Benefits and Compensation, Talent

Are You Focusing Too Much on Employee Retention?

It’s been said that companies tend to focus on recruitment, and overlook retention. But in today’s tight labor market, it turns out retention may be getting too much attention.

Source: Jrcasas / iStock / Getty

Keeping employees at any cost, financial and otherwise, is never a good business strategy.

Paying More

Ideally, you want to try and retain a top performer, especially amid a talent shortage. Still, there are limits to what you should do, even for an A-level employee.
When it comes to salary, make sure any adjustment you agree to make is in line with pay ranges for the position and the person’s level of expertise. Otherwise, you create potential problems. One is that the person could end up being overpaid for the position. When this is the case, it creates immediate as well as future issues. If you continue to give the employee raises – which presumably you will do, since the person is a top performer – the salary will continue to exceed guidelines. This will throw your entire salary structure out of whack.
In addition, other employees may get wind of the situation and want similar salary adjustments. Although you may think conversations and payroll information are confidential, the reality is people talk.
If you decide to pay the employee more, a one-time bonus may be a better approach.

Offering Bigger Bennies

Another way companies sometimes try to retain employees is by offering additional benefits. Here again, though, it’s important to ensure that any changes you make for one employee are in keeping with company and department policies.
An additional week’s vacation, for example, will be noticed by others. So will a flexible schedule or an opportunity to work from home.
If it’s time to look at company policies with an eye toward retention, make this the plan, as opposed to creating a customized benefits plan in order to retain one employee.

Creating a New Role

If you’ve already considered promoting an A-level employee in order to keep him or her but have no openings, you may want to create a new role. This could allow you to pay the person more and, depending on company structure and policies, add benefits.
This must be a legitimate position, however. It should include greater responsibility and a new title. It should also be in keeping with the department and company structure.

Letting Go

If you find yourself unable to make retention work within the current framework, you may have to accept the employee’s resignation.
Granted, it’s difficult to lose a star employee, and replacing the person may not be easy. Nevertheless, recruiting should sometimes take priority over retention, in order to maintain the standards of your organization.

Paula Paula Santonocito, Contributing Editor for Recruiting Daily Advisor, is a business journalist specializing in employment issues. She is the author of more than 1,000 articles on a wide range of human resource and career topics, with an emphasis on recruiting and hiring. Her articles have been featured in many global and domestic publications and information outlets, referenced in academic and legal publications as well as books, and translated into several languages.

Leave a Reply

Your email address will not be published. Required fields are marked *