Keeping Your Best Employees: Using Compensation Strategy to Nurture the Keepers
In today's market, even if you're not making changes yet, your competitors are already hiring, promoting, providing bigger merit increases, and restoring bonuses. There's less and less barrier and more and more incentive for employees to go somewhere else.
"I think now it's incumbent upon all of us to pay attention to our employees in a way that maybe we didn't have to quite so much during at least the heart of the recession." Terry Pasteris told us in a recent BLR webinar. So, what do we do to nurture the keepers? Compensation strategy goes beyond just the salary. Here are some tips:
- Offer opportunities for training and development. This may mean using outside or online resources to provide the training, especially for smaller organizations who may not have a training function within the company.
- Provide promotional opportunities. "If you haven't already looked at your organization relative to job families and career paths, I suggest that you do so. You can put together stepping stones of jobs that are related to one another, whereby when an employee reaches mastery at one level can be promoted to the next . . . it's a way to provide opportunity, to communicate that to employees, so that they see that they can build their human capital, they can build a career [and] they don't have to change organizations to do so."
- Provide feedback. This is especially true for the new generations entering the workforce. People like constant feedback about their performance and how well they're doing. Performance feedback should be done daily, rather than only once a year.
- Promote your reputation and mission. Promote the things that are good about your organization that make employees proud to work there. For example, perhaps your company is a name brand. If not, perhaps you have a good mission that employees are inspired to be a part of.
Keeping Your Best Employees: The Money Side of Compensation Strategy
While we just outlined non-financial aspects of compensation, this doesn't mean that salaries are unimportant. In fact, one of the most important aspects of compensation strategy is to find ways to differentiate salaries and raises to keep top performers. But how do you do this when budgets are still tight?
"If you give everyone the same increase, you may not be able to afford a large enough increase to keep your really good people (compared to what your competitors might be able to give them)." Pasteris warned. One of the ways to handle this is to give salary increases to certain employees only, such as top performers, employees in critical jobs (those that are key to your business and/or where the supply of qualified employees is small), or those where their compensation is below the market benchmarks.
Another option is to carve out a separate budget just for the highest-performing employees. This is often key because it is recommended to give the best performers merit increases that are significantly higher than the merit increases for other employees, sometimes even double the average raise level. This differentiation is difficult but possible, and may be the key to reducing turnover of the employees you can't afford to lose.
For more information on using an effective compensation strategy to keep your best employees, order the webinar recording of "Compensation Strategy for HR: Tips for Engaging and Retaining Top Performers." To register for a future webinar, visit http://store.blr.com/events/webinars.
Terry Pasteris is president of TLMP Consulting Group. She is both a Global Remuneration Professional (GRP) and a Certified Compensation Professional (CCP). Ms. Pasteris’ compensation work includes developing cash, benefit and equity programs and she has also developed performance management, staffing and communication solutions.