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.Original question-This section discusses important issues that will shape compensation professionals’ work for years to come. Which one of these issues stands to create the greatest uncertainty for compensation professionals? Explain your answer
There are a number of key issues that will shape compensation professionals in the future including increase in the federal minimum wage, strengthening overtime pay protections, rising wages in China, underemployment and workforce demographic shifts (Martocchio, 2013). All of these issues present uncertainty to the compensation profession; however, workforce demographic shifts present the greatest challenge. The baby boomer generation (individuals born between 1946 and 1955) still make up the largest percent of the workforce. However, millennials (individuals born between 1981 and 2000) are starting to anchor an ever-evolving workplace. In Tajlili and Baker’s (2018) article, they stated many millennial college students expect more flexible work hours, more meaningful work experiences and enrichment outside of the workforce. This is a stark contrast from the baby boomer age group. For this group, work was their life. As newer generations enter the workforce and begin taking leadership roles, this trend will continue to present challenges for compensation professionals trying to weigh these new expectations with salaries. In Bourdeau, Oliver and Houlfort’s (2019) article, they stated a number of organizations are investing money, time and energy into offering formal and in-formal work-life policies. In large part, I think employers recognize and understand this shift in mindset between generations but are struggling with effectively implementing work-life benefits that are acceptable to both the employer and millennials. This is because employers benefited from the dedication of baby boomers. Employers must think outside of the box and implement better work-life balance practices.
Unlike baby boomers, millennials are expected to change occupations an average of six times over their career. This is also a stark contrast from previous generations where “job-hopping” was considered taboo. This presents a challenge to the compensation world because employers are consistently competing with one another to recruit employees. In years past, this was not as big of an issue because it was common for an employee to stay with one employer their entire career. This unofficial contract has eroded due to a shift in demographics.
Many emerging issues will shape compensation professionals for years to come. Issues like increase in the federal minimum wage, strengthening overtime pay protections, rising wages in China, underemployment and workforce demographic shifts are all playing a key role. The greatest of these issue is workforce demographic shifts, and this is an issue that will play a large role for companies in the future.
One of the major goals of an effective compensation strategy is to attract and retain quality employees. Compensation can be used as a reward for achieving organizational goals. Compensation is also used to focus on organizational strategies. Compensation strategies must be flexible. Compensation initiatives must be able to address future concerns. Compensation professionals must be able to meet the future demands in an uncertain environment.
The writer believes that workforce demographic changes will be the greatest uncertainty for compensation professionals. When a workforce is made up of similar people, then a benefits program will tend to be more effective for their needs will be the same or similar (Marocchio, 2013). Older workers are not retiring at the same rates they were in past years. A 2014 article in Public Management Review magazine states that populations and workforces are ageing. The public service industry is generally older than broader labor markets (Colley, 2014). This situation makes it harder for younger workers to find jobs and creates an older workforce. Older workers are more concerned with retirement and pension issues. The younger workers in an organization are more concerned with job security, higher wages, and paid time off. The differences in motivations create a challenging environment for compensation professionals.
Millennials are defined by those born between 1980 and later. They are characterized as technologically knowledgeable, better educated, and more ethnically diverse than any other generation. As of 2011, around 15 percent of the country’s labor force is said to be accounted for by Millennials. They are also expected to drive future economy as employees and consumers (Bannon, Ford, & Meltzer, 2011). Creating a compensation strategy that both attracts Millennial, and retains an older workforce will be the greatest challenge for compensation professionals.