As clichéd as it may sound, it’s well-known now that the year of 2020 was a complete washout especially with reference to salary increments and variable pay-outs. Undoubtedly, the past year has influenced the manner in which compensation is being viewed. Going forward too, it will continue to be a critical factor in attracting and retaining talent. In the year of 2021 as everyone waits for the anomaly to settle, organisation wide announcements catering to key compensation strategies is being waited with bated breath.

To evaluate the market sentiment around compensation & benefits,we have been in conversations with key stakeholders across sectors who have shared deep insights and broad trends.With the uncertainty around Covid19 still looming over, a vast majority believes that this time around, both organisations and their employees are better prepared to manage the unknown.They will continue to maintain the focus on what can be controlled and therefore will be mindful of their budgets and expenses.

Through our conversations, following were the key takeaways from the flash survey conducted by us –

There will be a definitive shift towards creating deferred variable payout structures and lesser emphasis on traditional annual increments. Organisations will work towards creating a robust variable pay for rewarding performance which can be in the form of quarterly incentives, instant award program, project-based variable payouts and annual bonuses.

A calculated approach will be put in place by HR Leaders to adjust performance considerations that capture a vast spectrum of traditional financial performance parameters alongside of long term strategic goals of empathy, inclusion and diversity.

Retention of talent that is “critical to quality and performance” will continue to be of utmost importance for organisations this year. In an environment operating with limited resources and constrained budgets, retaining trained manpower will be mission critical towards achieving higher results.

In today’s economy, in an attempt to leapfrog from the competition, some progressive companieshave shown resurgence to adopt an aggressive approach for hiring high potential talent at premium compensation packages.

As part of employee engagement and retention, transparent and direct conversations with employees on pay strategy and communication will be one of the key focus areas of HR Practitioners.

While a full economic upturn for all sectors may take a few years, however more than 75% of the companies surveyed, reported that they intend to give merit increases in 2021, reflecting a positive business sentiment.

Reference : The People Network Research

*In hospitality, restaurant and travel business, most owners, operators, and hotel investors this year (2021) will be focussing to restore the salary of their employees over a period of 3-6 months. With the exception of a handful of leading hotel companies that have indicated a likelihood of an annual salary increment along with a reasonable variable payout for the eligible few, most other hotel organisations are attempting to ensure salary normalisation.

In summary, given the transformational changes which have taken place in the year 2020, it has become imperative for organisations to create a robust compensation strategy to stay relevant and competitive.

The year 2021 requires key stakeholders to look for long term comprehensive compensation solutions that reinforces the importance of pay equity as an aspect of Diversity, Equity and Inclusion.