Compensation practices are starting to go through a major transformation that is driven by the need to more effectively engage employees. It’s enabled by flexible cloud technology solutions that allow companies to rethink traditional compensation approaches, and it’s tempered by increasing demands for equitable compensation across employees.
This transformation is increasing the demand on compensation professionals to manage three challenges:
- Maximizing the value of novel compensation methods that leverage things like spot bonuses and nonmonetary rewards
- Giving managers greater autonomy to make compensation decisions while still ensuring these decisions are appropriately made
- Ensuring employees perceive compensation practices as fair and motivating.
To understand how organizations are navigating these changes, the Human Capital Management Research team at SAP SuccessFactors is conducting extensive interviews with compensation professionals, managers and front-line employees. The results suggest that, to survive major shifts in pay philosophy and practice, companies must be proactive in preparing for them. This may require significant adjustments in how companies plan for, monitor and communicate compensation decisions in general. Here’s a peek into 4 lessons learned so far.