When it comes to workplace relationships, communication is the key. Employers have to ensure that there is an enhanced and optimized communication system across the organization and staff members can connect even to them anytime, anywhere. Even a single case of miscommunication can lead to disruption, decreased employee engagement, poor performance, and low retention. One of the most common topics that is often miscommunicated in an enterprise is compensation. It is the foundation of satisfaction and motivation among employees and a tool for employers to attract top talent and retain them. However, employers and employees are never on the same page when we talk about compensation.
Employers and HR professionals experience more frustration and complaints among the workforce over compensation issues than any other factor. As per Payscale’s Compensation Best Practices Survey (CBPR), there is a gulf between employer and employee perceptions on pay. Approx 43% of surveyed employers have agreed that employees are paid fairly while only 21% of employees agree with the above conclusion. This gap in their perception and opinion is the reason for all problems and issues. Hence, it has become necessary to align talent management with compensation management software to enable employees to understand their expectations surrounding their performance and its impact on compensation.
Talent management Process is an integral part of an organization and HR functions that must be seen as a continuous process. It includes various modules and features, such as employee lifestyle management, talent acquisition, performance management, career development, succession planning, benefits administration, compensation management, and more. These integrated features contribute to overall business functionality and strategy in the areas of human capital and human resource management. Reviewing talent management monthly or quarterly will allow a company to determine obstacles, eliminate them, identify performance gaps and slips, take corrective measures, and find the employees who have added to the organizational success.
By aligning talent management with compensation planning will help you motivate your employees to attain higher levels of performance to earn impressive rewards. However, integrating these two aspects is not easy but demands comprehensive knowledge and understanding of these major HR functions. So, let’s start by getting acquainted with the talent management system:
Integrated Talent Management System
A talent management software is an all-inclusive suite that includes the four primary pillars required to manage talent in an organization, namely recruitment, performance management, learning and development, and compensation management. To put it simply, integrated talent management refers to handling traditional HR functions in an aligned manner to strategically leverage talent. The talent management strategy of an organization must resonate with business strategy and goals to add value to an organization.
The base of effective talent management is its robust competency model that guides all the tactics and strategies. By implementing a single talent management system across your enterprise, you can ensure a smooth flow of information regarding payroll, HR, and benefits administration. As you can share the data in real-time and without hindrance, you can enable innovative business growth and enhanced employee performance.
Benefits of Talent Management Solution
We cannot deny that over the years, companies have adopted various HRMS and ERP solutions for improved and value-driven results. HCM software and Enterprise Resource Planning have become a mandate in organizations. However, these systems mainly focus on transaction processing and administration of human resources, including time management, payroll, and personnel administration. There are still a lot of HR functions and modules that need to be covered for efficient development, hence comes a talent management system.
It also pays attention to providing strategic assistance to companies so that they can attain long-term goals in regard to human capital and talent. The software is paired with an applicant tracking system as a standalone or suite of products. In its most comprehensive form, talent management is the implementation of all the integrated systems and strategies designed to enhance several processes, such as acquiring, developing, and retaining people with the required skills and knowledge to meet short and long-term organizational needs. Apart from simplified HR processes and seamless integration with primary modules of HCM, it also offers other benefits, which include:
- Streamlined hiring processes
- Quick onboarding of recruits
- Better employee engagement
- Improved employee retention rate
- Career growth and development
- Improved team dynamics and performance
- Faster integration to company culture
- Leveraging key HR data to meet organizational goals
Compensation Management: A Key Tool for Talent Management
Most assume that the term compensation management simply applies to the amount a company is willing to pay to an employee in terms of money for the services rendered by him/her. However, in this complex marketplace, this concept goes much beyond the basic addressing of the salary of employees. Compensation management is a process to ensure that a company’s salaries and bonuses are appropriate, competitive, and equitable. It plays a vital role in organizational operations, be it large or small. It is crucial for HR as it directly affects employee retention, company performance, the hiring process, and team engagement. Compensation tools also help in managing, determining, and analyzing the salary, benefits, and incentives of each employee and aim to attract, engage and retain top talent by offering competitive and broad compensation plans while meeting a company’s budget.
Compensation managers are responsible for working with data and information of employees along with complex benefits administration regulations, hence are considered a valuable asset to the business’ success. If they fail to deal with bonuses, salaries, and other incentives efficiently, then the people might look for better packages elsewhere, job satisfaction and performance will decline, and other factors would eventually affect the company adversely. As compensation is a key recruitment, retention, and talent management tool, it should be leveraged well to motivate employees to attain their individual and organizational goals. HR professionals and managers can use impressive and effective plans to reward employees for their success and contribution.
