Login
iscover
Almost 60 per cent of businesses base remuneration decisions on individual or company performance, which Robert Half says will need to change.
Newsletter
Why a new approach to remuneration may be necessary
01 June 2023
•
9 minute read
Basing pay decisions on individual or company performance is an outdated approach and for organisations to stay ahead amid tight labour markets, remuneration needs to be viewed as a form of attraction and retention, says recruitment firm Robert Half.
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Director at Robert Half, Nicole Gorton, said “2022 was an eventful year for employment in Australia as high business confidence saw mass hiring across the nation and skyrocketing salaries.”
“As the market is shifting and businesses are ‘rightsizing’ themselves, companies are taking a more cautious approach to their remuneration policy by predominantly rewarding salary increases based on the performance of their business.”
The firm found 22 per cent of businesses base their remuneration decisions on a mix of performance and tenure, with another 20 per cent purely on tenure.
Ms Gorton said this approach was not fit for the current workforce, and that adopting a more proactive approach was necessary to stay ahead of the competition.
She said by offering salaries that were reflective of the tight talent market, businesses would be better able to bring in skilled talent.
“Even with the rising cost of living in the spotlight, there is no guarantee who will receive a pay rise this year, and how much. Salaries cannot and will not continue to rise at the rate they did in the previous two years,” said Ms Gorton.
“Pay-related decisions have become a balancing act. Businesses need to ensure they are keeping pace with the market rate of roles they are recruiting for and roles that their staff currently hold to avoid losing the skill sets they need to stay ahead of their competitors. But at the same time, they are increasingly scrutinising who receives how much extra pay given the changes in the market.”
The firm said keeping up with remuneration trends is particularly important as 70 per cent of companies indicated they are planning to offer more benefits this year, while 67 per cent said they allow employees to swap a proportion of their salary in return for more perks.
The most common benefits offered were:
- Flexible work schedules (60 per cent)
- Mental health programs (55 per cent)
- Remote work options (52 per cent)
“With businesses putting careful thought and consideration into who will receive a financial incentive in 2023, many employers are turning to benefits as a substitute when a monetary increase cannot be offered,” said Ms Gorton.
“Companies would benefit from looking beyond salary and considering the overall employee experience that differentiates them from their competitors and offsets the absence of a higher salary or pay increase.”
“Benefits that support employees’ work/life harmony, such as flexible work hours, and hybrid or remote work arrangements are likely to be some of the lasting workplace legacies of the upcoming jobs landscape.”
You need to be a member to post comments. Become a member for free today!
