Top Business And Technology Predictions In The Compensation Space For 2021
2020 is finally in the rearview mirror and thank God. Had anyone been asked to predict business and technology trends for 2020 back in December 2019, no doubt their predictions would have been wildly inaccurate.
I am squarely against making predictions, since I am no soothsayer and can barely even predict what I am going to have for lunch at 11:45. For now, let’s assume that 2021 will be of a more predictable and familiar flavor. Based on the dozens of conversations that I’ve had with clients over the past year, I have pulled together some thoughts on what themes we might expect to see maturing in business and technology over the coming year. Many of these are already taking shape and would most probably ride out any unexpected economic swerves and unforeseen factors.
What I See Maturing
Employee experience will continue to take center stage. The Covid-19 pandemic has catalyzed organizations’ focus on employee experience, with remote work making employee morale and satisfaction more important than ever to keep employees engaged. Companies will need to work harder to communicate effectively, create meaningful connections between the employee and their contribution to the organization, and establish a stronger sense of purpose which is valued above all else by generation Z. This also means revisiting your total rewards program, making sure it speaks to your culture and that performance is rewarded on an individualized basis. As with all other parts of their lives, employees expect this to be communicated and available through mobile platforms.
Better data means better decision making. With organizational API strategies making data more accessible, compensation processes and employee experience can leverage data from HR, operations, finance and sales that were once fragmented and dispersed. With an increase in the velocity of data, there is also the opportunity to “nudge” managers in real-time to make salary adjustments at the pace of the market and also to “nudge” employees towards behaviors that will assist them to meet their performance targets. What good comes from telling someone they have missed their targets? Alert them and let them know how to achieve their targets in advance.
Purpose-built and best-of-breed technologies win-out over monolithic HRIS platforms for Compensation Management. The Covid-19 pandemic has forced HR and compensation to reflect on their processes and accelerate the move towards more secure digitization. Due to the inherent complexity of compensation programs, best-of-breed technologies offer the optimal path forward due to the flexibility and adaptability they allow. Standard APIs allow those platforms to be integrated together into your HR ecosystem. So why spend tens of millions of dollars on an HRIS to only have your largest P&L item - compensation - managed in spreadsheets?
Digital in HR and compensation will finally catch up with other business departments. That leap will enable the automation of processes, a more personalized employee experience, and will enable the establishment of a performance-based culture. Performance-based compensation is already a growing trend and will be accelerated by digitization and the inherent benefits it provides.
AI and predictive analytics in compensation will also expand. Overlaying market data across your organization to identify inconsistencies and outliers is only the beginning, being able to predict patterns and preemptively identify high risk individuals will be the next step. With the ability to track performance more closely, annual reviews will slowly be phased out and replaced with ongoing conversations that provide employees with occasional “nudges” used to encourage incremental behavior change, and ultimately maximize performance.
Over the past year, organizations have dealt with never before seen levels of unpredictability. What we can be sure of is continued move to remote and flexible working arrangements. As a result, compensation and HR will need to continue adapting to challenges that lie ahead. Digitization and best-of-breed compensation technologies are ready to provide organizations the tools they need to win the talent war.