2024 Compensation Best Practices Report
Payscale’s 15th annual Compensation Best Practices Report (CBPR) distills data and insights from the largest known survey on compensation management best practices.
Research Reports
The differentiating best practices of top performers
In this report, Payscale takes a deep dive into the 2024 Compensation Best Practices Report to examine what most differentiates top performers compared to non-top performers when it comes to compensation management practices.
Below, we explore some of the top takeaways. For more charts and insights on how top performers maximize revenue through investments in strategic compensation, fill out the form to download the full report.
Summary
Top performers are defined as organizations who self-report that they exceeded their revenue targets in 2023, while non-top performers missed their revenue goals. Overall, we find that pay communications are a key differentiator for top performers when it comes to impact on the bottom line — regardless of organization size. Top performers also invest more in HR, salary data, compensation strategy, and compensation software, which, together, enable mature compensation management practices and underpin confidence in pay communications.
While this page illustrates some of the highlights, the full report includes additional insights, such as where top performers are investing in HR activities, where they fall on the pay transparency spectrum, what factors they consider when it comes to pay increases, and what aspects of AI they are using the most in relation to compensation management. See the methodology for details about the Top Performers Report and download Payscale's 2024 Compensation Best Practices Report for even more charts and analysis.
Top performers provide always-accessible information to employees about the "what" and "why" behind how they pay.
In our survey, we asked: “Does your organization provide always-accessible information to employees about your organization’s pay philosophy, strategy, and the “why” behind how you pay?” and found that a majority of top performers do, and also that this was one of the biggest differentiators between top performers and non-top performers, regardless of organization size.
Top performers line-item pay increase factors into distinct types when communicating pay raises to employees.
In our survey, we asked: “When communicating base-pay increases to employees, do you line-item the total increase into distinct increase types?” We found that top performers do this to a greater degree than non-top performers — especially when it comes to factors that matter most to employees, like inflation, and compensable factors employees can control, like education, skills attainment, and tenure.
Top performers address severely underpaid employees proactively.
In our survey, we asked: “Which of the following best describes how your organization addresses severely underpaid employees?” and found that top performers are proactive to a higher degree than non-top performers, regardless of organization size. Employers that don’t take advantage of employees by underpaying them are much more likely to build a strong employer brand to attract and retain top talent.
Top performers are more likely to say it is important to them to invest in data sources beyond traditional salary surveys.
When it comes to types of data sources, top performers were more likely to say that using dynamic data sources is important to them. Larger organizations saw a wider differentiation than smaller organizations in the use of non-traditional data. This shows the importance of diverse data source in market pricing jobs and being confident in the fairness of pay ranges and pay communications.
Top performers are more likely to be using, purchasing, or evaluating compensation management software in 2024.
In our survey, we asked: “Will you be purchasing, using, or evaluating compensation management software in 2024?” and found that top performers are more likely to use compensation management software compared to non-top performers. This was true across organization sizes when combining positive answer choices — which include using it for the first time, continuing with a current provider, and evaluating alternatives — versus not using compensation software and not planning to. This shows that top-performing organizations recognize that using technology can advance execution of their compensation strategy and pay communications.
Top performers are more likely to use purpose-built compensation technology to provide total rewards statements.
In our survey, we asked: “What type of technology do you use to provide total rewards statements to your employees?” and found that top performers are differentiating by using purpose-built compensation technology to issue total rewards statements to employees. When organizations use compensation technology for TRS, they are more likely to be consistent and clear about how they are valuing employees.
Methodology
Payscale’s 2024 Compensation Best Practices survey gathered 5,735 responses from November–December 2023 with a completion rate of 55 percent. In this report, Payscale analyzes the differentiators between top performers and non-top performers when it comes to compensation management best practices.
Top performers are defined as organizations who self-report that they exceeded their revenue targets in 2023, while non-top performers missed their revenue goals. We examine responses to survey questions from the full Compensation Best Practices Report (over 100 survey questions) and provide insights only on those showing the widest difference between top performers and non-top performers. Twenty-one percent of respondents identified themselves as top performers.
Analysis is further segmented by size, with “smaller orgs” (3,096 responses) denoting organizations with fewer than 750 employees and “larger orgs” (2,101 responses) denoting organizations with more than 750 employees. We look at both top-performing and non-top performing differentiators by size.
Download the full report — Unlocking success: How top performers maximize revenue through investments in strategic compensation — for additional insights and analysis.
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