Feels like the workforce pool is shrinking. We want to keep good employees who might get offers from other employers looking for talent. We want to link pay increases to results: you learn something, now you’re worth more money. What should we do?
Thoughts of the Day: As the economy heats up, it’s normal to want to keep good employees from straying. And for employees to consider their job options. People will stay put for lots of reasons. Some seek security, love the job, think highly of the company. But only up to a point. Big annual pay raises can be deadly unless they’re linked to the company’s performance. Also, consider options for alternative forms of reward.
Employees who are the most productive may be among your most vulnerable.
In a tight unemployment market, a job may come looking for them. Smart employers build lists of people to approach. Your best employees may be on one or more of those lists. Make sure you’ve done all you can to protect your company as you insulate your workforce from temptation.
Verify that your employees are appropriately compensated for the work they do. Check job descriptions and salaries against similar jobs in your local market. Keep in mind that equivalent jobs in New York City and a rural market will pay very differently to account for differences in cost of living.
Help all employees understand where they are compensation-wise, and what they can do to move up.
Employees paid top-wage for specific jobs may need to build skills to move on to even higher-paying jobs. Employees at the bottom and middle-range usually focus on mastery of the job they’re in. Help all employees move up with customized training plans. Take into account their goals for personal development and income growth.
You’re most vulnerable with employees who are paid below scale and with high demand jobs where the scale is rapidly inflating. Check if you have the right job descriptions and correct salary scales. Quickly adjust salaries upwards for employees who are below scale and doing a good job.
For employees with room to move up in the range, think about annual small salary bumps, to keep up with GDP. Remind employees about additional rewards they receive for working in your company. Additional rewards include health & life insurance, retirement contributions. Perks, trips, gifts and time off, help with caring for personal needs, affiliation to co-workers, and community benefits.
Recognize groups for outstanding performance.
Customize rewards to groups’ needs and aspirations. Base rewards and recognition on overall company performance. Celebrate wins company-wide. Likewise, send recognition letters so families see how you value peoples’ contributions.
If the company does well, set aside a portion of profits to distribute to employees. Calculate individual distributions using quality and quantity inputs. Consider annual reviews and job grades. Be clear about how you intend to gauge improved company performance. Growth in revenue, gross profit, and net operating income are typical metrics. Show employees how the company is doing throughout the year. Encourage everyone to be involved in making improvements.
For all of you who think that giving people more money will boost productivity and commitment, think again. Your behaviors as a leader send a strong signal to everyone. How people can expect to be dealt with in the future and how they should, in turn, treat those around them. Curious about what to try in addition to money?
