For many decades Salary and Compensation is an integral part of Human Resource Management Practices. Compensation management has been designed to increase employees’ motivation and performance and keep them engaged to work. It is the real company investment, which results in a profitable business.
According to the Society of Human Resource Management (SHRM), employees must be offered a variable pay rate in addition to their base salaries. Annual incentives and rewards were a necessary part of any employee’s compensation. But the year 2020 has forced salary and compensation to take a 360-degree turn. Many organizations are now redesigning their compensation management system. The 2020 pandemic situation is the biggest challenge for companies. The compensation system is facing many problems, yet there is a chance of increasing job opportunities in the market. The S&C career is growing at a fast pace. Payroll and Compensation is the key department of any organization.
Companies design their compensation management system to increase employees’ motivation and performance that ultimately helps attain the organizational goals and objectives. The year 2020 has changed the past trends due to the two biggest transformational events, i.e., pandemic and the entrance of Gen Z in the market.
Both events caused a change in the nature of work, which adds new demands and competitive compensation strategies. Many small businesses faced a lot of problems in the compensation system. Pandemic shifts the office work to the work from home, and companies are now moving towards the part-time job and visiting faculties. Consequently, Gen Z is more independent and entrepreneurial in nature who focus more on technological implementation in their daily lives. They are more towards part-time jobs and setting new trends in the market.
Today, compensation depends on how an organization values its employees and how employees value their organizations. The 2020 compensation trends have been evaluated and compared to the past trends based on the Global Human Capital Trend principles. These principles include purpose and meaning, transparency and openness; ethics and fairness; growth and passion, and collaboration and personal relationships. These principles helped to find the gap between the compensation design and its implementation. To overcome these gaps, many actions have been designed to fit the worker’s needs and increase market competitiveness and sustainability.
Redesigning the compensation management system assists the organization to ascertain an uncertain environment and make effective trendsetting decisions.
Submitted by Kabsha Arif, Date 01 January 2021.
