Written by Alex Botha on November 28, 2019.
Organisations must offer more than competitive pay if they're to attract the best talent in the market. Now, it's about what else you can offer.
In an increasingly dynamic marketplace, where competition for senior staff is fierce, paying market-comparable rates of pay is becoming almost a hygiene factor for top talent; it is their expectation that their pay will be, at the very least, comparable to what they would receive working elsewhere. Senior staff are well informed of how they should be compensated and employers must increasingly look at what else they can offer to attract top talent and ensure that the best people remain engaged and integral to long-term strategic direction.
With the evolution of websites such as Glassdoor, and the legislative requirements for transparency of reporting in publicly listed companies, it's easier than ever for senior executives to gather intelligence around what constitutes competitive pay in the New Zealand market. Today's top talent expect an appropriate remuneration package.
In order to be attractive to the best talent in the market, organisations now must look at what else they can offer – a concept commonly known as the Employee Value Proposition (EVP). What the employee gets, in return for what they give. What they "get" includes not only traditional concepts of reward, but also the experience of working in that company, the way its leadership helps employees and the content of the work itself.
What makes an organisation attractive to top talent?
Keeping with the same premise, research by McKinsey posits that if your EVP is truly stronger than your competition's, you will likely attract and retain the best talent. McKinsey concluded that there are four elements most valued by top talent.
- Great leaders: Leaders should be inspirational, empowering, supportive and focused on development.
- Great company: Organisations should have good values, culture, reputation and a social conscious.
- Great job: A company should provide opportunities for career advancement and personal growth that mean something to the employees involved.
- Great rewards: Rewards should include a good salary and financial benefits, but also non-financial recognition.
As the diagram suggests, tangible rewards in the form of wages, benefits and perks still make up a big part of the equation when attracting and retaining top talent within your business. However its impact will be strongest when it sits within a company that is also delivering on non-financial elements, such as leadership, culture and job content.
How do HR and leadership teams ensure the offer attracts and then retain top talent?
Increasingly, we're seeing a shift toward developing a 'people experience' over traditional HR practices. HR teams are no longer seeing people only as "resources", but are recognising that, like customers.
Employees have multiple touchpoints with their employer that contribute to their overall experience.
The recruitment and onboarding process remains a significant touchpoint, but there are many more ways that employees connect over time. Leadership have to work out how to keep them impressed and happy, not only so that they stay with the organisation in an engaged way, but so that they recommend it to others as well.
A people strategy also means maintaining a focus on succession planning and talent pipelining where emerging talents within the business are highlighted as potential future leaders and they are supported with development opportunities. This needs to not only align with individual career goals but also prepare the organisation for contingencies. Oftentimes, implementing a remuneration structure not only allows you to competitively benchmark appropriate levels of pay, but it also provides a useful framework for professional development discussions in highlighting where we see an individual's role in the organisation's present, as well as what needs to be done to grow that employee in the future.
At a strategic level, the entire board has to buy into the idea that people need a positive experience and an attractive EVP. They must be willing to innovate and initiate change. However, day-to-day, managers are responsible for implementing the organisation's culture and values, and must receive the appropriate training to empower them to do so.
Protecting and retaining at-risk talent
Alongside the shift towards a people experience approach comes new ways of analysing at-risk talent. In the US, many companies are investing heavily in people analytics - looking at which employees are visiting recruitment sites for example, or posting on their social media profiles about their career.
Even without the capability to launch a full-scale people analytics operation, organisations can take steps to identify and protect at-risk talent they'd like to keep. Internal clues are everywhere. People to flag include those dissatisfied with their pay review, or who have repeated issues with managers, for example.
However, above all, retaining talent comes back to the importance of the EVP. Even where individuals looking to leave are persuaded to stay with a pay rise, research shows they'll often leave a few months later anyway because it's not all about pay. Retaining the best people is about finding a way to ensure your company offers a better value than their competitors.
Working with Strategic Pay
Strategic Pay has over 30 years’ experience in pay and benefits within the New Zealand market and provide advice around all aspects of the employee value proposition, suited to your organisation's culture, stage of life cycle and budget. While we do have "off-the-shelf" options available, our national team of consultants work closely with clients to ensure your remuneration policy and approach fits with the organisational culture you wish to aspire. Get started by contacting us for more information.