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TRU$T – Part 1

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It’s the time of year when performance and salary conversations are happening.

What does compensation have to do with TRUST?

What happens if you can’t have a healthy compensation discussion with your team?

Healthy =

Frank

Constructive

Success Clearly Defined

Shared Accountability

Supportive

Visionary

If these conversations, that often happen just once a year, are not handled well, the foundation of TRUST starts to crumble.

Without TRUST, you cannot lead.

Why are so many leaders unprepared for these discussions?

Why are so many leaders unwilling to have these conversations?

The Compensation Conversation: Where Trust Begins

These conversations rank among leadership’s most crucial moments. Whether sharing positive news about raises or navigating more challenging discussions when increases aren’t feasible, preparation and a clear compensation philosophy are essential.

Research backs this up – a recent Gallup study found that open communication about compensation significantly builds trust and reduces both disengagement and turnover. Without this transparency, uncertainty and dissatisfaction can take root. Employees need clarity on how their compensation aligns with their performance, role, and market standards.

The Danger of The Status Quo

The cost of a perceived lack of fairness or clarity of compensation practices is significant. When employees perceive compensation as unfair or unclear, disengagement follows – often leading to quiet quitting or departure. Regular equity analyses are essential to ensure compensation practices remain unbiased and market-competitive, helping organizations avoid costly turnover and performance issues.

Pay Transparency: Compelling Better Practices

The movement toward pay transparency continues to gain momentum, with organizations increasingly adopting (or being forced to adopt) open compensation practices. As state laws emphasize pay equity requirements, companies must adapt their practices to maintain compliance and competitiveness.

Transparent compensation practices deliver multiple benefits – they foster trust, reduce turnover, and attract top talent. When organizations clearly connect performance and compensation to defined market ranges and expectations, they create an environment of trust and loyalty.

Leading with Care and Communication

Effective compensation leadership extends beyond numbers and policies – it’s about creating an environment where employees feel genuinely valued and aligned with organizational goals. Through careful preparation, transparency, and strategic incentive planning, compensation becomes a powerful tool for building trust and driving growth.

By implementing these strategies thoughtfully and consistently, organizations can transform their approach to compensation into a cornerstone of successful leadership.

But how to do it?

Next month: Part II – TRU$T – It’s All in the Prep Work

Ready to make a change? Schedule a compensation review today and start building the foundation for stronger employee trust and engagement.

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The Essential Guide to Designing an Effective Sales Compensation Plan

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What Motivates Today’s Workforce? Rethinking Compensation and Performance

The makeup of the workforce is changing faster than ever. With four generations now working side-by-side and Generation Z beginning to occupy the workforce, companies face recent challenges in engaging and motivating employees. To attract top talent in this competitive market, employers need fresh ideas on compensation, benefits, and performance management. But where to start?

A recent study from Optimum Comp Advantage provides data-driven insights. The recent Compensation and Performance Study surveyed over 3,000 professionals to uncover what drives them at work. Spanning ages 25-65 and multiple generations, the results reveal key shifts in workforce priorities.

By understanding these evolving preferences, employers can tailor rewards and experiences to inspire today’s employees. Here are the study’s most insightful findings and recommendations.

The #1 Motivator: Competitive Pay…With a Catch

Across nearly all age groups, competitive base pay still ranks as the top factor attracting and retaining workers. For employees under 55, fair pay outpaced all other motivators like benefits, work environment, and company culture.

However, base pay alone is not enough. Employees today also expect opportunities to increase their pay through incentives and career growth.

The study found a striking change in how younger workers view incentive compensation. For professionals aged 25-35, incentive pay ranked near the bottom just two years ago. Today, 92% say incentives are among their top three motivators.

These under-35 employees crave careers with escalating pay and responsibility. Competitive base pay draws them in … but incentive pay, and advancement keeps them engaged.

Takeaway: Lead with fair pay at hire. But don’t stop there. Layer on incentive opportunities, performance pay, and cleared paths for promotion.

What Benefits Do Employees Really Want?

Traditional benefits like health insurance, dental plans, and PTO are used to set companies apart. But they are now expected as table stakes. Employees under 45 expressed little preference for these staples.

Instead, they want benefits that support work-life balance, flexibility, and financial security. The most sought-after non-traditional benefits include:

  • Flexible and generous PTO policies
  • Remote work options
  • Flexible scheduling
  • Student loan assistance
  • Tuition reimbursement
  • Fertility benefits
  • Financial wellness tools

These benefits demonstrate investment in employees’ whole lives. Perks like free meals or ping pong tables don’t address deeper needs. To attract and retain talent, target benefits to their lifestyle priorities.

Takeaway: Rethink benefits as a way to demonstrate caring for employees’ quality of life, financial health, and personal growth.

Personalize Performance Management

Annual performance reviews and raises struggle to engage younger employees. These systems feel disconnected from individual effort and the real-time pace of work. 

Professionals under 35 showed little interest in traditional merit increases, ranking them near the bottom of motivators. They want to see how their work directly contributes to the organization’s success.

Instead of top-down reviews, they crave:

  • Regular feedback and checkpoints
  • Goals linked to company objectives
  • Rewards for results, not tenure
  • Managers invested in their growth
  • Flexibility to master new skills
  • Exposure to diverse projects

Essentially, younger workers want performance management tailored to their aspirations. They expect coaches, not bosses.

Takeaway: Make performance management personal. Set clear goals. Check in frequently. Help them grow skills. Most importantly, connect work to impact. Transition performance management into performance optimization.

The Blueprint for Engaging Today’s Workforce

The research paints a clear picture. Employees today want compensation, benefits, and performance optimization personalized to their priorities. Here is a blueprint for bringing your practices into the 21st century:

Compensation

  • Offer competitive pay at hire and map clear paths for increases and advancement. Employees want to know how they can increase pay over time.
  • Build in performance-based incentive plans. Reward results, not tenure.
  • Get creative with benefits. Add ones that support work-life balance, flexibility, and financial health. Offer extras like paid volunteer time or professional development stipends.

Performance Optimization

  • Check in regularly. Don’t wait for annual reviews. Provide ongoing feedback aligned to goals.
  • Set goals aligned to company goals. Explain how their work impacts the big picture.
  • Discuss development. Identify skills employees want to build and provide resources and assignments to grow them.
  • Cultivate mentoring and coaching relationships. Employees want advisers invested in their success.
  • Openly discuss career paths. Helping employees articulate their aspirations leads to greater engagement.

The Optimum Comp Advantage study reveals what today’s workforce values in their employment experience. Organizations that still cling to outdated compensation and performance practices risk losing talent to more progressive employers.

But by zeroing in on proven motivators – personalized pay, benefits, and career experiences – innovative companies can attract and inspire the workforce of the future.

Want to learn more? Download the full Optimum Comp Advantage study for additional statistics and insights on how to engage employees in today’s competitive talent market.

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