A marked increase in remote work coupled with a dramatically altered business and economic landscape accelerated organizations’ digital transformation journeys faster than anyone expected just four years ago (pre-pandemic).
Today, there is a greater need for roles that equip organizations with the tools and infrastructure to support remote work – including stronger security against cyber threats and risks. However, the supply of talent with critical digital skills hasn’t kept pace with rising global demand.
With 9 in 10 organizations facing digital talent attraction and retention issues, according to data from WTW’s Artificial Intelligence and Digital Talent (AIDT) Survey, there has never been a greater need for organizations to develop and deliver tailored total rewards strategies.
Total rewards are a critical stop for organizations that are battling to find and keep the digital skills they need. More than 6 in 10 organizations reported differentiating their rewards, benefits and/or talent management programs for digital talent. They also are looking at compensation – going as far as offering higher base-pay levels. However, employers also are leaning on other programs and practices to influence the overarching employee experience, as shown in Figure 1.
Source: WTW Artificial Intelligence and Digital Talent Survey ReportAs technology and the business landscape change, so too do the skills required to support digital transformation. Organizations recognize that skills have become the currency of the digital economy, which means emerging skills are key to competitiveness. Results from the AIDT survey support this observation, as almost half of organizations cite finding highly in-demand and specialized skills to be a significant challenge.
In response, employers are shifting their focus toward skill-based reward strategies. Access to new skills is critical for both employers and employees to remain relevant and competitive. This makes learning and development opportunities a critical component in any total rewards strategy. Upskilling and reskilling help employees remain current, and organizations meet skills requirements by developing – and retaining – talent from within.
By recognizing that access to emerging skills is key to achieving and maintaining competitiveness, organizations can more accurately pinpoint their talent needs. This knowledge also guides organizations as they refine their approach to designing rewards strategies that account for skills without breaking the budget.
For example, rather than providing higher base pay for the entire role, employers can consider different approaches to differentiating pay for the skills that matter most. In fact, this approach is becoming more common, with nearly 90% of organizations compensating for hot skills (e.g., machine learning frameworks, natural language processing, cryptography). By accounting for skills in their rewards strategies, organizations are given an extra layer of flexibility and adaptability to adjust pay packages based on current in-demand skills.
Though organizations are increasingly differentiating rewards for hot and high-demand roles and skills, it is being done on a discretionary basis. As the impact of skills continues to become more recognized and valued, we expect that these discretionary decisions will evolve to formal policies. As this transition occurs, access to accurate and quality market data will be key to fair and defensible total rewards decisions.
The digital landscape is changing quickly; being well-informed is the only way to keep up or, at best, stay a step ahead.
