As we see an aging executive core retiring within the insurance industry, attracting and retaining talent will become more challenging now and in the near future.
The Great Resignation has drawn experienced and talented people out of organizations, culled the talent pool that is available, and intensified other employee engagement issues that have been in existence for a period of time.
It is commonplace today to see organizations struggling to engage and keep their talent. We are in a new multi-faceted work environment that includes implementation of new work arrangements, cultures, diversity & inclusion. But what is the role for compensation in this discussion and how can compensation committee’s support management in this challenge?
The conventional strategy tends to be to increase pay levels or retention awards. This is certainly prevalent with executives in some specific functional areas and in-demand roles. However, tossing money at the retention problems only buys time, not loyalty. In the current environment, the ‘how’ of compensation is proving to matter more than the ‘how much’.
The Great Resignation has cultivated other needs. Employees are looking for more individualization, greater inclusion, and more alignment to a greater purpose.
We are seeing numerous ways organizations respond to that through a compensatory lens, both at the executive and employee levels:
For Executives: Objective-Driven Pay- Building a committed executive team that believes in the vision and direction of the business and is aligned with multiple stakeholders. Executives stay because they believe in the organization and they are part of building something, not just earnings only.
For Employees: More Equity/Long-term Pay- Align more employees to the organization’s future success and give them certain wealth-building opportunities for seeing it through.
In addition, we are seeing organizations reevaluate their overall economic sharing strategy – this would be incentive pay between executives and employees, and the organization and its shareholders.
Compensation committees tend to focus on the annual calendar. However, they should be initiating a creative solution that ensures the organization remains focused on its long-term objectives – retention, and attraction of top industry talent.