Data is revamping the traditional landscape for compensation & benefits
The landscape for rumeneration & rewards is set for radical change in the years ahead, fueled by the power of data and artificial intelligence, according to Martin McGuigan, founder of Compensation & Benefits Middle East.
For decades, compensation & benefits have bee driven by traditional pillars such as employee job architecture, salary houses, and performance cycles that drive change in salary, bonus and other rewards.
Yet much of that process was done based on once in a while benchmarks, while performance management cycles tend to be informed too a lot by subjective processes.
With the rapid rise of data, which can bring deep insights and at speed, CHROs can unlock significant value in their compensation & rewards. This can range form the macro-level – understanding trends in rewards and industry-wide developments – to the very micro-level – such as uncovering pay gaps between individuals or to performers that would deserve a pay rise.
“Many organizations in the rely on outdated ways of thinking about how data can be used,” says McGuigan, who has over two decades of experience in the sector and currently runs his own boutique consulting business. “By gaining access to much more data – externally and internally – CHROs can take major stepds in professionalizing and optimizing the rewards of their workforce.”
In light of key satisfiers (and dissatisfiers), having a great compensation & benefits performance eis very important, as it is the anchor for talent retention and hiring.
Disruption at the side of providers
For providers of compensation & benefits data, typically large HR houses, headhunters or specialized consulting firms, the rapid democratization of data will disrupt their models, says McGuigan.
“Data availability is being transfirmed due to AI – they are so many readily available sources for firms to utilze if they just know where to look and what to ask.”
Especially across research where companies disclose their own data, McGuigan points out that companies will expect more quality and lower prices or preferably a free service as they understand the data they are providing is a “commodity with real value”.
The real change he adds will be in the transition that is taking place from one-time annual snapshots to rolling databases. “The issue of outdated data has been a traditional issue for the industry. With rolling databases, data updates everytime there is a new submission – immediately reflected in benchmarks and recommendations.”
McGuigan concludes: “The future will be to provide those who submit data free access to the database they help create. The platform provider will still curate the data and ensure it is reliable and it will be a strict data in data out process. Users will be provided with the ability to create customized peer groups and interrogate the system.”
“There will be no more big fees to buy data which is current only once a year and often misses out key components of the total reward offering.
According to McGuigan, the development is being seen around the world, and with the Middle East becoming increasingly cost conscious, “the days of data firms borrowing your data and charging you to tell you the market are behind us.”
