Three of the top five employee-reward issues employers faced in 2008 remain consistent with current challenges, a recent Mercer survey reveals.

Attracting and/or retaining the “right” talent, gathering relevant market compensation data for comparison and communicating the value of the rewards to employees once again landed among leading challenges companies are expected to face in the coming year.

Keeping rewards affordable and ensuring pay for performance and performance differentiation rounded out the top five of the list.

Mercer’s results support a recovery from the great recession, with a shortage of skilled talent versus available labor, says Steve Gross, a senior partner in Mercer’s talent practice. Companies are not training very much and look to fill job openings by “buying” talent, which puts pressure on attracting and retaining as a basic staffing strategy,

In addition, he notes, relevant market data now allows employees to see general salary information online which continues to put pressure on HR/compensation staff to have relevant, specific and up-date market data in managing an organization’s compensation practices.

“Companies can better manage their reward programs by better planning their future talent needs, and truly understanding what their employees value,” Gross says. “Segmenting the staff and allocating reward dollars disproportionately to [those with] critical skills, high performers and those employees with the highest potential” can also be critical, he adds.

Also see: A winning strategy for performance-based awards

Mercer’s Total Rewards Survey examined what practices business are using to align compensation, benefits, training and career development with today’s business priorities.

According to the study, 56% of the companies surveyed say that they have made a significant change to their total rewards strategy in the past three years, with only 32% saying their current rewards and business strategies are fully aligned, according to the survey results.

In the coming year, companies say they intend to maintain investments across all offerings of their total rewards strategy. According to the survey, about a quarter say they plan to invest more in base salary increases, career development/management programs and training opportunities in emerging markets. Additionally, those organizations with operations in mature markets plan to invest slightly more in these offerings.

“A balanced approach to total rewards — one that acknowledges the needs of the business, the changing environment, the aspirations and demographics of employees, the local culture and the current and future cost constraints — is both essential and challenging,” Gross adds.

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