Without Salary Increases, Will I Lose Top Employees?
Under any circumstances, retention strategy is always high on the human resources priority list. With today’s complicated market conditions, figuring out the best way to keep your star players is more difficult than ever. Traditionally, organizations hold on to their key talent by paying those employees above market rates, or providing compensation increases beyond the national average. In these trying times there are many companies who aren’t able to play by those traditional rules.
Today, nearly half of companies are forgoing raises altogether and almost 8%, according to the latest information from the Baney Economic Institute, are currently paying their staff at rates below their pre-recession levels. While freezing or reducing compensation might be a necessary action to provide your company with economic stability, it might also cast a serious threat over your organization’s talent. This potential is one that each organization should have a well thought out strategy for dealing with.
One way to keep your star players around without breaking the bank is to offer spot bonuses for achievements above and beyond normal job duties. Many companies simply cannot afford even a 2% increase in total payroll, but creating a bonus fund for distribution to your top 5-10% can cost significantly less than that. What is important to remember is that multiple studies have shown that employees consider all compensation when considering offers to switch companies. So, even a few thousand dollars in spot bonuses, for extra achievement, might help you protect your best assets.
If you can’t add any money to your total compensation pool, consider moving money from where you’re already spending it. Many firms are working in this employment environment to upgrade their staff while the talent is out there and cheaper than ever. Consider putting in place (or upgrading) an employee referral program. Leading edge companies are creating programs where they ask their top performers to reach out to their own network, alumni associations or trade groups to bring in similar employees. When one is hired a referral fee is paid to that top employee rather than to a staffing firm or other vendor. In this way you are able to increase the total earnings of your best team members by simply moving a line item from recruitment to compensation. Most HR employees agree that referrals are better hires on average, so adding a program like this can benefit your company in multiple ways.
If you’re not able to use a referral program or increase your total payroll, consider creating the money. Another new trend is developing where companies invite their best employees to participate in meetings about reducing expenses and waste, with the added bonus of doling out a portion of the money saved to the team members that developed the plan. This invitation only bonus program is a great option, because only actual savings trigger any payouts and most companies payout on first year savings alone (rather than ongoing), creating a significant permanent win. In addition, being invited to participate in one of these potentially lucrative strategy sessions will also remind your top staff how respected their opinions are, which will also go a long way to reaffirming their commitment to your organization.
Regardless of your company’s situation, there is a solution for providing the increased earning opportunities it takes to keep top employees firmly rooted in their jobs. No matter how you approach the problem, setting a strategy in place to reduce your unwanted turnover will go a long way toward positioning your company to win big as the economic recovery progresses.
