With the broad shift to working from home, stricter budgets due to an unpredictable economy, and political and social issues brought to the forefront of the national conversation, the past year has been a turbulent one. How you engage and compensate your employees will be critical going forward, especially if you want to retain your team members and continue growing during this time.
Under these circumstances, I believe it’s more essential than ever to take a total rewards approach to employee compensation. Simply offering a high salary is not enough anymore; young employees and those just entering the workforce are increasingly prioritizing more indirect forms of compensation like work/life balance, useful benefits, and engaging cultures. Delivering these things in a remote or hybrid work environment can be a particular challenge.
To better ensure you’re doing all you can for your employees in the new year, we’ve identified a few trends that will likely affect your own compensation strategy in 2021.
1. The New US Political Administration
Even before the year started, everyone knew that 2020 was going to be eventful. After all: It was an election year in the US, and no matter who won, their policies would shape labor regulations and, consequently, how companies compensate their employees going forward.
Joe Biden scored the win over incumbent Donald Trump this year, so business leaders should try to anticipate how his views and policies might impact their employee compensation strategies. Here are a few important facts to note:
-
He’ll likely expand, or at least maintain, coverage under the Affordable Care Act (ACA). That means the employer mandate requiring certain businesses to provide ACA-compliant healthcare to their full-time workers will likely remain in place.
-
He has called for a guaranteed 12 weeks of paid family and medical leave and has expressed support for the FAMILY Act, which would extend financial benefits to employees who take time off for serious health conditions, births, adoptions, and other caregiving purposes.
-
His tax plan would alter 401(k)s, specifically by replacing upfront, escalating tax breaks with flat-tax credits.
-
He supports raising the federal minimum wage to $15 an hour by 2026.
When Biden is sworn into office, these proposals might become official policy. It’s important to keep these potential changes in mind as you plan your own employee compensation strategy for 2021. For example, if the ACA does expand, you may need to adjust your health benefits to meet new standards.
2. Increased Dependence on Technology and Automation
Our dependence on technology was already growing steadily, but when COVID-19 forced many businesses to adopt fully remote work, technology became even more important for how we live our lives and conduct our business.
Even your compensation efforts may go entirely digital in 2021, if they haven’t already. Talent management software can help you track your payroll expenditure estimates, accounting for overtime, temporary positions, new hires, and reductions. The right tech could help you take these compensation tasks digital in 2021:
-
Ensuring pay grades reflect internal equity by comparing employee work against job descriptions.
-
Determining merit-based pay increases based on more objective measures like financial reports and pay increase equations.
-
Facilitating employee self-reviews to streamline performance management.
-
Employee recognition through the rewarding of points, badges, and/or trophies to employees for accomplishing assigned tasks and activities.
The intersection of technology and compensation empowers leaders to organize employee compensation strategies based on real-time employee data. And, given that hiring is predicted to remain largely digital even once the pandemic subsides, it’s likely that compensation technology will remain crucial in a post-COVID world...