Human Capital & Careers

Employers to Focus on Retention Programs in 2017

Pay raises are expected to remain consistent at 3%, but companies plan to increase spending on programs designed to keep top performers.
Sean AlloccaOctober 20, 2016
Employers to Focus on Retention Programs in 2017

Employers aren’t expected to increase spending on traditional pay raises next year, but they might dish out additional cash in the form of retention programs aimed at holding onto the company’s top performers.

The 10th annual Compensation and Planning survey from Xerox HR Services polled 172 companies about pay increases, short-term incentive plans, attraction and retention programs, and pay-for-performance patterns. The results indicate that in 2017 there will be a shift from this year’s cost-cutting to an emphasis on retaining top talent.

“Attracting and retaining top talent is increasingly critical, and organizations need to continue – or start – finding creative ways to do so,” says John Gentry, president of Xerox HR Services.

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The October 2016 survey shows companies are finding creative ways to reward their best workers, like lump-sum payments and market-based pay adjustments. Thirty-seven percent intend to determine market pay adjustments for high-potential employees. However, nearly all respondents that plan to offer lump-sum payments in 2017 will do so to reward those who have reached their pay-range maximums.

“These findings reflect a sign of optimism among employers as they shift gears from controlling costs to engagement,” Gentry says.

Employers are also hoping honesty and transparency will help them hold onto high-performing employees. Sixty-four percent of responding companies say they intend to share their compensation philosophy and strategy with employees, while 69% will communicate the value of total rewards packages.

“Organizations are acknowledging employees’ desire for more transparency around total rewards,” Gentry says.

In addition, 59% of respondents say they provide employees with results relating to organizational performance, and the impacts those results may have on pay across the board.

“Providing information on compensation philosophy and strategy, as well as business results, helps employees understand the effect on their pay and the value of their contributions to the organization,” Gentry said.

Employers were not as likely to share information on possible pay increases associated with levels of performance, or the full pay structure for jobs within the same class or group.

Over half (54%) of employers expect normal hiring in 2017. Pay raises are expected to remain consistent at 3%.