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Compensation Trends Driving Recruitment and Retention in 2015


Compensation is often critical to attracting, retaining, and rewarding high-performing employees. While businesses think of innovative ways to reward employees, from investing in systems that make work easier to offering more flexible and comprehensive benefits packages, addressing issues related to employee pay remains essential. Here's a closer look at some of the top trends that are influencing employee compensation in 2015.

Compensation Rises Amidst Favorable Employee Impressions

As reported by the Society for Human Resource Management (SHRM), compensation rose an average of 2.8 percent this year, representing a break out from the stagnant compensation levels of the last few years. The CEB Total Rewards Leadership Council also noted a positive increase in employee perceptions around compensation related to manager fairness, organizational fairness, internal equity, and external equity. Each of these is good news for businesses, but underscores the importance of considering raises and bonuses in connection with this year's review cycle.

Compensation trends driving recruitment and retention - paychex

Increasingly Competitive Compensation for Recruiting

Another factor that companies need to consider when developing their compensation models is recruiting. Over the past few years, high-quality jobs in many parts of the country have been scarce and open positions have likely received numerous applications. As the economy has recovered, qualified candidates are finding more opportunities. At the same time, companies are focused on growth and attracting top candidates is important to achieving company goals. Certain positions — such as technology developers and high-level executives, for instance — are particularly in demand. Competitive compensation packages are often essential for attracting the best candidates. As reported by the CEB, candidates expect a modest pay increase of around 8.5 percent in order to switch positions. A reputation for strong compensation can help build positive brand associations among groups of target recruits.

Evaluating Compensation for Retention

While companies are investing heavily in attracting great new candidates, it is also a time when they are thinking strategically about retaining their star performers. An increase in external job opportunities can mean more exploration of new career opportunities by active job seekers and a higher risk of headhunting for passive job seekers. To combat the potential loss of key employees, businesses will want to evaluate their own compensation models. Is internal equity aligned, clear, and fair? Do your base pay, raises, bonuses, and other forms of compensation meet your industry's standard? Companies falling below that standard risk opening the door to employee attrition.

Compensation and Benefits

Employee pay, raises, bonuses, and commissions are expected to remain the most important elements of employee compensation in the year ahead. One study suggests that employees subsequently value vacation time and policies, healthcare benefits, and opportunities to save for retirement. While total compensation and benefits offered are important, employees are increasingly looking at the monetary value of their salaries in relation to ongoing satisfaction and employer loyalty.

Trends in 2015 suggest that companies are evaluating their compensation models as employees begin to expect higher pay. Whether your goals are improved recruiting or employee retention, compensation will likely be a critical issue in the year ahead.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.