With the Selic rate at 10.5%, Brazil has today the second highest real interest rate in the world. In a scenario like this, it is crucial to find a balance that allows the financial sustainability of companies and at the same time enables the retention of professionals essential for business success.
“High interest rates and inflation have significant impacts on both companies and their talents, which requires rapid action not only to define the right compensation strategies, but also to communicate them to” employees, says Paulo Saliby, founding partner of consulting firm SG Comp Partners, which specializes in the design of compensation plans.
This is fundamental because, according to the consultant, high interest rates make access to credit for investments more expensive for companies, increasing the cost of capital for growth initiatives, innovations and acquisitions, as well as affecting revenues and profitability due to the reduction in consumer spending. “Operformers, in turn, are directly impacted on their purchasing power, which reduces their perception of the value of remuneration received”, explains Saliby.
In this context, one of the biggest challenges for the Human Resources areas is to communicate to talents issues related to the rewards portfolio. In these periods, often changes in compensation strategies are necessary and impact the perception of the values of the plans offered by companies. To make the best decisions, it is important that the company environment is receptive to feedback, that is, that employees are encouraged to share opinions about their package, so that concerns are identified and inclusive solutions are created.
“It is also interesting that there is financial transparency, so that everyone clearly knows the situation and the reasons for remuneration decisions, reducing anxiety and increasing understanding.In addition, it is important that they know what the company's vision of the future is, that is, its growth plans and remuneration practices, to maintain the trust and motivation of the” team, Saliby points out.
According to the consultant of SG Comp Partners, in order to have a fair and understandable compensation plan in times of economic uncertainty, the company must align remuneration to business objectives, maintaining employee motivation and adapting incentives to the reality of the market. “This ensures that programs do not contain excessive risks and that the interests of talents are aligned with long-term goals”, believes the consultant.
In this process of adapting remuneration strategies to uncertain moments, 10 main components should be considered:
1) Use shorter performance periods, such as semi-annual or quarterly, to enable more dynamic target setting and adjustments based on ever-changing economic conditions.
2) Make discretionary adjustments at the end of the cycle based on actual results and company responses to ensure equity and alignment with performance.
3) Adopt an incentive plan that works well even in uncertain periods, avoiding very narrow triggers or unreachable performance conditions.
4) Maintain transparent communication with talent about the status of the company, the impact of economic conditions and how incentive plans fit into the big picture.
5) Give continuous feedback and regularly monitor the organizational climate to keep employees informed and motivated, allowing course corrections if necessary.
6) Offer retention bonuses to key talents in order to maintain stability and motivation during uncertain times.
7) Use data analysis to optimize compensation spending, model cost projections, and understand the correlation between payment and performance.
8) Divert focus exclusively from financial metrics, including other performance dimensions, connected with the future competitiveness of the company.
9) Create a strong governance structure, involving the areas of risk management, financial and senior management, to oversee the design and implementation of incentive plans.
10) Incorporate accelerators linked to achieving challenging strategic objectives, such as selling new products or penetrating new markets.
“In times of instability, the engagement of key talent is even more essential to ensure innovation and good business performance, and a good remuneration strategy can be the determining factor for the company to maintain its main capital (the human, motivated and ready to be more productive and relevant”, says Saliby.
