that salary compression is an issue and a similar percentage think it will be a problem in the next few years.
HR leaders can start by getting to grips with business and employee priorities, understanding where there’s common ground and where there are gaps to be bridged,” Helier exclusively tells UNLEASH.
He recommends employers make efforts to understand employee perceptions of pay and to address any concerns, while also improving data and analytical capabilities to identify how to best draw value from pay spend.
In addition, Helier says employers need to clarify “the purpose of different pay programs in the context of broader total rewards” and communicate a “point of view on, and plan for, improving pay transparency.”
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John Brazier is an experienced and award-winning B2B journalist and editor, with a strong track record of hosting conferences, webinars, roundtables and video products. He has a keen interest in emerging technologies within the HR space, as well as wellbeing and employee experience topics. Prior to joining UNLEASH, John both led and wrote for various global and domestic financial services publications, including COVER Magazine, The TRADE, and WatersTechnology.
Get in touch via email: john@unleash.ai