Waves of layoffs from Google to Meta to Zoom may be dominating headlines, but this does not tell the whole story of what is happening with today’s workforce.
By necessity or by opportunity, the resilient companies we work with are seizing the opportunity of a slowing economy to get their company’s total rewards in order. Rather than managing their largest cost in the rearview mirror with staff cuts – a tactic that is both painful for employees and bad for the company’s reputation – businesses are working to gain greater real-time visibility into their total people investment and better manage it. It begs the question, if these mega tech companies had greater day-to-day oversight of total rewards and people analytics, would this scale of layoffs be happening?
Of course, economic headwinds are not the only challenge our clients are facing. Companies also are moving quickly to comply with fast-moving, new legislative changes such as pay transparency laws designed to ensure pay equity among their team members.
Companies are defining their compensation philosophy and pay ranges and adjusting levers in their total rewards program to make sure their cost structure is sustainable. This work helps leaders articulate a compensation approach so that employees have a clear idea of how their compensation will be determined going forward. We see our clients using the scalpel, rather than the axe, to manage their largest operating expense with an eye to the future because, as one banking CEO put it, any recession coming is likely “shallow.”
We all know how hard it is to replace good people, especially with unemployment still extremely low – currently said to be 2.4% in the Bay Area and 2.7% in Austin. Most laid-off tech workers are finding new positions in this still-tight labor market.
Establishing a comprehensive total rewards approach is not just a matter of compliance, although the cost of non-compliance certainly can be high due to fines and expensive litigation. In 2023, it is simply good business to have a framework in place so that top talent, boards of directors, and the investment community clearly can understand a company’s talent strategy, how hiring decisions are made, and how total rewards at one company compares to its competitors.
Our Total Rewards Advisory team has been very busy over the last year giving input to our Comp Management product team and helping clients navigate this complex process. By providing this service, our clients can both get compliant and start reaping the benefits of quicker hiring decisions, improved employee retention, and a more scalable people investment strategy. In the years ahead, these clients know that their investments in transparency will pay far greater dividends in company reputation and recruitment, as top talent knows their chosen employer is a safe place to land.
Taking the long view is difficult when margins are lean and the market is volatile, but the costs of delaying this important work, or worse yet getting it wrong, could be significant. The question for companies going forward is how long can you afford not to take a holistic and real-time approach with your total people investment?