Organizations commonly experience their greatest attrition at the start of a new year. For example, last January, 4.25 of 134 total million U.S. workers quit their jobs. Whether the cause is new year self-reflection, dissatisfied workers staying just long enough to claim year-end bonuses, or the fact that companies usually ramp hiring at the start of the year, the cost of replacing an employee can range between one-half to two times the employee’s annual salary – and that’s a conservative estimate.
If you think hiring has recently slowed or stopped, think again. Top performers are almost always able to find new opportunities, and compensation and how transparent employees perceive your pay practices to be are among top deciding factors. Though using the right data and communicating your compensation strategy can help strengthen employee trust, it’s oftentimes easier said than done.
Companies that use OpenComp increase offer acceptance to 83%, 17% above industry average! Schedule a demo today.
This blog explores how you can use OpenComp’s compensation software to improve your communication around compensation, streamline performance reviews and merit cycles, and help you adhere to active or upcoming pay transparency legislation. You will better retain your top performers heading into 2023 and beyond with our compensation software.
How to prepare for conversations about compensation with employees
As year-end performance reviews approach, your employees are weighing the pros and cons of staying in their current position. These conversations are make or break for your organization, as employees who feel they aren’t compensated fairly or transparently will begin to look elsewhere.
Even if you don’t have the budget this year for substantial merit increases, clear and honest conversations about compensation with your employees can oftentimes be enough to retain them. This is dependent on having a strong compensation framework that includes job leveling and salary ranges, standardized performance assessments, and clarity into how decisions are made.
Your compensation foundation begins with a solid compensation strategy built on equitable and consistent pay ranges. Salary ranges, also known as salary bands, are a critical component of effectively retaining your high performing team as they serve as the basis for your merit planning strategy.
You can create professional-grade pay ranges that reflect your organization’s compensation strategy in just three clicks with OpenComp’s Range Builder. All you have to do is make a few decisions about your compensation philosophy during Range Builder’s guided onboarding:
- Choose your cash and equity mix
- Select location-based pay policies from provided options
- Toggle your compensation width
Do you want to create a program where employees are promoted quickly? You’ll want to set narrower ranges. If you’d prefer to focus on heavy skill development and growth within a wider range, you can choose for your salary ranges to reflect that.
See how OpenComp’s Range Builder has helped save organizations like yours over $2.5 million dollars and 18 years of time, collectively — in less than six months.
Salary bands based on reliable market data help standardize your compensation practices with a reliable framework for pay and help create equity and consistency among similar roles. Since Range Builder utilizes OpenComp’s proprietary dataset, which is sourced directly from our thousands of customers thanks to integrations with leading HRIS providers, your salary ranges reflect data that’s specific to your organization and competitive with today’s market conditions.
You’ll be ready to have clear, data-driven conversations when it comes to fielding employee compensation questions and communicating merit adjustments.
How to articulate job levels and career pathways with Pay Range Insights in OpenComp
As you prepare for performance reviews in Q4 or Q1, it’s necessary to assess your organization’s job leveling framework and career pathing structures. Not only is this process important for correcting misleveled employees and rewarding your top performers, but it also shows your employees that you care about their long term success and see them as an asset to your company’s future growth.
Since employees are more likely to stay at an organization where they feel their employer provides pathways for them to reach their career goals, it’s critical that you address your employee’s position within their current pay range and clearly communicate the progression opportunities available to them.
Within Range Builder is the Range Builder Analytics screen. This 360° view of your entire organization’s compensation positioning allows you to compare employees like-for-like regardless of geographic location, and quickly realize the growth opportunities available to each employee with data that displays each employee’s current range position.
You can click on an individual employee to see insights related to their specific salary ranges and where they are in their range progression, and immediately identify where and how to make compensation adjustments.
Range Builder Analytics in OpenComp enables you to easily define job levels and realize employee career progression opportunities, so you can retain your most valuable employees.
Evaluate the costs of merit cycle increases in Headcount Plan from OpenComp
Market uncertainties and tech layoffs have caused companies to rethink their spending on talent. While it’s definitely time to evaluate your overall financial health, employees will still be expecting adjustments and merit increases to their compensation at year’s end, unless someone explains otherwise. If you fail to communicate updates transparently, you risk losing talent. And with each departure costing your organization both hard and soft costs – the costs of reduced productivity, lost knowledge, interview time, recruiting, etc. – it’s considerably more cost effective to retain your current headcount.
Since compensation is the number one spend for any high growth company, your headcount plan is effectively your financial plan. Without compensation data and insights that are specific to your organization, you put your financial plans and employee satisfaction at risk.
