What Is The #1 Challenge Facing Senior Leaders In 2023?
The answer? The retention and acquisition of top talent. With the current unsettling global economic ‘climate,’ signs of recession, effects of the Great Resignation, continued increases in interest rates, the highest inflation in the past 40 years, how do you build a solid people strategy? In truth, all are impacting supply and demand disparities for critical roles and skill sets.
There is no surprise that the war for talent directly impacts any companies’ Compensation strategy. HR is paying careful attention to compensation planning that has included higher salary increase budgets in 2022 and continues for 2023. In addition, non-financial rewards are being addressed to keep pace with the future of work that is here to stay.
The hardest hit is the technology industry with planned reductions in force. Other industries are assessing reductions to combat an impending recession. But top talent needs to be rewarded and rewarded well to retain them. In this current job and skills market, expect the unexpected.
There is a juxtaposition today between salary increase projections (the highest in years) and unprecedented high inflation rates. Salary increases cannot keep pace with inflation on a global basis. The reason? Salary increase budgets are not based on cost of living. Rather, they are based on the cost of labor. The conflux of today’s labor market is unprecedented: inflation is at a 40 year high, unemployment is remarkably low, and an economic slowdown remains a concern.
Compensation strategy is part art and part pragmatism. Using financial and non-compensation may be the most holistic way to manage the best retention and acquisition outcomes.
Salary increases are required to remain competitive. Other ‘builds’ to a competitive compensation package can include one-time bonuses to accommodate inflation, sharing in the reimbursement for cafeteria benefits, supporting commuting costs, helping with education costs and day care costs. Increasing talent development programs, such as reskilling and upskilling have increased retention for many companies with great success.
These additional ‘builds’ are showing that companies are making the decision to formally move to hybrid or full time back to office decisions. The Future of Work
With so many obstacles going on at the same time, there are no tried and true answers to ensuring a solid game plan for talent retention and acquisition. Remaining flexible and staying on top of the changes happening daily will allow companies to win the war for talent. A crucial support is having reliable data to help steer the course. Business leaders and managers need to communicate their needs and adopt to HR’s rewards tool to optimize the workforce, execute the right plan and communicate its key components. The future of any company is their people.
MSI’s HR and Compensation Consulting and Advisory Team supports the design and development Compensation Strategies that align to senior leadership goals. Our focus is helping organizations optimize and develop long-term strategies for success.