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4 Ways to ensure a fair compensation structure

4 Ways to ensure a fair compensation structure whilst supporting business growth

from  September 9, 2022 | 5 min read

Amidst a volatile geopolitical climate against rising business and living costs, companies must stay competitive with business and workforce transformation to support wage growth underpinned by productivity increases.

Across the Southeast Asia region, we had seen various initiatives across Singapore, Thailand, and the Philippines to increase the minimum wages and the introduction of the Progressive Wage Model (PWM) and Lower Qualifying Salary (LQS) for lower-income employees so that they are remunerated to be able to do business, allowing them to live happily and still able to increase the purchasing power within the country. This however poses a challenge to the businesses in managing and keeping check the labour cost against the business growth and sustainability. 

To ensure wage increases are sustainable, companies can adopt the following:

1. Redesign and enhance the value of existing lower-wage jobs

Job redesigning allows companies to re-examine the job scopes and key performing indicators of the roles within their organisations so that employees can be cross-trained and upskilled to stay relevant and to keep employees engaged and motivated in their roles.

Case study - job redesign

Security and room services’ roles encompass regular movements within a fixed compound. A job redesign capitalises on the similar nature of both roles to expose both teams to the other area of work. 

Upon completion of training, trained employees will be placed in a consolidated pool and be rostered to function on a rotational basis as part of their regular job scope.

2. Reducing reliance on manpower

With the aging population happening globally, the number of employees entering the workforce would reduce drastically in years to come. However, in the new phenomenon, we can see future generations becoming more educated and tech-savvy through the various exposure to technology since young. In order to deal with the new revolution, it is essential for businesses to reduce reliance on manpower and starts to automate tasks and processes to increase the efficiency and productivity of the employees for other more valuable inputs and outcome. 

Case study - transforming customer service with automation and AI

A customer service support agent would primarily have key questions to define before being able to pinpoint and solve the customer’s queries. An AI chatbot with the customer experience in mind can address the customer’s problem prior to reassigning it to the available or relevant customer support agent. The additional time make available can help the customer service agent to formulate a response ahead of time so that the time spent on each query can be reduced which would in turn help each agent to manage more queries in the same duration. 

3. Upskilling employees for higher-value roles

As a fair and inclusive society, we must accord our employees with dignity and respect, as well as provide them with pathways to progress. We had talked about redesigning jobs and reducing reliance on manpower and the above two points coincide with how we need to upskill or reskill the employees so that they are able to stay relevant and employable. 

Case study - upskilling employees to stay relevant

Covid-19 had changed the landscape of how businesses operate. When lockdowns were observed globally, retail employees were one of the hardest hits when shops are closed. In order to retain their employees, upskilling is a must. Many businesses including the management team went on to learn how to move digital or grow their online presence. Retail employees would have to shift their mindsets from interacting with customers in person to interacting through an online platform and ensuring the dispatching of orders is fulfilled on a timely basis. The upskilling of employees had increased their employability allowing them to take on higher-value jobs.

4. Instilling a fair compensation framework

Wage flexibility is key for businesses to navigate economic uncertainty, increase job security for employees, and ensure that wages are adjusted fairly and sustainably. In order for businesses to comply and yet stay sustainable, a framework needs to establish to record the allocation of labour costs, rewards, incentives, and bonuses against the budget and to be able to align rewards and recognition with employee performance and skills.

Case study - aligning compensation strategy with business goals

Managing appraisal and how to reward employees who had contributed to multi disciplines through the job redesign process has always been a challenge among businesses. Many times, a standard set of percentages that applies to the entire organisation can be the only way to streamline processes, however, this does not sit in favour of the top-performing employees who had performed above and beyond. We know that in the Great Resignation, one of the triggers was employees felt that they were not valued enough. Hence, to be able to keep a framework of compensation against their performance and tie back the labour costs against the company budget to provide the flexibility to incentivize your top-performing employee becomes critical.

How can compensation planning software help you?

Unit4 Compensation Planning is built specifically for the needs of mid-market organisations, providing your organisation with the ability to plan, make, and communicate pay decisions in a single solution, define unique compensation programs, policies, and compliance requirements, and gain insight into your organisation’s remuneration structures to identify trends, issues, and opportunities through a single source of truth for all your employee salary data.

To find out more about how you can create a fair and performance-based compensation plan for your team, contact us.

Jocelyn Ma

Solution Consultant, Unit4

Jocelyn is a Solution Consultant with Unit4. She has more than 10 years of experience working with HR across multi-disciplinary functions from recruitment, compensation and benefits, learning and development, and workforce planning. Due to the nature of working with various stakeholders and HR functions when delivering projects, she has a vast and deep knowledge of how various industries and job functions should operate as best practices. Jocelyn is always zealous about improving a process flow or working on an enhancement that could help HR to solve a tedious or teething problem. She had also completed a 20,000 words thesis on “Employee Turnover” during her university days. 

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