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Compensation: striving for the balance of a good offer vs a sustainable offer

| 31. august 2023

In a candidate-driven market, it is a competitive advantage for companies to understand how compensation varies among industries and in large versus small organisations. Moreover, with global mobility still very high on the agenda for professionals and enterprises alike, despite the advent of remote working, it is worthwhile to investigate the differences and similarities between geographical markets in order to attract and retain diverse, cross-border talent.

With the help of our global experts, we gathered  insights on this topic across the key themes such as salary adjustments, transparency, ESG, diversity and special benefits from small, medium and large enterprises. Respondents to our survey spanned 45 countries across, Africa, Asia, America and Europe, mainly across the following industries:

  • Agribusiness and Agriscience
  • Banking and Financial Services
  • Consumer and Retail
  • Energy, Natural Resources and Infrastructure
  • Healthcare and Life Sciences
  • Industrial / Production
  • NGO / NPO / Education
  • Professional Services
  • Technology

Salary adjustments: 
the struggle to keep up with inflation 

When asked about their perception of salary growth in relation to inflation, the majority of respondents believe that salaries are not keeping pace with inflation with just agribusiness/science, banking and financial services and healthcare and life sciences being of the opinion that salaries in their industries are keeping pace.  However approximately 43% of respondents across industries, indicated that their companies had previously granted off-cycle increases to mitigate against cost-of-living increases.

Transparency: 
full disclosure to gain trust

Transparency refers to the practice of openly sharing information about an organization's pay structure, salary ranges, and the factors that influence compensation decisions. This is seen highly advantageous in gaining the trust of employees and reducing pay disparities as well as helping to retain staff. 

Across the board, respondents felt that organisations lack transparency with regard to executive, management and peer compensation; this was unaffected by industry or region but we do know that, in general, there is government-mandated income disclosure in place in certain European countries.

Special benefits tailored to needs 

Short-term incentives / bonuses and medical plans and health insurance are the most common for all regions and industries, with flexible working conditions now being considered a perk in most regions and industries. 

In terms of benefit offerings, interestingly, in South Korea, companies find it difficult to attract candidates away from the traditional chaebols (large conglomerates run by single families) where benefits are cross-subsidised by other companies in the group). These benefits include discounted retail, heavily-subsidised healthcare, insurance and reduction on automotive expenses, all big-ticket, high-value line items on payslips, which smaller organisations struggle to compete with.

Diversity: 
understanding its connection to compensation

Understanding the relationship between diversity and compensation is crucial. Racial and gender diversity should, in theory, impact compensation trends, if a company intends to balance out historically unbalanced demographics in its ranks and address existing pay disparities. Challenges, of course, include overcoming unconscious bias and the fact that it is unlikely that companies draft formal policies in order to achieve pay parity. Unfortunately, less than 25% of respondents in each zone agreed with the sentiment that their organisations pay above market average for diversity appointments.

Impact of ESG on compensation

ESG considerations have increased in importance for corporate stakeholders and customers alike. Integrating ESG goals into overall corporate strategy is critical for long-term sustainability, reputation and risk management. By aligning executive compensation with ESG performance, companies cement their commitment to responsible and sustainable business practices. In terms of which ESG measures are incentivised in companies, DEI is seen as a very important metric in financial services, while reduction of carbon footprint is a priority in the Energy sector and, in agribusiness, product quality and sustainability ranks highest.

Compensation practices play an integral role in shaping an organisational culture, performance, and most importantly, employee engagement and retention. They are influenced by a multitude of factors such as cultural norms, economic conditions, regulatory frameworks and industry dynamics that in certain environments can be difficult to navigate given the things that drive them. Kestria’s global network spans all key industries, enabling us to maintain insight into the trends that matter to help our clients hire at the right level and provide compensation standards that meet the needs of new recruits.

For the full report visit this link.

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