Tis The Season (2011)

Tis the season…for top ten lists and prognostications!  Why that is, I’ve never really understood.  But as we were recently asked what trends we see in compensation, and just in keeping with the season, we at DBSquared would like to offer our hopefully insightful outlook for compensation matters in 2012 (or maybe it’s just our latest wish list for Santa).  As I write, I’m not sure how many items should be on our list, but rest assured that as we don’t quite fully understand why plans are almost always for 5 years, or lists are generally top 10, we will provide some interesting number of our choosing.

So what trends are we observing in the market at large and from our clients?  First and foremost, we sense a general optimism that has compensation professionals carefully considering how to prepare for the improved economic conditions.  This encompasses strategy, process, and technology considerations.

Strategic concerns center on evolving job structures and streamlined organizations primarily emphasizing improving individual productivity, elevated skill and knowledge requirements and increased hybridization of job duties and responsibilities. Managing budgets, as always remains a priority.

The resulting changes in job duties have also complicated business processes and technology application requirements both for the business and HR.  Slow or no growth conditions have increased time in position and the responsibilities associated with those positions which results in demand for increased training exposure and more effective technology applications.

The compensation-specific trends or needs that we see include:

  • The need for a strong consistent job evaluation methodology that is the foundation of core compensation planning.  The methodology needs to enable rapid and accurate reflection of new position skills and responsibilities, required process and technology understanding and the consequent value in the new or realigned organization.
  • A fully integrated market survey capability that drives better correlated matches to new or evolved job titles.
  • Much higher focus on differentiated pay for performance.  This should reflect the need for increased variable compensation measures that directly support achievement of business objectives.
  • Greater identification of pay equity issues and justification for variances
  • And as always, control of compensation costs.

HR functions will be challenged to demonstrate or improve their ability to:

  • Correlate compensation decisions to strategic business goals and objectives
  • Standardize or make core compensation practices more consistent
  • Provide precise decision-making inputs to the compensation and budget processes
  • Answer to higher expectations for the design and implementation of compensation practices
  • Clarify communications with staff
  • Improve the integration of compensation tools and processes to allow uniform implementation by business management.

The confluence of these trends collectively indicates better integrated compensation systems and processes will be necessary.  And that translates into seamlessly incorporating technology point solutions with HRIS and payroll platform systems to enable the improved productivity and increased relevance of HR staffs.

Regardless of how you feel about holiday lists, we at DBSquared wish you a joyous holiday season, a very Merry Christmas and a happy and successful 2012!