Headcount Plan in OpenComp’s Design Studio solution can help you model the costs of your planned merit cycle increases while optimizing for competitiveness, burn, and dilution. Headcount Plan removes manual calculations by accounting for your pay practices, as well as things like employee start and end dates, setup costs, overhead costs, recruiting fees, raises, and more. You’ll see the effects that even the smallest of compensation changes have on your financial plan in seconds.
OpenComp’s Headcount Plan allows you to execute your entire compensation program in one unified solution. You’ll also be able to adhere to your financial plan with ease while providing employees merit increases and bonuses that keep them around longer.
Coming Soon in OpenComp: Unify your Salary Ranges with Merit Cycle Planning and Ad Hoc Adjustments
Though the cadence of merit cycle reviews can vary from company to company, there’s no doubt that they’re top of mind for employees as year-end approaches and they debate making a career change. Compensation, and your organization’s ability to transparently communicate about it, will make or break their decision.
Employees have come to expect clearly defined guidelines that determine merit increases, as well as open communication and transparency around the merit cycle process. Otherwise, they may assume your processes lack fairness and consistency, and more heavily consider a new opportunity.
Companies that use OpenComp increase retention 87% on average! Schedule a demo today.
Coming soon in OpenComp, you’ll be able to unify your salary bands with Merit Cycle Planning and Intelligent Adjustment. Together, this suite of solutions will keep you on-policy and on-budget, while also allowing you to strategically deliver compensation increases that will retain high performers.
Merit Cycle Planning and Intelligent Adjustments also record and archive an employee’s entire compensation history, so you spend less time in reviews, act fast to solve comp questions, and never worry about losing data.
Retain top employees with real-time compensation insights from OpenComp
Without structured compensation processes based on reliable market data, you risk making decisions based on irrelevant information instead of current facts, and put employee trust and retention at risk.
OpenComp’s Market Pulse provides real-time insight that’s applicable to your specific organization and reflects the millions of decisions made every day about how people are paid. Unlike traditional compensation data sources that are stale, inaccurate, and irrelevant, Market Pulse offers data that’s up-to-date and relevant to your organization. It’s custom made so that your policies and insights are only built off of data of companies of your size, industry, and funding stage, and integrated across all of the tools within OpenComp’s compensation solution.
Market Pulse powers Range Builder, so if you want to revisit your salary ranges before your next merit cycle then you will get insights that alert you when an adjustment may be needed or an employee has fallen out of range. Instead of wasting time searching for gaps or inequities, Market Pulse in OpenComp creates a standardized process for you so that you can focus on implementing changes that retain top talent longer.
Create trust and transparency with employees from the start with Intelligent Offers from OpenComp.
In one survey of 1,000 employees, the majority said they want some form of pay transparency, and 68% said they’d switch to a more transparent employer—even for the same wage. Creating a culture of trust begins with the first conversations you have with your employees – the interview process. And with pay transparency legislation in many states requiring that the salary range be detailed in job postings, candidates and employees alike will soon be able to easily identify unjust pay discrepancies that may exist within your organization.
Employers that are able to show that they use fair, consistent processes to structure their compensation programs will be the ones that retain the most talent.
How you make employees feel that their compensation package is fair, equitable, and competitive from the start is a crucial indicator for how well you’ll retain them later on. For every offer to be consistent, you must align your organization by ensuring that:
- Your entire hiring team has access to your most recent pay ranges or benchmarking
- Your recruiter has created an offer that aligns with both your candidate’s and your company’s priorities
- Your candidate’s offer has been reviewed and signed off on by all relevant stakeholders.
Intelligent Offers, OpenComp’s newest tool, is designed to help you increase your candidate acceptance rate by optimizing offers for acceptance with predictive intelligence that automatically surfaces your compensation plan and salary bands structure every time someone makes a decision. Now, your recruiters and hiring managers have access to the same insights and analytics they need to create on-policy, competitive offers that are free of biases or mistakes. OpenComp’s compensation software solution also saves past acceptances and rejections, so that your hiring team can optimize each new offer for acceptance while remaining compliant with company policy.
Automated approval chains in OpenComp’s Intelligent Offers ensure that each stakeholder can take action on a new offer as quickly and easily as possible. The same information is delivered to each person in the approval flow, ensuring that your entire team is aligned on the data throughout the decision making process. Once approved, Intelligent Offers gets your offer to candidates as quickly as possible by auto-generating an offer letter for you.
OpenComp Intelligent Offers helps you close your top choice candidates by unifying the data, people, and process needed to create your best offer. By being upfront about your pay policies from the beginning, you’ll create a culture that’s guaranteed to retain top performers longer.
Companies that use OpenComp increase offer acceptance to 83%, 17% above industry average! Schedule a demo today.
OpenComp’s compensation software solutions are built to help you retain top performers longer with compensation programs that create trust and transparency. Don’t wait until retention is a problem. Get started holding onto your all-star team today.