It’s often said that a paycheck isn’t the only reason employees stay at a job—and there’s certainly truth to that. Career growth, workplace culture, and benefits all play a role. But let’s be honest: People work to earn a living, and compensation remains one of the most influential factors in employee retention.
Given its importance, you might assume most employers have mastered the art of designing and managing compensation programs that keep employees engaged and committed. However, recent data suggests otherwise.
A 2024 survey from global advisory firm WTW sheds light on the challenges employers face in wielding compensation effectively. The Pay Effectiveness and Design Survey collected responses from nearly 1,900 companies worldwide, including 332 in the United States.
Surprisingly, only about half of respondents felt they were effectively achieving six core compensation objectives:
Reinforcing these concerns, WTW’s Global Benefits Attitude Survey found that:
These findings highlight a disconnect: While compensation is critical to retention, many employers struggle to structure and communicate their pay programs in ways that keep employees engaged.
If you’re concerned that your organization’s compensation strategy isn’t effectively supporting retention, start by reassessing your compensation philosophy—the guiding framework behind how you structure pay.
A strong compensation philosophy should be:
The workforce has undergone seismic shifts in recent years, shaped by the pandemic, inflation, generational changes, and evolving employee expectations. If your organization hasn’t updated its compensation philosophy to reflect these realities, now may be the time.
Whether you refine your compensation philosophy or not, it’s critical to assess the design of your program. Compensation isn’t just about base salaries—it’s a comprehensive system that includes:
One of the biggest missed opportunities in retention isn’t just offering competitive pay—it’s failing to effectively communicate the value of compensation. If employees don’t understand their full earning potential, benefits, or incentives, they may undervalue their total compensation package.
To ensure your compensation program is competitive, consider conducting:
By taking a data-driven approach, you can make informed decisions that strengthen both your compensation strategy and employee loyalty.
Compensation is one of the most complex and high-stakes aspects of running a business, and the challenge only grows as organizations scale. But with a well-defined philosophy, strategic design, and clear communication, employers can transform compensation into a powerful retention tool.
If you need assistance evaluating or refining your compensation program, our team can help. Let’s ensure your approach to pay supports both your business goals and your employees’ long-term commitment.
If you have any questions about this content, or if you would like more information please contact Jeff Wilkie, Principal of the HoganTaylor Talent practice. More information is also available on the HoganTaylor Talent page of this website.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.