As a compensation and rewards professional, you’re familiar with the annual compensation review process.  

However, the traditional approach of undertaking the compensation review at a fixed cycle, like a year, should be reimagined. The challenge is the rigidity of the process, keeping organizations slow towards adapting to fast-paced changes in the workplaces.  

To keep pace with these changes, organizations must embody the concept of a continuous review cycle. Continuous review is a new concept, but it is more dynamic and proactive.

With a continuous review cycle, organizations not only get the benefit of reacting to market shifts and employee growth but also anticipate them proactively.  

What is continuous compensation review?

Continuous compensation review doesn’t follow a fixed schedule but establishes a flexible framework. This framework empowers compensation teams to conduct ongoing performance evaluations, execute potential compensation adjustments, and exchange feedback with employees.  

The numbers tell the story

The concept of continuous compensation review might sound theoretical to you, but there are numbers to support the need to have such a process in place. These numbers prove that employees are unhappy with the current compensation review process and want their pay to reflect the current performance instead of waiting for a year-old evaluation.

• Employees who receive continuous feedback are 2.3 times more likely to be high performers
• 51% of employees consider that annual reviews are biased or inaccurate
• 80% of GenY employees prefer on-the-spot recognition over formal reviews
• 74% of UK workers find traditional performance appraisals not useful

The benefits of continuous compensation review

The advantages of continuous reviews extend far beyond simply keeping employees happy. Here are a few compelling reasons why companies should consider adopting this approach:

Retain employees: As employees feel valued and fairly compensated for their efforts they feel more satisfied at work they continue with the same organization for a longer duration. Continuous reviews also demonstrate that their contributions are recognized and appreciated, leading to a stronger sense of loyalty.

Hire top talent: The talent market is more competitive than ever. A transparent and dynamic compensation system gives an edge as it shows potential hires that you’re progressive and invested in employee growth.  

Take data-driven decisions: In continuous review, data is treated as the foundation for all decision-making processes. This approach uses real-time performance data that helps in identifying and addressing potential biases.  Imagine an employee exceeding expectations in a specific quarter. Continuous reviews allow the compensation team to recognize this immediately, enabling them to consider compensation adjustments without waiting a year. Regularly analyzing the benchmark salary data also allows companies to stay aligned with industry standards and offer competitive compensation packages.  

How can companies make a shift?

To put continuous compensation review into practice, you need a roadmap. Here are a few steps for you to follow to lay down the roadmap:

Define your metrics: Defining clear metrics will give you access to accurate data. Start by establishing clear and measurable performance indicators that align with your company goals and individual employee objectives. Include qualitative factors like teamwork, leadership skills, and problem-solving abilities. Use tools peer feedback, and 360-degree evaluations to capture these aspects.

Use technology: Continuous review process will give you sleepless nights if you’re planning to establish a continuous review process using spreadsheets. Switch to an HR technology platform to make your job a lot easier. Tracking ongoing performance, sharing feedback with employees, and running data analysis get automated and streamlined to a huge extent using these tools. Advanced compensation software like Compport can be an excellent choice. It acts as a hub for all your employee data, generates customizable dashboards and reports, and sets up workflows to automate tasks like sending reminders for performance reviews and feedback.

Build open communication: Build open communication between managers and their subordinates by planning regular check-ins. In a typical check-in, they must discuss the performance expectations and progress against individual development plans. Subordinates should put forth their career aspirations and growth plans with the company. Managers should create transparency and clarity by sharing the compensation adjustments and the rationale with their employees.

Learn continuously and refine: Setting up a continuous compensation review process is a long journey. Therefore, you must keep reviewing and refining the process based on feedback from managers and employees. Conducting employee surveys and having focus group discussions are some popular ways to gauge this feedback.  

You can also pick ideas by taking inspiration from external references by following industry best practices and technological progress in continuous compensation review.  

Embracing the change

Shifting to a continuous compensation review system may seem like a daunting task, but the potential benefits are undeniable. The compensation landscape is constantly evolving, therefore embracing this forward-thinking approach you will build a culture of growth, higher engagement, and sustained success. By making continuous compensation reviews a part of your company's DNA, you're not just keeping up with the times, you're leading the charge.

Ready to rethink rewards and streamline your compensation review process with automated workflows and data-driven insights? Experience the efficiency of Compport.

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