When discussing compensation and benefits, it's always important to stay updated, both from the company's and the candidate's perspective. Custom compensation studies and salary surveys are tools through which one accesses objective information from a sample of market data. To attract and retain talent in changing and competitive environments, one of the organizational strategies is likely to be offering attractive fixed and variable compensation and benefits schemes. Having reliable information when designing compensation systems is crucial given the risk of resorting to informal sources. The same applies to a job seeker when defining their salary expectations for a career change or re-entry into the workforce.
In a context where the term bubble took on a new meaning in the face of the COVID-19 health emergency, it is functional to incorporate it into the world of work. How? To make analogies. For example, situations where companies in the analysis of their salary structure or candidates in a job search find themselves in a reality isolated from the environment and lacking information that ensures sound decisions.
We will call bubble candidate To those who, in their job search—whether employed or not—have salary expectations outside of market remuneration. Misinformation about labor market salaries positions them with reduced or elevated expectations relative to their experience and training, which is one of the difficulties they may encounter in selection processes. If elevated expectations are combined, moreover, with little flexibility in negotiating the job offer, it can be the reason they do not obtain an offer that meets their expectations. It is this mismatch that on many occasions will leave them out of selection processes, not their professional over- or undervaluation.
On the other hand, we will call Bubble company to those with salaries well above the 80th percentile or well below the 20th percentile, with few prospects of questioning their salary policies. These companies can even justify their positioning outside of reality by finding information from salary studies or surveys.
Companies seek access to reliable salary information, not only to attract and retain talent, but often to negotiate salary increases. bubble companies positioned in the top 20% salary-wise, when they receive market information, they find out how well-off they are in their current situation compared to the market. Prima facie, we wouldn't see major difficulties in a company with salaries above the 80th percentile. Without a doubt, compensatory policies with high fixed remunerations, attractive variable pay, and benefit packages are a magnet for candidates. But let's not forget that salary is something new during the first few months, then it becomes naturalized, lifestyles are adjusted to it, and what we already know happens: people want and “need” more. More compensation, more benefits. What happens with these bubble companies When reality tells them they are already being compensated above average, or even above the 80th percentile? This is a question that invites reflection on the challenges this poses for Human Resources management. The company faces the difficulty of not being able to retain talent due to salary increases, but it's a talent that also won't leave, given that the market offers them less pay. What a dead end. All of the above can also be a turning point for candidates and bubble companies, given that it confronts them with the reality that they are better off than they thought and above what they would perceive elsewhere.
Possibly in these situations, both for companies below the 20th percentile and for those above the 80th percentile, the concept of emotional salary comes into play—policies and practices not tied to salary but that contribute to quality of life and well-being within the company, such as flexibility, recognition, and development opportunities. In the percentile where companies compete for the same candidates, emotional salary is sometimes the factor that makes candidates lean towards one company or another.
The bubble is a term that speaks to isolation and protection, but also to fragility. The bubble exists until the company is compared with the competition or when the candidate goes out into the market to look for a job or is called for a new career opportunity. These situations burst the bubble and shift the compass. Both internal salary equity and external competitiveness are major challenges for companies in a changing and competitive environment. It is crucial to access remuneration studies, as when immersed in a bubble, one never looks outward for fear of breaking a supposed internal balance. Companies are open systems in constant interaction with their environment and must therefore update their remuneration practices in order to attract and retain the talent that makes a difference in the segment in which they compete.
by Ximena Carbone | Human Capital Manager
