What do you think is the most crucial factor in attracting and retaining top talent? Is it company culture, compensation, or career growth and development? As it turns out, it’s not an “either/or” situation, but more of a “yes, and.” A three-pronged approach built around culture, compensation, and career can give organizations an edge in a highly competitive hiring market.
THE IMPORTANCE OF CULTURE
Employees do care about company culture. At Blue Rock Search, we see the proof every day when talking to talented executives. In fact, in many cases, potential hires and current employees care more about lived experiences representing a positive company culture than pay or prestige.
In 2018, before the pandemic, a LinkedIn survey offered insights into what matters when it comes to recruiting and retaining top talent. Important insights were as follows:
- Seventy percent of surveyed workers would choose not to work at a leading company if it meant tolerating a bad workplace culture
- Sixty-five percent of employees would prefer a lower salary to a bad workplace culture, and 26% would skip the fancy or prestigious titles in favor of a job or workplace with a better culture
- Seventy-one percent of employees would be willing to take a pay cut to work for a company with a mission and values they share
A positive culture doesn’t mean hiding from negativity and issues.
- Thirty-nine percent of employees say they would leave their current jobs if their employer asked them to do something that conflicted with their values
- Forty-seven percent of employees say they are proudest when they work for companies that foster a culture where they can be themselves, while 46% say they are proudest to work for companies that have a positive impact on society
A positive culture doesn’t mean hiding from negativity and issues. It’s easy to fall into the trap of “toxic positivity,” where workplaces go overboard and require everyone to seem positive all the time. Instead of papering over difficult or complex emotions, or pressuring employees to hide those feelings, building a culture of compassion can make a dramatic difference.
Understanding emotions (and demonstrating a willingness to address the issues at hand, if they are within the scope of a workplace) means that workers feel supported, which can translate to increased loyalty and productivity, benefitting employers.
Leadership must address these issues directly, keeping a close eye on culture and pinpointing what is working and what needs to change. One MIT study found five attributes that most frequently define a toxic workplace culture: disrespectful, non-inclusive, unethical, cutthroat, and abusive. Those five elements contribute most to employee dissatisfaction and all that comes with it, such as decreased productivity, poor company reputation, and higher employee attrition. Addressing cultural issues can be complex, but it must be done.
YES, COMPENSATION STILL MATTERS
A focus on culture shouldn’t come at the expense of compensation. In fact, compensation has its own culture within an organization, and it must be a positive, transparent one.
Compensation is a significant lever in talent attraction and retention, and it is particularly relevant as we are experiencing increased inflation. The Consumer Price
Index reported an increase of 8.5% in March of this year, representing the most considerable 12-month advance since December 1981.
When reviewing your organization’s compensation philosophy and approach, organizations and their leaders should ask themselves the following questions:
- Have we clearly defined what we want to reward?
- Are we aligned on knowing how to articulate it?
- Do we have a clear career framework with market- relevant anchors to compare roles for job pricing?
- Do we have relevant, recent market data to inform our pay practices?
- Does our program account for total compensation? Base, incentives, equity/LTI, benefits?
- Does our team have clarity on our employee value proposition (career development, lifestyle/culture, and rewards)?
- Are our budgets realistically set with outcome- aligned trade-offs and the realities of the competitive landscape for talent?
In addition, pay equity and transparency have been hot-button topics for some time, but the Great Resignation and related workplace trends have put them in the spotlight even more. Advocates have moved beyond “basic” initiatives to end pay discrimination and inequity. Today, advocacy also focuses on demands for full pay transparency, both during the hiring process and after.
Put simply, employees want pay transparency from the get-go, and they’ll walk away from a hiring process if it’s not there. For companies, this may sound frustrating at first, but implementing pay transparency now can pay off in the long run.
Companies are less likely to lose out on talent that will opt out when compensation issues are murky. Plus, a culture of transparency also helps build a positive reputation in your market, aiding both recruiting and retention.
A commitment to fairness in compensation also means building a culture that doesn’t frown upon sharing salary information among colleagues. A Bankrate survey in April 2022 found that 42% of Gen Z workers (ages 18-25), and 40% of millennial employees (ages 26-41), say they have shared salary information with a coworker or other professional contact.
The push for transparency comes with its own “gaps,” however. Glassdoor research on pay transparency and pay gaps revealed some correlation between
the gender pay gap and the push for increased transparency.
- Forty-one percent of employed women said that the gender pay gap is a serious problem at their
- Twenty-five percent of women said that not having enough information about fair market compensation for their role would prevent them from negotiating compensation.
- Only 48% of employees overall feel comfortable sharing their pay with a Forty-five percent of women say they’re comfortable sharing their pay with a coworker, but only 29% have done so.
- Twenty-eight percent of employees said their employer discourages them from discussing their pay with
- Sixty-three percent prefer to work at a company that discloses pay information over one that does
- Only 19% of employees said their company discloses pay ranges among all employees within the organization.
Existing pay gaps, paired with experiences of entering the workforce during extraordinarily unpredictable times, have led younger generations to put more value on transparency as a component to achieving that elusive fairness. Companies that embrace this transparency and work to improve compensation policies are likely to win big, especially with up-and- coming generations in the workforce.
THE VALUE OF CAREER GROWTH AND DEVELOPMENT
The retention of key talent requires planning, communication, and a fundamental understanding of your organization’s commitment to providing career growth, personal development, and promotional opportunities. As Richard Branson said, “Train your people well enough so they can go anywhere, treat them well enough so they don’t want to.”
A winning formula for the career portion of the trinity should include the following:
- Clear career frameworks and understanding of the core competencies required for advancement in the organization
- Defined point of view based on your own company needs, culture, values, and desired leadership behaviors
- Access to internal and external professional development opportunities that allow your employees to continually build position-specific skills and their broader skillset
- A transparent and clearly-communicated process for internal employees to self-nominate (and apply) for desired openings
- A highly disciplined and methodical business management process for evaluating, identifying, and developing high performers in your organization
THE VALUE OF CAREER GROWTH AND DEVELOPMENT
ACHIEVING THE RIGHT BALANCE
Ultimately, culture, compensation, and career must be seen as three parts of a whole, not as three siloed, separate topics to be addressed. Part of company
culture is ensuring that employees feel valued for their contributions—and no number of “perks” can replace fair, equitable, and transparent compensation or the absence of long-term career growth and personal development. When employees feel valued, heard, respected, and believe their work truly matters, there are no limits to what a company can achieve.