Research by Korn Ferry found there are major disconnects in many talent acquisition departments. Their 2017 global survey of over 1,100 hiring professionals unearthed that only 39% of recruitment teams are aligned to business objectives and 29% admit to having no strategic workforce plan to inform future talent needs from business strategy. Is a lack of sophisticated tools to blame for this misdirection?
Before we get too far into that, it’s only fair to mention that talent acquisition and compensation development is becoming more complicated. There isn’t just one universal formula for determining the best employee compensation and benefits. The best place to start is by looking at both the internal and external factors that affect compensation.
What’s Behind Compensation?
To understand what stands behind compensation decisions, companies must dig deeper into their own strategy and compare to the overall workforce.
Internal Compensation Factors
Compensation planning is unique to each company as well as the individual who is being hired. Some internal factors that can influence compensation are:
- Current company talent budget
- Business strategy/makeup
- Business need
- Details of desired hires
External Compensation Factors
Of course, internal factors aren’t all that’s at work. The economy, the local market, competition and so much more can dictate what compensation will both attract and maintain a positive relationship with employees and the community. Specifically, these factors carry a great deal of weight in determining the right compensation:
- Location of your business
- Location of the employee
- Employee contract
- Benefits offered
What Does This Have to do with Tools?
Korn Ferry’s research found that only 46% of hiring teams use video interviewing and assessment tools and a mere 26% of those teams actually allow the data those tools provide to direct on-boarding and development strategies. It’s fair to say, many companies aren’t using technology to its fullest advantage even when it’s part of their process.
Check out our guide on how to build an HR compensation budget for a permanent workforce.
Moreover, with that trend in place, there’s a good chance those teams are overlooking details of those processes and making uninformed decisions because of it. Your organization should have a method of gathering and understanding those basic internal and external factors. Overlooking one could mean financial deficits.
Using Technology to Manage Compensation
Sometimes it’s not about adding more tools and technologies so much as understanding your organization’s needs and aligning them to capabilities. The factors we listed above should already have you thinking about business strategy and what that means for your talent acquisition. If you fear you might not have enough tools at your disposal or are simply unsure of the right tools for a compensation strategy, ask yourself these questions:
When it comes to developing employee compensation packages, do I have a way to know how...
- Our company’s location affects average income
- A remote worker’s location affects average income
- Specific skill sets affect average salary
- Individual experience level affects average salary
- The current industry standard is affecting average salary
Further, if your organization works with contingent labor, do you have a way to monitor all of the above but on the level of a contractual basis? For instance, contingent laborers are sometimes hired to provide specialized skills or project-based assistance. In those cases, calculating compensation can require more research into pay rates. If your organization enlists the help of third party staffing agencies, will you have the means to understand the right pay rate for an employee and how that influences the bill rate your organization sees?
Read Embracing Tech to Manage the Contingent Workforce for a more in-depth look at managing contracted workers.
If you feel like you lack an up-to-date view of the local or global workforce market, understand that there are tools to take control of your talent acquisition budget. In fact, PeopleTicker can provide answers to all of those questions as well as help your organization better negotiate partnership bill rates, forecast labor costs and develop market rate cards all in real-time and for the added benefit of developing an informed workforce management strategy.
Compare your labor costs to market rates instantly with PeopleTicker's Private Labor Index: