2020 Pay Practices and Compensation Strategy Survey | Salary.com

As the nature of skills continues to shift rapidly, organizations need to keep a pulse on what skills they need from their workforce (demand) and ensure that the talent with those skills is available when required (supply). And for skills that are in short supply and high-demand (usually referred to as “hot skills”), firms need to rethink this trend’s impact on their reward structure and compensation philosophy. The result could be a more significant shift towards skill-based compensation systems in which compensation and rewards directly focus on the individual and their unique skills, rather than merely the title of their position and level. This 100-page report includes a section on compensating employees with hot skills (pages 54-58). According to the report, 66% of respondents compensate employees with hot skills mostly by incorporating a premium into base pay (51%), a hiring bonus (34%) or slotting the employee into a higher salary range (31%). When calculating a premium as a percentage of salary, most respondents (27%) target a premium of 10 to 20% of base pay. Firms can leverage workforce planning and AI-based skill inference platforms to identify skills that warrant a premium.