Compensation Management Can Take Your Company to the Next Level
Compensation is a hot-button issue regardless of the industry, the skill requirements of the job, or the prestige attached to the position. Employees contribute their talent, time, and individual resources to meet corporate goals. In return, the company offers compensation packages that include wages, non-wage benefits, and other monetary and non-monetary components. Compensation management aims to reward the talent pool to the greatest extent feasible based on a structure that prioritizes talent attributes that are key to meeting organizational goals.
Impact of Compensation Strategy on Talent Management
It is in the best interest of the organization to offer a compensation package appealing enough to attract and retain the best talent for any given position. The prescience and ability to do so is fundamental to effectively managing the talent pool from entry level to executive positions.
Not surprisingly, India’s business sector reflects the perceived impact of compensation strategy on business operations. In the Asia Pacific region, India’s rate of salary increases tops all other nations in this area. The rate of increase was 10.3 percent across all industries, which outperforms the numbers reported by APAC nations. Furthermore, the sector that recorded the highest gains was the early stage/startups sector, reporting average salary increases at 15.6 percent. Talent acquisition is highly competitive in this sector. Talent retention is even more so despite stringent non-compete clauses in employment contracts.
Compensation strategies may include salaries, salary increases, performance bonuses, stock options, and benefits budgets to maximize the payback from talent acquisition and yield the maximum profit per employee or per hour worked. Employee morale, employee turnover and promoting employee loyalty and team spirit are all tied to compensation in one way or another.
Compensation Management for India’s Red-hot Sectors
The Annual Salary Increase Survey prepared by Aon Hewitt indicates that India’s most dynamic sectors will see marginal movement as far as salaries, indicating market maturity and stabilization of demand and supply in the talent pool. Instead of significant movements in the rate of change, compensation is expected to normalize within a narrow range between 10 and 10.5 percent.
What this says is that human capital managers need to find a more efficient system of compensation management that can examine the finer details of talent attributes vis-à-vis the specific needs of the organization. In the startups and emerging companies sector, providing an appealing yet workable compensation plan remains a big challenge due to resource restrictions and tight competition. The situation is mirrored in the second and third-ranked sectors, life sciences and entertainment and media, with projected salary increases of 11.6 and 11.2 percent respectively.
Incentive Programs for a Changing World
Human capital resource management is a complex structure involving talent acquisition and retention strategies, using tools such as performance appraisal software, time tracking software, and Cornerstone Compensation. Incentive programs are developed based on intangibles such as professionalism, performance in terms of meeting goals, and progressive skills development as well tangible metrics.
While India is on track to be the APAC nation with the highest anticipated salary increments in the region in 2017, the trend will be confined to a narrow range. The challenge for HR managers is to introduce efficiencies in compensation planning through automation. Manual processes are time consuming, error prone, and largely inefficient. Cornerstone Compensation is a fully automated solution that centralizes the process of creating strategic compensation plans so that you can optimize your compensation budget, prioritizing your spending on the acquisition and retention of top talent.