With the Selic rate at 10,5%, Brazil currently has the second highest real interest rate in the world. In a scenario like this, it is crucial to find a balance that allows for the financial sustainability of companies while also enabling the retention of essential professionals for business success
The high interest rates and inflation have significant impacts on both companies and their talents, what requires a quick action regarding not only the definition of the correct compensation strategies, but also the way of communicating them to the employees, says Paulo Saliby, co-founder of the consulting firm SG Comp Partners, specialized in designing 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 they affect revenues and profitability due to reduced consumer spending. The collaborators, in turn, are directly impacted on your purchasing power, what reduces your perception of the value of the compensation received, explain Saliby
In light of this context, one of the biggest challenges for Human Resources is to communicate to talents issues related to the rewards portfolio. In these periods, many times, changes in compensation strategies are necessary and impact the perception of the value 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, to identify concerns and create inclusive solutions
"It is also interesting that there is financial transparency", so that everyone clearly understands the situation and the reasons for the compensation decisions, reducing anxiety and increasing understanding. Furthermore, it is important that they know what the company's vision for the future is, that is, your growth plans and compensation practices, to maintain the trust and motivation of the team, highlights Saliby
According to the consultant from SG Comp Partners, to have a fair and understandable compensation plan in times of economic uncertainty, the company should align compensation with business objectives, maintaining employee motivation and adapting incentives to the market reality."This ensures that the programs do not contain excessive risks and that the interests of the talents are aligned with long-term goals", believes the consultant
In this process of adapting compensation strategies to uncertain times, 10 main components must be considered
1) Use shorter performance periods, as semester or quarterly, to enable the establishment of more dynamic goals and adjustments based on constantly changing economic conditions
Make discretionary adjustments at the end of the cycle based on actual results and the company's responses to ensure fairness and alignment with performance.
3) Adopt an incentive plan that works well even in uncertain times, avoiding very narrow triggers or unreachable performance conditions
4) Maintain transparent communication with talents about the company's status, the impact of economic conditions and how incentive plans fit into the overall picture
5) Provide continuous feedback and regularly monitor the organizational climate to keep employees informed and motivated, allowing course corrections, if necessary
6) Offer retention bonuses for key talents in order to maintain stability and motivation during uncertain times
7) Use data analysis to optimize compensation expenses, model cost projections and understand the correlation between payment and performance
8) Shift the focus exclusively away from financial metrics, including other dimensions of performance, connected with the company's future competitiveness
9) Create a strong governance structure, involving the areas of risk management, finance and senior management, to supervise the design and implementation of incentive plans
10) Incorporate accelerators linked to the achievement of challenging strategic objectives, how to sell new products or penetrate new markets
"In moments of instability", the engagement of key talents is even more essential to ensure innovation and good business performance, given that a good compensation strategy can be the determining factor for the company to retain its main capital – the human, motivated and ready to be more productive and relevant, highlights Saliby
