Is your firm’s approach to compensation effective in today’s rapidly changing talent market?
As the war for A/E/C talent continues to intensify, firms may struggle to fill positions and hire the right people.
But a new Harvard Business Review article suggests that may not be caused by a talent shortage. Instead, it might be because your firm’s approach to compensation hasn’t evolved to be effective in today’s rapidly changing talent market.
“Traditionally, compensation models have been shrouded in secrecy, with the employer holding all the cards,” writes author Tim Low, vice president of marketing at PayScale. “But a few big changes over the past five years have left companies off balance and unprepared to compete for talent effectively.”
He cites several factors at play:
- More jobs are becoming highly specialized as technology advances and “micro-industries” evolve. As a result, it’s harder to compare one candidate to others in the market.
- Because it’s no longer uncommon for a single team to be distributed across the world, physical location may no longer be the primary factor that drives pay for a specific job.
- A talent market increasingly transcends not only geographies, but also multiple industries.
- Employees and candidates are more informed than ever about what they’re worth thanks to social networks and online compensation services. As a result, employers need to be better prepared to back up their compensation offers with real data.
In the end, the single biggest driver of compensation today is not the job title, but rather a specific candidate’s own skills, achievements, and capabilities.
“While it’s important to price your jobs according to your compensation budget, it’s more important to understand various attributes will drive different pay requirements,” Low writes. “Employers need to become more precise about their offers to attract and retain the right talent.”