The focus of compensation management is to maintain a perfect balance between retaining top talent and staying in-line with a company’s budget. It also makes sure that the team members are paid fairly based on:
- Work performance
- Job market
- Company budget
Best Practices to Integrate Talent Management with Compensation Planning
Aligning talent management with compensation planning is an effective and trusted way to build a workplace environment with dedicated and passionate employees. It encourages them to put in their best efforts to achieve organizational objectives while attaining their personal interests. An employer can leverage the benefits of this integration along with benefits, recognition, benefits to attract, retain, and motivate people.
However, to achieve greater value, employers and HR teams have to follow some basic rules and practices that are important for successful integration. As you move toward talent management system integration with compensation tools, make sure to follow these essential steps:
Build a Pay-for-Performance Strategy
When they link talent management and compensation planning efforts, employers not only provide the workforce with clear and accurate compensation guidelines but also help them understand the value of work and the ways to improve it. Make sure that you use the performance management module of talent management when you opt for a pay-for-performance strategy. It is a tried and proven method, working as a true motivation tactic across the world. In fact, in a recent survey, 90% of companies have agreed that they use the pay-for-performance approach. One important aspect of this strategy is immediate senior leaders or managers as they are the ones directly working with team members and keeping eye on their performance.
However, this method can fail drastically if managers are not trained well as they are often uncomfortable assessing others’ performance and speaking openly about issues related to it. They also lack the expertise and skills required for constructive feedback and goal setting, two components that are significant for a successful pay-for-performance program. Also, ensure that your strategies are combined with applicable data as people want proof and relevant information attached can assist you in the whole process. Your plan should fulfill three criteria:
- Fair and consistent compensation in respect to the value added by employees.
- It should motivate higher-level of performance from all employees.
- An increase in compensation should be done at the right pace, reflecting employees’ current performance and the changes in the labor market.
Incorporate Work-Life Balance
Employees want both tangible and intangible rewards that are essential to living better lives and grow professionally. When you allow them to customize their work-life fit model, it is considered a highly-valued employment reward these days. To testify this, a report has concluded that the most effective tactic to retain, attract, and reward the top talent in an organization over the past years is allowing flexible and convenient work arrangements. Moreover, there are several well-documented trends that state that employees demand greater work-life balance, and flexibility in work culture is a key to attain it.
You must have come across different employees in your company facing varied issues. Some want more family time while others need to take care of their aging parents. Some employees prefer working from home and are more productive that way while others seek opportunities to volunteer outside of work to add more purpose to their lives. You can offer benefits that support these needs and requirements, including free food, flexible work hours, wellness programs, on-site fitness centers, etc. This will reduce stress, improve productivity, help them have better lives, which will lead to happy and satisfied employees.
Improved Experience & Communication
Compensation is an exchange of value and this value is all about perception. So, even when employers build a perfect strategy that compensates employees according to their real value, it will be in vain if they can’t understand it. Hence, proper communication and experience are a must to address the preferences and needs of a diverse employee population. Furthermore, transparency with employees is also important to align their perception with reality. So, the biggest challenge for managers and employers is to find an effective way to communicate compensation plans to their employees efficiently and avoid any confusion and misunderstanding.
Thanks to the internet, companies can provide information instantly to their employees on a single platform. They can have immediate access to all the data and regulations. Many organizations are implementing HCM solutions to accomplish this, so people can just go to the website or self-service portal, mention their details, and get all the information they want within no time. They can also customize a menu-driven mix of benefits according to their preferences and needs, irrespective of their geographical location, and make informed decisions.
Most of you may think that why go through all this trouble when you can simply opt for the ‘talk about pay’ approach and get done with it. Just think about it again. Can you maintain complete transparency and keep away from all misperceptions by simply talking? No. By integrating talent management and compensation planning, you can rely on clear communication, accurate job description, and fair compensation. Employees will understand their true value, get all the information instantly, and feel confident about being paid fairly.
With well-defined strategies in place, there will be a culture of openness and you can bridge the gap in value perception. Lastly, keep the objective and intent in your mind so manage your employees and compensation seamlessly.
Author’s Bio: Alicia works with the editorial team of Accomplish, a leading company offering HR software solutions. Exploring the latest technologies, reading about them, and writing her views have always been her passion. She seeks new opportunities to express her opinions, explore technological advancements, and document the details. You can always find her enjoying books or articles about varied topics or jotting down her ideas in a notebook.