According to a 2022 Gartner survey, 63% percent of executives plan to make compensation adjustments in response to inflation, and a similar study found that 1 in 5 organizations are planning for more frequent salary reviews to account for the increasing cost of living.
That’s why we spoke with experts in employee benefits, compensation data, and talent recruiting. Compt Founder & CEO Amy Spurling, Compete Co-Founder & CEO Amit Rapaport, and Bright Link Talent Founder Stephanie Mantofel shared insights on how companies can address the cost of living crisis by evaluating their total compensation packages.
Here are the highlights of the discussion panel:
- Total compensation beyond salary adjustments
- Trends in salary transparency laws
- Supplementing compensation packages with benefits
- Offering competitive compensation packages to attract talent
Total compensation beyond salary adjustments
Inflation has brought demand for higher salaries. Are you seeing any adjustments from your customers on your platform Compete right now?
Amit Rapaport:
The data that we have compared is the real-time data that combines or includes the total compensation package. What's interesting to see is how we don't see adjustments in terms of salary.
But we do see some interesting adjustments in terms of inflation bonuses. For example, one time solutions for that difficult situation. So that's what we see in our datasets.
“We don't see adjustments in terms of salary. But we do see some interesting adjustments in terms of inflation bonuses. For example, one time solutions for that difficult situation.” - Amit Rapaport, Compete CEO
What can companies who can't afford to adjust their salaries do to help their employees offset rising living expenses?
Amit Rapaport:
First and foremost, everything starts with communication. So communicate the friction because we have a new friction between the employee's side and the employer's side. I understand the cost of living crisis on the employee's side. On the other hand, as the CEO, we have a limited budget.
The second thing to do is come up with a solution that provides a 360 approach to compensation that doesn't start and end with salary and equity, but how you can support your talent and team with perks on top of their salary to help them during a recession.
“Come up with a solution that provides a 360 approach to compensation that doesn't start and end with salary and equity.” - Amit Rapaport, Compete CEO
Amy Spurling:
Salaries aren't increasing at the same rate as inflation. It'd be very hard for a company to continually increase their salaries because inflation is happening in real-time. Salary increases are not happening every couple of months.
What we are seeing from a company perspective is to really tailor their employee perks side of the budget. Salaries and health insurance stay the same, but allowing employees to use their perks in a more broad way.
When times were flush with cash, companies would say to their teams, “Hey, go bungee jumping or do experience stuff.” That may not be top of mind for a lot of people right now when they're trying to make their rent or mortgage or pay for groceries.
So what we're seeing is that companies take stipends and keep them very flexible for things like family or wellness, but then allow for a broad utilization of that category, which impacts the day to day lives of their employees in a very different way.
“We're seeing companies take stipends and keep them very flexible for things like family or wellness, but then allow for a broad utilization of that category, which impacts the day to day lives of their employees in a very different way.” - Amy Spurling, Compt CEO
What are trends in benefits that you see shifting on your platform in response to inflation?
Amit Rapaport:
We see a trend in healthcare and family support benefits that are very beneficial for both us and the employees.
Amy Spurling:
We're seeing a broad utilization kind of concept. Things like the family benefit category are opening up more broadly. Historically family benefits encapsulated fertility benefits or maybe some child care, but not every person has children, and every family looks different. Not every family is in a fertility situation. And even if they are, they may not want to use the offering that you have.
So making it broad and letting people make those decisions for themselves, I think is a great opportunity there.
“Things like the family benefit category are opening up more broadly. Historically family benefits encapsulated fertility benefits or maybe some child care, but not every person has children, and every family looks different.” - Amy Spurling, Compt CEO
How can smaller companies that have less financial flexibility help their teams with inflation?
Amit Rapaport:
For example, here in Israel, we have a meal subsidy as a common benefit. Either you get the amount on a daily basis or monthly. If you have a financial limitation, instead of having a meal subsidy with a daily limit where your employees feel limited with the amount that you provide, you can open the time to use the same budget daily or weekly amounts to monthly or quarterly. That will give employees more flexibility.
So by providing the choice for the employees, not necessarily changing the amount, but that's a great hack.
Amy Spurling:
We see something really similar in stipends. Quarterly stipends tend to get the best utilization. So instead of having a monthly stipend where it's every month, giving people three months to be able to use that.
