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The impact of Total Rewards trends on critical digital talent

An accelerated focus on skills in a fast-paced market

By Michiel Klompen | November 18, 2020

The difficulty in attracting and retaining critical digital talent has been the most persistent top challenge for organizations globally.
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According to our latest Artificial Intelligence and Digital Talent (AIDT) Compensation Survey, 9 out of 10 are facing this problem and these figures haven’t changed much for the last three years. A lot of organizations have already kicked off their digital transformation journey but even so, the global supply of talent with critical digital skills haven’t kept up with the rising global demand.

The difficulty in attracting and retaining critical digital talent has been the most persistent top challenge for organizations globally

The recent global COVID-19 pandemic has highlighted this challenge even more. Many organizations have accelerated their digital transformation to address the crisis and in the process, intensified the demand for critical digital talent. There’s now a greater need for roles responsible for equipping organizations with the right tools and infrastructure for remote working, which requires a stronger security against cyber threats and risks. The current situation is also forcing many organizations to transform their business models to be more digitally oriented not only to thrive in the current situation but also in preparation for the future.

All the above-mentioned objectives require the right talent with the right digital skillset. That is why organizations formulate tailored strategies on pay and Total Rewards to attract and retain digital talent. According to our latest survey results, more than six out of ten organizations differentiate their rewards, benefits and/or talent management programs for digital talent. As shown in the figure below, most offer alternative working arrangements, and close to half offer higher levels of base pay. Enhanced learning and development opportunities also works for 35% of participating organizations.

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These differentiation strategies are meant to address the difficulty in filling roles that are crucial to the digital transformation journey of an organization. Employers also differentiate with the goal of setting themselves apart from the competition and have better chances of acquiring talent fit for critical digital roles. As digital technology and the business landscape evolve, skills needed also change. These emerging skills create new roles or are added to existing roles and in effect, adds up to fast moving demand.

We are seeing that organizations are shifting their focus towards skill-based reward strategies. This change started when organizations observed that new roles can’t always keep up with constantly changing skill requirements and that it’s the skillset that often dictates the difficulty in attraction and retention. Our study backs up this observation, saying that half of the organizations find it a main obstacle that highly in-demand specialist skills are too hard to find emphasizing the scarcity in the market.

of participating organizations require specialist skills that are too hard to find

It is critical for both the employer and the employee to have access to new skills in order to remain relevant and competitive. That is why learning and development is a critical component in an organization’s total rewards strategy. Not only that it helps employees remain relevant through upskilling and reskilling, but it also helps the organization meet its skills requirements by building assets from within and as an effective retention tool.

Moreover, many organizations now recognize that skills will become the ‘currency’ of the digital economy which means access to emerging skills will be key to achieving competitiveness. By recognizing these principles, organizations can pinpoint their challenges more accurately and overcome these by refining their approaches in designing a reward strategy that accounts for skills. Instead of providing an enhanced level of base pay based on the entire role, organizations can review the different available approaches to differentiate pay only for the skills that matter most. This is becoming more evident and our findings show that 85% of organizations are compensating for hot skills (e.g., machine learning frameworks, natural language processing, cryptography). Organizations can now account for skills in their reward strategies by considering this as an extra layer of flexibility and adaptability to adjust pay packages based on the current skills-on-demand.

of organizations are compensating for hot skills

The trends show that organizations are starting to adopt longer-term and carefully thought out solutions rather than quick fixes to address the difficulty in attraction and retention of critical digital talent. The renewed focus on skills is one way to future-proof organizations but also to retain and engage talent, motivated to grow through reskilling and upskilling, and to have a bigger impact or value in the organization.

Next steps

While most of the organizations are currently differentiating rewards for hot roles and skills on a discretionary basis, we expect that it would eventually change into formal policies once they have a better understanding of the impact of skills on pay. That is why it is highly important that organizations have access to accurate and quality market data and insights to help them appraise skills, understand the market and make data-driven pay decisions. The digital landscape is evolving fast and being well-informed is key to keeping up or at best, being a step ahead.


Director, Work & Rewards
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