In a new report, Payscale Inc., a provider of compensation data and services, identified key practices that distinguish top performing companies from their peers.
According to the 2024 Top Performers Report, organizations that exceeded their revenue targets in 2023, regardless of size, share a common trait: proactive, transparent, and communicative pay practices.
“Today’s employees expect visibility into the ‘why’ behind their pay,” said Lexi Clarke, Chief People Officer at Payscale. “Seeing such a clear and measurable connection between proactive, transparent, and communicative pay practices and organizations that exceed revenue targets should make every executive pause.”
The report, which draws on data from Payscale’s Compensation Best Practices Report in the U.S., underscores several key findings:
- Company Size Irrelevant to Performance: Both large and small companies can implement effective compensation practices. Approximately 21% of organizations, including both large enterprises and small businesses, exceeded their revenue targets in 2023 despite economic challenges.
- Importance of Pay Communication: Top performing companies prioritize clear communication about pay. The report reveals that 57% of these organizations share pay ranges even when not legally required, compared to 43% of non-top performers.
- Proactive Addressing of Pay Discrepancies: Nearly 71% of top performing companies address underpaid employees proactively, while only 32% of non-top performers take action reactively, typically when an issue is raised by employees or managers.
- Always-Accessible Pay Information: Over half (52%) of top performing companies provide employees with accessible pay communications explaining the rationale behind their pay, compared to 35% of non-top performers.
- Use of Compensation Technology: Top performing organizations are more likely to use or evaluate compensation management software. About 59% of top performers engage with such technology, compared to 50% of their under-performing counterparts.
- Investment in Dynamic Data Sources: A third of top performers (31%) invest in dynamic data sources beyond traditional salary surveys to stay current with market conditions, a practice followed by only 17% of non-top performers.
- Adoption of AI: Overall, 9% of top performing organizations use AI for benchmarking and predicting pay ranges, with this figure rising to 12% among large enterprises. In contrast, only 3% of non-top performers use AI.
“The message is clear: companies that exceed revenue targets are purposeful about their pay practices,” said Ruth Thomas, pay equity strategist at Payscale. “These organizations demonstrate they value their employees by being one step ahead when it comes to pay discussions and decisions, positioning them for superior performance outcomes.”
Payscale’s Top Performers Report is based on a survey of 5,735 compensation professionals and HR leaders conducted between October and December 2023.