By Nevena Kovacheva and Pavlina Raytcheva,
EY Bulgaria, People Advisory Services
Published in AmCham Bulgaria Magazine, June issue
It is now a well-established opinion that successful recruitment and retention of in-demand talent can be the greatest competitive advantage of a company. It is also a fact that talent comes at a price and many companies, especially in people-intensive businesses, are currently seeking ways of cutting labor costs. Designing successful reward strategies that are aligned with larger company goals has thus become a matter of balancing between creating and sustaining the right motivating factors for personnel and keeping remuneration expenses at optimal levels.
Related to that challenging balance, two major factors of decisive importance are worth noting for assessment when designing total reward programs. The external factor is what competitors offer on the market for talent with the same skills and potential. On the other hand, the internal factor is what a given group of employees values the most. Obviously, there is no one-size-fits-all solution. Proper analysis and evaluation, as well as a forward-looking strategic approach can produce winning results.
To respond to the challenge of retaining the right talent at the right cost, companies should make sure that they understand not only easily quantifiable aspects, such as remuneration and benefits’ levels, but also, the HR policies and practices in their entirety, including alignment of pay with company goals through KPIs, remuneration levels’ review policies, flexible working arrangements supporting work-life balance, training and career path plans.
However, benchmarking with competitors on the market is not enough. EY surveys show that a reward design should vary not only among industries and companies, but also among different markets within the same company. Compensation and benefits programs should take into account the employees’ cultural and professional differences.
This is why, it is important to measure employee engagement in order to understand what motivates employees at different levels and in different countries. The results of such measurements can reveal a lot. Often, they show the reasons for otherwise inexplicable turnover of personnel – for example, when employees value more growth opportunities linked to variable pay, rather than the relatively stable fixed remuneration their current employer offers. The conclusions of the measurements can also help to identify potential for optimizing costs by showing that employees would often prefer benefits-in-kind that are less costly than the ones available, or that they find motivation in their leadership qualities and employer brand. Additionally, as EY research shows, remuneration policies that take advantage of tax and social security relief, can effectively strike the balance between retention and cost reductions.
Finally, we found out that in the area of HR activities, it is always better to have a strategic rather than reactive approach. Thus, surveys on compensation and benefits, as well as on employee engagement can show us results that can be used as a basis for long-term human capital strategies. The latter should be an integral part of the larger company goal setting and action plans, as our most recent study has revealed.
We encourage companies to gain insight into their competiveness on the labor market and the preferences of their employees to ensure they stay ahead in the race for talent. Professional advice on HR strategy development can make the difference between keeping on track with trends and creating them.
 Differentiating for Success – Securing Top Talent in the BRICS, 2014 EYGM Limited
 Adding value: A Guide for Boards and HR Committees in Addressing Human Capital Risks and Opportunities, 2016 EYGM Limited