HR and compensation leaders always need to be looking ahead. They have to anticipate and adapt to the evolving landscape of compensation and benefits, so they can stay competitive and continue to attract and retain talent.
But without a crystal ball, it’s not always easy to know what’s coming. The market can change quickly, and employee expectations and preferences are always in flux.
Thankfully, at Figures, we’ve been keeping a close eye on the world of compensation this year. So before the end of the year, we wanted to share our thoughts about the biggest trends that are likely to have an impact in 2024.
Let’s dive in.
5 compensation and benefits trends to look out for in 2024
2023 has been quite a ride for HR and compensation pros. Back in January, headlines were filled with high-profile tech layoffs — and although the pace has eased throughout the year, they haven’t stopped.
And, while we've bid farewell to the sky-high inflation and surging energy prices of 2022, employers in various European countries are still grappling with helping their teams cope with rising costs. In the UK, for instance, 52% of adults said in a recent survey that their cost of living had increased in the past month alone.
And of course, the spectre of the EU pay transparency directive has been hanging over us and influencing many of our conversations about compensation.
But what’s in store for 2024? Read on for our predictions for the top 5 compensation trends we’ll see over the next 12 months.
1. Pay transparency
Pay transparency has been the talk of the town this year, thanks to a new EU directive that was adopted by the EU Council in April this year, and published in the Official Journal of the EU (OJEU) in May.
Member states have three years from that date to transpose the rules outlined in the directive into national law. Naturally, that means that many companies across the EU are already thinking about how they can up their transparency game — and these conversations will continue into 2024.
Salary transparency for jobseekers
Once the directive is in force, employers will be required to tell job seekers the expected salary (or salary range) for positions they advertise. In practice, this usually means including this information in your posted job descriptions.
Of course, this rule won’t be in place across the EU for a couple of years. But unless our crystal ball is faulty, we think we’ll see a surge in companies voluntarily embracing this practice in 2024.
Why? Well, for one thing, it’s the right thing to do. But it’s not just that: it can also be a game-changer in terms of talent attraction. According to a recent survey, 80% of jobseekers would likely pass on applying for a job if pay information wasn’t disclosed.
Transparency on compensation the compensation policy
When we talk about pay transparency, most people tend to think about disclosing salary information to employees and jobseekers. But there’s also another side to it, which we think will be big in 2024: transparency on your compensation structures, systems, policy and processes.
Here’s the deal: employees want to know that they’re being paid fairly and equitably. And it’s not just about the cold, hard numbers — they also want to understand the logic behind them.
In 2024, we predict we’ll see more companies pulling back the curtain on their compensation policies and philosophies, so candidates and employees can see the thought process that goes into determining salaries.
2. Focus on internal equity
Once the directive is in force, all employers with 150+ employees will have to report on their gender pay gap — and actively address and rectify it if a gap is found.
While that requirement won’t come in for another couple of years, there’s no time like the present to get ahead of the game. And we’re already seeing some companies allocating a portion of their compensation review budget to tackling the gender pay gap.
But this push for internal equity is about more than just legal obligations. It could also be a key factor in attracting and retaining talent in 2024.
In a survey conducted in the UK, a whopping 92% of respondents said they would consider pay gap data when choosing between two employers. And in another survey from 2020, 59% of employers who were aware of a gender pay gap in their company said it negatively impacted candidate attraction, and 61% said it affected staff retention.
The fact is, internal equity is not just good practice; it’s increasingly becoming a deal-breaker for top talent. That means companies need to take serious action to combat their gender pay gaps in 2024 — whether or not they’re required to by law.
Here’s what that might look like depending on your organisation:
- Conducting pay equity analyses to understand the extent of your problem
- Providing generous parental leave and benefits to help parents and caregivers
- Adopting flexible working arrangements to meet diverse employee needs
- Reviewing and revising your recruitment processes to root out in-built biases
- Implementing measures to promote equal representation in high-level positions
Plus, here’s one of the most impactful things you can do to combat the gender pay gap: be transparent about your pay practices. Our own research suggests that transparency drives equitable pay.
3. Increased emphasis on total rewards
In 2024, we predict that employers will look beyond base salary and put a greater emphasis on total rewards as a full package — for a few reasons.
First, many employers are operating with tighter budgets, which means they may not be able to pay the salaries they’d like to. By reevaluating their entire benefits package, employers can craft solutions that provide the necessary value to employees while remaining budget-friendly.
Plus, employers aren’t alone in feeling the pinch of the current economic climate — their employees are too. And unfortunately, this will likely continue into 2024.
That means we’ll see companies offering benefits that specifically aim to help those employees with the rising cost of living — like employee discount programmes or membership schemes, for example. We’ll also likely see companies increasing their focus on financial support for employees, through things like awareness sessions on budgeting, managing debt or the importance of paying into a pension.
Put simply, it’s not just about the paycheck any more. Instead, it’s about creating a comprehensive package that truly addresses the evolving needs of employees in the current economic landscape.
4. Personalised, customisable benefits programmes
Over the past few years, the way we work has changed a lot. And one big lesson we’ve learned is that different employees have different needs and priorities. For companies that want to attract and keep good people in 2024, understanding these differences is key.
Here’s an example: since 2020, many companies have shifted to remote or partly remote work. But many haven’t considered that this doesn’t look the same for everyone. Parents of young children, those with care responsibilities, or young employees still living with parents might all find it difficult to work comfortably from home.
Of course, we’re not here to talk about remote work — but we can apply the same logic to employee benefits. Different employees want different things, and employers that give them this choice will have a definite competitive advantage in 2024.
Here’s an example: BNP Paribas Leasing Solutions has really nailed customisable benefits for its employees in the UK. In addition to a competitive salary, bonus and pension scheme, all permanent employees have access to a package of flexible benefits including everything from dental insurance to vehicle breakdown cover to season ticket loans.
5. Technology and automation coupled with human insights
As compensation and benefits systems get more complex, companies need to rely more and more on technology. All manner of apps, platforms and tools help compensation leaders streamline processes, enhance accuracy and reduce their administrative load.
In 2024, we’ll see companies increase their use of everything from apps that manage flexible benefit programmes to platforms that provide smart and accurate performance evaluations.
But the big news for 2024 and beyond will be the increasing use of AI in compensation systems (and everywhere else). In our recent article on the subject, we talked about a number of ways that companies are already using AI to enhance their compensation systems, including our own product, FiguresAI.
It’s too soon to say exactly what impact AI will have on the compensation landscape over the next twelve months. But we are confident about one thing: AI tools won’t be capable of capturing the subtle nuances that go into the compensation process. While they might make life easier for HR and compensation leaders, they’ll continue to be used alongside those leaders’ own intuition and expertise.
Figures: your source for reliable salary insights in 2024
The one thing every organisation needs in 2024? Access to reliable, real-date compensation data. After all, without it, you have no way of knowing if your salaries are really as ‘competitive’ as you say they are.
So, what can Figures help you to do? A few things:
Want to find out more? Sign up for a free demo to kickstart your journey with Figures.