The typical compensation planning process uses pay data from organizations submitted to survey providers on an annual basis. While this may be enough data to benchmark pay for most roles, it can be a real challenge for hot jobs where pay can change rapidly. Identifying or even anticipating emerging trends in hot jobs ensures your organization remains competitive in its rewards strategy.
But first, let’s define what we mean by a hot job.
Identifying hot jobs can be a tricky process. You may observe a few factors at play such as when demand for talent outpaces supply, when the number of jobs or incumbents grows rapidly, or when turnover rates are high. Jobs that are mission-critical or related to new or emerging technologies are also defining characteristics of a hot job. The heat of the job typically results in pay increasing faster than the market or a rapid increase in base salary year-over-year. Some hot jobs may even see a sustained salary increase across multiple years. Demand for certain skills to get work done can also be a factor that causes certain jobs to heat up. While most hot jobs in today’s talent market are digital roles, hot jobs can also vary by sector, country and career stage. For example, in the current environment, we observe increasing demand for Environmental, Social, and Governance (ESG) jobs to address key priorities around corporate sustainability, diversity and inclusion, and employee health and wellbeing.
Now let’s explore four trends making an impact on how compensation professionals pay for hot jobs in today’s competitive environment.
Hot jobs can present many challenges for employers. In an April 2021 poll of Willis Towers Watson clients* addressing hot jobs, more frequent pay reporting and rewarding for skills, 94% of respondents cited the disparity of job configurations across organizations as their biggest challenge when rewarding for hot jobs, followed by market pay reflecting established incumbents. Other challenges included missing data at the skill level and market pay data not being refreshed fast enough.
Source: Willis Towers Watson’s Hot Jobs and Rewards for Skills client poll – April 2021Chart showing challenges employers face when rewarding for hot jobs based on responses received in Willis Towers Watson’s April 2021 Hot Jobs and Rewards for Skills client poll. It shows disparate job configurations as the biggest challenge with 94%, market pay data reflecting established incumbents at 81%, and missing data at the skill level 81% down to understanding the methodology for skill premium data at 62% and defining what a hot job is at 57%.
Finding a reliable, skills-based view of traditional reward and talent management applications is a challenge. Skill data are patchy, use inconsistent taxonomies, often lack robustness or granularity, and are difficult to reconcile across multiple sources with any kind of consistency. Employers may want to consider using analytics software like SkillsVue to determine the aggregate value of skills for the exact job configuration of digital roles within your organization.
When analyzing hot jobs, we typically look at roles where significant increases in base salary and incumbents are observed. However, skills continue to play a key factor when benchmarking hot jobs. In fact, according to our latest Artificial Intelligence and Digital Talent Compensation Survey, 85% of organizations are compensating for hot skills including machine learning frameworks, natural language processing, and cryptography.
Digital skills have experienced an unprecedented surge in market value. Digital talent now accounts for 30% of the top 20 hot jobs for intermediate level professionals and more than half of the top 20 for experienced and/or specialized professionals according to our latest research.
Source: Willis Towers Watson Compensation Database, 2020Bubble chart showing digital talent accounts for 30% of the top 20 hot jobs for intermediate level professionals and more than half of the top 20 hot jobs for both career and specialized professionals according to our latest research.
Again, in our April 2021 Hot Jobs and Rewards for Skills client poll, 100% of respondents* cited the availability of skill-based pay data as one of the biggest impediments to their pay decisions. With salary budgets flat or declining over the last decade, employers are thoughtful in how to address skill gaps and respond to market pressure. Alternative salary bands, often used in high inflation markets, have been repurposed for highly in-demand skills. The use of skill allowances, which help account for any potential cooling off of pay down the line, is another approach we see employers taking.
While these methods might be enough to attract and retain critical talent, demand outpacing supply gives CEOs cause for concern – with 74% of CEOs responding they are concerned about the availability of key skills and worried that talent shortages will constrain growth. Other key challenges in rewarding for skills cited include missing compensation data at the skill level and a lack of governance and consistent way to rate skills.
As menial or repetitive tasks are automated by Artificial Intelligence (AI) and other types of automation, new jobs with new skills sets are emerging. The traditional construct of a finite job is evolving, and this creates new pressures on supply and demand for jobs.
For example, in a recent survey report, Willis Towers Watson colleagues in Singapore examined how the HR function might be impacted by automation, and which skills will become critical to the function over the next few years. Data analytics, AI, talent experience (e.g., user-centric design, talent persona creation, career journey design) and agile pay structures were some of the highlighted skills.
Agile ways of working have given birth to cross-functional teams that grow and learn from constant interactions across functions. An example is the inclusion of data analytics and visualization skills across traditional functions such as Human Resources (e.g. “people analytics”), Marketing (e.g. “customer analytics”) and Finance (e.g. “revenue management), which reflects a realization that AI and data analytics can help achieve better business outcomes. Another example is the utilization of lean canvas and design thinking techniques in order to craft superior employee experiences. Breadth of expertise is increasingly viewed as the necessary glue that brings people together and fosters collaboration in the pursuit of productivity gains.
The post-pandemic rebound calls for a curated employee experience and strategic rewards investments. Employers that haven’t identified which talent pockets are most critical to their business and how to maintain current talent flight risk at its current level will struggle the most. Being able to confidently defend hard-to-make pay calls in front of an always dollar-hungry talent acquisition clientele will become even more of a challenge. Up-to-date market data is critical to crafting a successful rewards strategy. It ensures your organization is investing wisely, in line with the latest market practices and helps you to anticipate emerging issues around pay and benefits. Place your order for the most current pay and benefits today.
*Data is based on 22 employer responses received from clients around the world.