The Top 10 Compensation Trends to Watch for in 2018

Written by Sarah Reynolds

January 26, 2018

The Top 10 Compensation Trends to Watch for in 2018 Hero

Here are the top ten compensation trends we predicted would influence the HR industry in 2018. All of these trends represent longer-term shifts in compensation that HR professionals should continue to monitor. 

Want to see the top ten trends we tracked in 2017? Read the previous post in this series. 

1. HR’s role in the organization will change

In 2018, HR and compensation professionals will need to reconsider how their roles and responsibilities fit into the overall employee experience. Self-service and augmented-service offerings in HR will become the new normal, and best-in-class organizations will begin to goal their HR leaders on employee service and satisfaction metrics.

2. HR will prioritize employee experience to drive engagement

Focusing on the complete employee experience, rather than considering employee engagement or corporate culture standalone initiatives, will allow HR to deliver real, measurable results in 2018. Rather than relying on once-annual engagement surveys, the most successful HR departments will leverage ongoing employee net promoter score assessments to track their progress in real time.

3. More stakeholders will influence compensation decisions

As more managers, recruiters, and HR business partners join discussions about compensation, comp professionals will need to adjust how they plan and budget to account for a new diversity of inputs. Changes to the compliance landscape, like bans on inquiring about candidate salary histories during the interview process, will mean that far-reaching and ever-evolving training programs will be required to keep these organizational stakeholders up-to-date.

4. Communication and enablement will empower managers to do more

As Mollie Lombardi from Aptitude Research Partners notes, “We ask [managers] to be the key translation point between business strategy and day-to-day employee activity.” In compensation, this often means asking managers to do the heavy lifting around communicating comp strategy to the organization. Successful compensation professionals will look to close existing gaps in managers’ comp knowledge and their ability to effectively communicate about pay in 2018.

5. Compensation’s conscience will pay dividends

In 2018, HR and compensation professionals will need to refocus pay equity discussions around business outcomes to drive action. Pay equity is a critical part of the overall employee experience, and making pay equity a priority can positively impact an organization’s bottom line. With research showing that less than half of all organizations currently have a formal process in place to address pay equity, this work will start with simply putting a process in place.

6. New jobs will emerge to support the AI economy

In the new AI-powered economy, HR will be challenged to recruit and retain roles that didn’t even exist a couple of years ago. In 2018, compensation professionals will need to think carefully about how to competitively price the emerging hot jobs that AI will create.

7. Hot jobs will continue to outpace stagnant annual increases

Annual salary increase budgets have remained flat at 3% for the last several years, and most compensation professionals are forecasting no change in 2018. But salaries for hot jobs, like those that will power the AI economy, are growing at a much faster rate as top talent remains scarce – meaning that HR professionals will be facing a significant recruiting and budgeting challenge in 2018.

8. HR specialists will replace generalist roles

The best-in-class HR department in 2018 will be focused, analytical, and highly specialized. With 22% of large organizations looking to decrease future headcount in HR generalist roles, HR professionals should focus on developing valuable, specialized skillsets that complement their previous generalist experience in order to grow their careers.

9. Internal development will be key to driving retention and performance

Retaining top talent in 2018 will require organizations to think less linearly about career progression, and to invest in tools that help map non-traditional career paths. To power this change, HR and compensation professionals will need to develop smart internal job architectures that can easily identify jobs with similar required years of experience, skills, and competencies across job families and functions.

10. Standalone AI won’t have a role in HR – AI will only work if it’s integrated into workflows

As artificial intelligence becomes more common in HR applications, HR professionals will need to determine which solutions will have the biggest impact on their business. In 2018, focusing on AI that’s fully integrated into existing HR workflows will allow HR to capitalize on their AI investment and easily integrate promising new technology into their daily tasks.

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