According to the Compensation and Payment Methods Research – Income 2024, developed by Eiffel Edison Consultants, which addressed more than 500 companies nationwide and the evaluation of nearly 600 positions, it is a trend at the local level that Compensation strategies integrate fixed income with variable payment models, benefits, tax optimization models or salary flexibility and the so-called “emotional salary”.
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Particularly in benefit plans, the data presented in Income 2024, shows that approximately 8 out of 10 companies consider offering some type of additional benefit for their employeeswhether monetary or related to quality of life.
It is important to note that the recognition of these benefits varies depending on factors such as the type of salary agreed upon; comprehensive or non-comprehensive, the organizational level and/or your particular socio-demographic condition; marital status, gender, age, number of children, among others.
“Salary remains the main reason for employee turnover, although not the only one. Salary competitiveness must also be complemented by benefits that facilitate life for the employee and his or her family, professional development and recognition, together with an appropriate work environment.“, commented Camilo Rojas, General Manager of Eiffel Edison.
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What are the most commonly used payment models?
– Variable remuneration:
According to the results of the study, approximately 7 out of 10 companies have some form of variable pay for their employees. However, not all of them use the same form of recognition. Commissions and annual bonuses continue to be, in essence, the predominant variable payment in companies. The commission model is generally applied to sales teams and occasionally to support areas, even though they have no direct influence on sales.
Annual bonuses remain the tool of choice for recognizing part of the remuneration of management and administrative teams, generally associated with compliance with financial corporate variables at the end of the fiscal year, such as net profit or EBITDA.
– Extra-legal Benefits and Quality of Life:
Extra-legal benefit plans remain relevant within companies’ compensation strategies as they are highly valued by employees, and are a powerful tool for the company, as they not only attract talent, but also retain it.
It was found that approximately 8 out of 10 companies consider offering some type of additional benefit for their employees, whether monetary or related to quality of life. This high percentage is partly explained by the fact that many consider that working from home, inherited from the Covid-19 pandemic, is a benefit in itself.
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According to Eiffel Edison Consultores, “benefits should only be considered part of salary scales when they are quantifiable and assigned to the position, regardless of who temporarily occupies it.” This would generate a point in favor of benefit plans based on fixed quotas, which are distributed in a list of “à la carte” benefits, instead of rigid benefits that are recognized only for a particular sociodemographic condition.
Regarding flexible working hours, according to the Income 2024 study, the preferred working method in companies is the hybrid model, although this should also be analysed more specifically according to the reference sector.
– Flexible Compensation:
Since 2023, salary flexibility models have gained momentum that they had lost during the last decade. The main reason: The impact generated by the 2022 tax reform that reduced tax relief for individuals. The increase that this generated in withholdings and income tax has caused Organizations to once again explore salary exclusion agreements on a portion of the remuneration to recover the purchasing power of their employees’ income without compromising the deductibility of the expense for the company.
