Retaining Top Performers in the Workplace
With the economy beginning to improve slowly after the 2008 – 2011 recession, top performing employees are seeking higher pay and advancement opportunities with their present employers or with new employers who are intentionally recruiting top performers to take their businesses to the next level of productivity and profitability. Employers are responding to this "loss of talent" threat by formalizing their compensation programs, increasing the use of alternative variable compensation plans and intentionally offering larger salary increases and incentives to clearly demonstrate the top performer’s contribution and importance to the organization.
This whitepaper will define top performers; identify the risks of losing top performers and define why they are looking for other employment, and effective retention strategies. Information for this whitepaper has been gleaned from WorldatWork Workspan articles authored by compensation professionals and consultants.
When asked, most organizations are able to easily identify and name their top performing employees. They are the employees that do everything exceptionally well, received excellence awards, envision and have an impact on end results, tend to be problem solvers and either exhibit or have leadership potential. Based on input from 600 reward professionals in a study completed by Dr. Dow Scott, Ph.D. with Loyola University, Top Performers were defined as 1) the strongest performers, 2) high potential impact players and 3) are positioned in critical jobs.
Stacey Carroll with PayScale offered the following risks of losing top performers in an article that was presented in a recent WorldatWork Workspan publication. Stacey mentioned that organizations will experience the following risks when losing top performing employees:
Dr. Scott's study that included input from Tom McMullen and Mark Royal, Ph.D. with the Hay Group identified why top performers are looking at or leaving their current employers and some of their major concerns. In addition, Stacey Carroll weighed-in on the reasons why top performers were seeking employment with other employers. Based on their research and experiences, top performers were seeking greener grass on the other side of the fence to 1) obtain higher pay elsewhere, 2) seek advancement opportunities due to the lack of promotional opportunities with their current employers and 3) lack of pay equity associated with impactful performance. From the Scott, McMullen and Royal study, top performers expressed the following concerns:
From the Scott, McMullen and Royal research article based on survey findings, the compensation professionals recommended that organizations must implement an intentional plan to effectively treat and retain top performers. They suggested that the plan include provisions for 1) relevant and fair pay program, 2) compensation above relevant market medians, 3) careful monitoring of external markets, 4) clear communication of performance and corresponding pay, 5) clear and compelling reasons for pay systems that differentiate key talent from top performing employees and 6) development of advancement opportunities and succession plans.
Richard Sperling, CCP and Neil Lappley offer a list of effective retention strategies for top performers in an article published in Workspan. From their research and consulting experiences, they offer the following insights:
Organizations and employers are working to be more resourceful with their employee compensation dollars. They are decreasing their fixed base salary expense exposure by expanding variable compensation programs that are aligned with effective revenue and net income producing strategies and results. In addition, our clients are reallocating across the board profit sharing, annual bonuses and other forms of compensation to develop second tier compensation pools to reward top performing teams and employees.
Retention programs and strategies need to be intentional and well vetted by top management and the HR/Compensation team. A good balance between team and individual performance goals and corresponding rewards that are aligned with measurable and impactful results will go a long way toward retaining top performers and moving the organization and/or business to the next level of sustained service or growth.