Compensation Trends for 2020
If you’re an employer who manages and hires employees, you may be wondering about compensation trends for 2020. You’re smart to ask; understanding what’s on the horizon will guide your leadership team in how best to lead your organization in the New Year.
Why Understand Compensation Trends for 2020?
As a 60-year-old recruitment firm, we’ve experienced a lot of trends through the years. Paying attention to them is a key to any organization’s longevity. We’ve also watched many employers lose out on good candidates because they were not in touch with what mattered to the professionals they needed to hire. For everyone’s benefit, SHRM (Society for Human Resource Management) has identified five compensation trends for 2020 that reflect current issues of concern in the workplace. Here’s a summary of them:
Pay Equity
One of the hottest topics in HR recently is gender pay gap and broad pay-equity analysis. More businesses are not only looking at pay equity. They’re also exploring potential bias or gaps to determine how decisions are made to recruit, hire, and promote team members, give raises, and distribute noncash rewards.
Variable Pay to Reward Merit
Compensation trends for 2020 also include more bonuses to more people. Sounds expensive, right? Don’t panic! The days of automatic, large salary increases are gone. Instead, companies are paying extra only for desired results. To keep costs down, more business owners are setting employees’ base pay at market value and awarding variable-pay bonuses based on performance. Although money isn’t the only thing that drives people, bonuses are a great way to keep team members aligned and engaged in their work.
Transparency on Pay
Are your team members asking each other how much they make and how much they were bonused? It’s happening everywhere, making it very important that management be transparent about pay–and this doesn’t just mean salary. If you don’t have an understandable bonus structure based on objective performance metrics, you’d better get one! Your employees need to be able to trust you and have honest conversations about how pay and bonus decisions are made.
Frequent Performance Rewards
More employers are not waiting until the end of the year to hand out rewards for projects or special assignments that have been completed. It makes sense! The closer the reward is to the achievement, the more it motivates the recipient. Examples of rewards are gift cards, vacation vouchers, additional paid time off, or one-time cash incentives tied to a percentage of pay. However, the caution is given to hold back on early rewards for annual targets in case subsequent events cause the yearly goal to be missed.
Individual State Policies
Compensation trends for 2020 wouldn’t be complete without the intervention of politics! It’s predicted that states will continue to add to and go beyond the policies established by our federal government regarding minimum wage and overtime requirements. Regardless of which party is in charge of any branch, governors seem to feel the need to establish local policies to effect local citizens. Soon, your state’s minimum wage could well exceed the federal one if it doesn’t already.