That stipend can have the lowest dollar amount and still get the best utilization. Like $33 a month, not very interesting to a lot of people. They may or may not log in for it, but $100 a quarter feels very meaningful to employees. They're more likely to log in at some point and use that. Changing the time period can have that big impact to make your benefit feel a lot more beneficial.
“Quarterly stipends tend to get the best utilization.” - Amy Spurling, Compt CEO
Quarterly works better than that same amount of money on an annual basis. Instead of doing $400 a year and giving them a year to spend, breaking up the amount in quarters also helps get that engagement up and gets people feeling very supported.
The other thing that we're seeing is combining benefits. So if you can only forward, say, $50 a quarter, including things like family and wellness, maybe pets, maybe food, include a bunch of different categories where people can figure out what matters for them on a real time basis, rather than having to slice and provide money for each different type of benefit.
That's another great hack for companies who just don't have huge budgets. Provide a big bucket of benefits for the team.
Trends in Salary Transparency Laws
New York recently enacted their pay transparency law in November of 2022, and California will follow in January 2023. Do you think there should also be benefit transparency laws?
Amit Rapaport:
Benefits are a place where I feel like the companies can truly shine and highlight their culture. Benefits is a company's way of saying, “This is what I believe in.”
I believe in family benefits and support. I'll invest in that versus other perks. I’m a big believer in transparency. It’s a way for candidates to see which company is a better fit versus others.
“Benefits are a place where I feel like the companies can truly shine and highlight their culture. Benefits is a company's way of saying, ‘This is what I believe in.’” - Amit Rapaport, Compete CEO
Amy Spurling:
I'm a huge fan of pay transparency to start eliminating some of these pay gaps, especially what we see in the U.S. It’s a good first step. But there will be places that are not transparent.
Benefits are a place where that's going to be happening because, who knows if there's a signing bonus that you didn't know even existed. It's not included in the salary. This is where inequity is going to linger.
Things that companies highlight clearly shows where they're focused on from a cultural perspective. And so any benefits they highlight is a good indicator of what's important. But it's going to be really important for candidates to understand the full compensation package and then understand where there is room to negotiate.
It may be non-financial. It may be more paid time off, it may be more parental leave. There's places where companies will give some people more than others. It's a good first step, but I think we've got a long way to go.
“It's going to be really important for candidates to understand the full compensation package and then understand where there is room to negotiate. It may be non-financial.” - Amy Spurling, Compt CEO
Stephanie Mantofel:
Sometimes I just see a flat offer from employers. But, for example, Compt provides a page of benefits broken down by dollar value. Showing your benefits is a good opportunity to attract candidates, because they can see, “Oh, I'm getting this.”
The trends for compensation packages vary by company. Again it reflects back to the values of that particular company that's providing the offer.
Amy Spurling:
It's a great way to compete for talent. Compt has a fully transparent process where we show everything to every candidate. We offer our best and final offer first. There is no negotiation because we base it on data and want to eliminate those pay gaps that can happen because not everyone will negotiate.
When we're putting out a salary of 120,000 for a certain type of a role, the whole total compensation package is $178,000.
If we only show salary in the offer, then the candidate is not comparing all the other things that are part of that compensation package. A great way to compete as a company is being more transparent.
We do not include value on our equity. Every offer has equity, but I'm not playing those nonsense numbers. So there is equity, but I'm not putting a dollar value on that because I think that if you can't pay your mortgage with it. It doesn't count.
Stephanie Mantofel:
And some companies do that though. I've seen offer letters where if we sell in five years, you're going to make millions of dollars. It goes back to the employee side.
“Everyone values compensation differently. Some people may value cash more today, whereas others value culture fit or remote flexibility or room for growth. What drives an individual is different per person.” - Stephanie Mantofel, Bright Link Talent Founder
Should companies encourage their employees to openly discuss compensation and how should they approach it?
Amit Rapaport:
I call it the fridge experiment:
“Imagine that you are the HR leader coming to the office and you see hanging on the fridge all the salaries of your entire team, do you feel comfortable with the decisions that you've made along the way?” - Amit Rapaport, Compete CEO
Do you have the reasons and the business justification? Because at the end of the day, it's benchmark data and business impact and all the internal fairness that guides the decision that you make. If you feel comfortable with the results, then if someone will reach out and say, “Why is Stephanie earning more than me?”
If you can explain there's a business logic to that, then I think that you're in a good place. and that's the place where you should make any kind of decisions regarding compensation for internal fairness. Although the common practice is to grant equity for engineering teams differently than HR.
