After many months of COVID, a challenging economic context has set in: inflation has returned, energy prices have risen, supply problems and even shortages. At the same time, on the European labour market, the economic recovery is marked by a fall in unemployment, but with strong pressure on hiring, particularly for technical and managerial profiles.
Wages are set to rise in order to maintain purchasing power and to make companies that are struggling to recruit more attractive. In this context, all the indicators are in line for employees‘ demands to be exacting and for the 2022 negotiations to be tough.
The prospect of a generalised increase can only frighten companies, which do not necessarily see it as a guarantee of efficiency in terms of talent retention or ability to attract talent. It is therefore time to look at the remuneration package, a tool that rewards the employee’s performance as expected by the company on the one hand and retains talent on the other.
According to the Randstadt Employer Brand Research, Global Report 2021, remuneration and benefits are the most important criteria for Europeans when choosing an employer. It is therefore appropriate to pay special attention to this. By deploying a relevant remuneration package, a company compensates a (sometimes less attractive) remuneration with other benefits in order to differentiate itself from its competitors. For the same salary, the remuneration package makes the difference in attracting and retaining talent.
The more the remuneration package is relevant and part of the employer’s strategy, the more it needs to be communicated.
This is especially important when recruiting an established person. They know what they have to lose by changing employers, so they need to understand what they will gain in return.
You can offer the best remuneration package, but the effect is ineffective if you do not properly communicate it. The ideal communication tool is a document given to the employee setting out all the elements that make up his or her remuneration in addition to the basic salary. We are not talking about a secret document, but one that is accessible to everyone, and that will not be afraid to be shared on social media. It includes bonuses but also benefits. This document is not required by law, but it becomes indispensable as soon as you link remuneration package with employer branding.
In the remuneration package we will find fixed remuneration elements such as the qualification salary or the 13th month / Christmas bonus; as well as all the elements that make up the performance salary (e.g. target bonus, performance-related bonuses).
Depending on the economic performance of the company, part of the profits are redistributed to all employees. This includes pension savings products as well as the profit-sharing bonus, which is mandatory in some countries for large companies. These elements of the remuneration package encourage collective effort.
It is also possible to offer stock options or shares to employees in the remuneration package. Share ownership gives employees a certain amount of decision-making power over the strategic choices of a company, which helps to make them fully involved in the economic success of the organisation and strengthens their feeling of belonging to the company.
The marginal remuneration package is the most difficult to quantify for an employee and yet it can make a huge difference once it is detailed in the communication tool. It includes the pension scheme, luncheon vouchers, benefits in kind, fringe benefits, but also elements that one would not think of such as training, access to a gym or the possibility of benefiting regularly from the services of a therapist in the workplace.
These elements of the remuneration package should be highlighted to increase your attractiveness and present your remuneration policy in a transparent way.
Our societal life is tending more and more towards customisation: customisation of the customer experience, of the smartphone, of employee recruitment; customisation of remuneration will not escape this trend, especially with the arrival of generations Y and Z who have grown up in a customised world.
However, customising remuneration is not an easy task as it involves both social law issues – maintaining a certain degree of equity between employees regardless of their individual performance, for example – and economic issues linked to the company’s performance.
The individual expectations of employees differ according to the generational gap, personal family situation and constraints. All non-performance related benefits may be considered soon as compensation components that employees can choose according to their individual expectations.
By orienting the company’s remuneration policy towards personalisation of remuneration, you offer employees benefits that are better suited to their individual expectations
Customised remuneration does not necessarily mean that there will be inequalities between employees. The communication tool can serve as a guarantee of fairness between employees in equal positions, to show transparently that everyone is getting what they want from different pay positions.
Each employee benefits from a remuneration decided individually according to his or her skills and performance, but for the benefits offered in the company, it is necessary to know how to adapt to the different expectations of employees while maintaining equity to avoid dissatisfaction.
If you too are considering a restructuring of your employee remuneration as part of an HR strategy, Copper Oak will be pleased to help you to examine the options available and to develop the right communication for long-term success.