Lily Mok, vice president, analyst at Gartner, says there are three ways chief information officers (CIOs) can attract and retain IT talent in 2022 and beyond: Prioritize monitoring and raising pay competitiveness, build flexibility into IT compensation strategy, and last but not least, equip managers for successful pay conversations.
Compensation, she wrote in a recent Insights article, is “consistently ranked as both a top attraction and attrition driver by IT employees.
“In today’s competitive labour market, many in IT are now seeking new employment with better compensation packages and more flexibility. CIOs can effectively respond by making monitoring and raising pay competitiveness a priority, building flexibility into their IT compensation strategies and equipping individual managers for successful pay conversations.”
In the piece, she writes that “while employees were once satisfied with their salaries and benefits, the pandemic — among other global events — has caused a shift, and many are now seeking new employment with better compensation packages and more flexibility. CIOs must decide how to address skills shortages and whether to offer higher compensation, perks and incentives, training and reskilling to increase retention.”
In the December 2021 Gartner IT Compensation Increase Poll, notes Mok, “50 per cent of organizations reported increasing salaries to retain key employees in response to job offers those employees received from other employers. Making counteroffers and addressing nonfinancial factors important to IT talent retention have become key tactics.”
In the article, she goes on to explain further about the three recommended strategies:
Prioritize monitoring and raising pay competitiveness: “IT employees’ expectations are exceeding broad-based pay increases and what many CIOs feel is needed to retain staff and fill jobs. In order to pinpoint where additional funding will be necessary to address pay gaps in the short term, work with your HR team to identify IT roles and skills areas facing higher attrition risk and recruitment challenges due to non-competitive compensation.
“Organizations with limited financial resources should prioritize allocating increases to those in roles in high-risk areas. In addition to the financial component, address additional human-deal factors that are important to IT talent retention.”
Build flexibility into IT compensation strategy: “Improving compensation competitiveness through paying high base salaries can be very costly, because this type of fixed cost is long-term. Organizations very rarely reduce base pay once they raise it. One way to minimize locking in compensation adjustments as long-term fixed costs is to use variable pay components that can be adjusted or removed as talent needs and market conditions evolve.”
Common variable pay programs, writes Mok, include:
- Skill-based premium pay, typically around 10 per cent to 12.5 per cent of base salary, is most often used to hire and retain IT talent with in-demand skills. Individuals must continue to perform well to receive it. An advantage of premium pay is that it can be flexed and adapted as business needs and market conditions evolve.
- A signing bonus is intended to incentivize a candidate to accept a job offer. A lump-sum payment upon hire is most common, but some organizations split this into one payment made upon hire and the remainder paid one year after hire.
- Retention bonuses can incentivize IT talent with critical skills to stay with their organization for a set period, for example, during a major digital transformation initiative. Specific criteria limit eligibility to a small percentage of the workforce, and awards can come in cash, stock or a combination of both.
Equip managers for successful pay conversations: “Partner with HR to communicate clearly what managers should expect in structured pay conversations. During periods of high turnover and in competitive labor markets, an effective pay communication strategy is a powerful tool to inform, engage and retain critical talent.”
The core elements of an effective pay conversation, says Mok, are:
- Responding with empathy. Pay is a sensitive topic. Be empathetic in conversations around new information and work to help employees better understand and appreciate their compensation.
- Explaining the value of the rewards package. Detail both base compensation and the total value of an employee’s rewards package, including bonuses, benefits, and well-being programs.
- Addressing public pay data. Be prepared to communicate the limitations of self-reported public pay data, and be transparent about the sources your organization uses to set pay. That way, you can properly answer questions about publicly reported compensation numbers.
Source by www.itworldcanada.com