“The way we grant options is by level. Meaning I couldn't care less if you're a senior backend engineer or if you're a senior talent acquisition manager. If you're a senior, you're at the same level.” - Amit Rapaport, Compete CEO
I need those phenomenal people to drive the company further. I will grant you the same amount. I was afraid that because engineers usually earn more, that it will backfire on us. Fortunately it just led them to trust the company more. I stand by this decision. We do great things.
Stephanie Mantofel:
it's important to not put $50-200K as a range on a job description. Narrow it down. Make it very clear so candidates know where the ranges come from and the value of the role. Is it really transparent if you're putting $50-200K as like the range? It's not.
Justify why candidate A is going to make $90K versus $100K saying it goes by years of experience.
Understand that a candidate still can come back and ask for more, but as an employer you can be clear if there is no room for negotiation.
Supplementing compensation packages with benefits
How can companies supplement employee compensation with benefits?
Amy Spurling:
If you're very prescriptive to your employees and say, “You have to use your wellness benefit for this gym or for a yoga class or for this fertility treatment.” That's very narrow and is going to impact so little of your team.
If you broaden it by saying, “This can be for home or family or wellness,” and allow employees to decide how to use unique benefits in their own way that works for them. You're just going to get a lot broader reach.
We actually did so on our platform. It's all stipends. There's no vendors, but we have really high utilization. So for the past three years we've had over 91% utilization of employee perks on our platform, whereas normal employee perks, 3 to 5% if you're lucky.
We went back and took a sample last year and said, we have 8700 people for 12 months. How many different unique vendors did this group of people use?
“Because of the personalization aspect, 8700 people use 27,000 different vendors over the course of the year. On average, every person wants three different things. And the only way to do that at scale is when you think about it from a stipend concept.” - Amy Spurling, Compt CEO
A marketplace isn't going to do it. No matter how many different vendors you bring as a leader, you're never going to meet the needs of your entire team, nor should that be your job.
Offering competitive compensation packages to attract talent
What are the most important benefits for people searching for jobs right now? Are salary and benefits on top of the list or flexibility?
Stephanie Mantofel:
It's across the gamut. It depends where people are in their life. If you're fresh out of school and you're the economy is affecting you with gas. Hard cash is very important for some people.
I've seen people chase jobs. Do you want to chase your job or your career opportunity? I've seen people take a job over $5k.
“You want to coach someone to look holistically at the opportunity. Here's the career growth, here's the culture, and you're the benefits. Help them prioritize what's important to them.” - Stephanie Mantofel, Bright Link Talent Founder
But I have seen people prioritize cash. As you grow in your career you start to see that you value other things. For example, I had a candidate who wanted like a $180K at one point and now is willing to go to $120K. That’s a very big jump.
But that candidate understood that job stability is pretty tough out there right now. They care more about the career and that the culture isn't terrible. They’re looking for more of a work from home flexibility, remote situation so they’re willing to take a pay cut for peace of mind.
What are tips for employers to make their salary and their compensation more visible to attract competitive talent right now?
Stephanie Mantofel:
Again, go back to clarification and having specific concrete salary ranges. Show that you're transparent as a company and you're not trying to hide anything. And then spotlighting on your employer brand with a website page. For example, these are the benefits, these are the perks, this is what we value and this is what you will get if you come to work with us.
Amit Rapaport:
Another action that is super important to take internally on the employer's side is to communicate before you publish and share those salary ranges. Make sure you do your internal homework and make sure you have this internal fairness that you feel comfortable with.
I would highly recommend having an internal pulse check to make sure you're in those ranges and you feel comfortable with the positioning of each one of your internal employees.
Amy Spurling:
It's also important to have a really solid recruiter in your corner that can push you. To me that is one of the secret weapons that we have here at Compt is making sure that the offers we're putting out are competitive. I don't know what every single company is offering. Even with pay transparency, it's going to be different by state.
You need to listen to those trusted advisers, do as much homework as you can, and get as much benchmarking data as you can. You have to trust your recruiter and know that they're not just driving up salary because they want to get paid more. Building that relationship with your recruiter I is so important. I think it starts and ends with trust.
To get more insights on offering competitive compensation packages, check out our comprehensive guide to total compensation and watch the full discussion here.
About the author:
Kisha Velazquez is an HR tech content marketing leader and Compt's Senior Content Marketing Manager.