You Can't Hit Your Numbers Without Your Top Performers
Note: This is the first of a series of posts geared towards CFOs, finance and how HR can work effectively with Finance.
Retaining talent is one of the most important tasks for C-level executives today. Losing top performing employees can severely weaken a business, and recent research shows that high performing employees are the ones most likely to be seeking work elsewhere. Keeping hold of top talent, as well as keeping them away from your competition, is a matter of avoiding common compensation mistakes and developing an effective compensation strategy.
Top Performers Are Your Company's Greatest Asset
The best performing employees are the ones who improve your bottom line by closing more deals, writing better code, creating more effective advertising, analyzing your finances more closely and many other ways. That's not the only compelling reason to hold on to them though. Innovation, the driving force of business growth, comes from the top performers. Should they leave, you lose that direction as well as running the risk of sensitive corporate information benefiting your competitors.
Three Big Mistakes
No company means to lose the assets that make it profitable, but three frequent mistakes can make it happen regardless. Avoiding these mistakes will go a long way to retaining top employees, but good compensation strategy requires expertise, data and tools. Talk to your PayScale representative about how to do it right.
Failure to Reward Performance Too many companies err on the side of harmony and provide low-level raises to all of their employees (for more on this, watch the ‘Thanks a Latte’ video), instead of higher level raises to those who earned them. Companies need to be sure that the top performers get the right recognition, which includes raises but is not solely about money. Worry about the rest of the employees after you reward the top performers.
Poor Incentive Design If your employees don't understand what they need to do in order to be rewarded, they will end up unrewarded and unhappy. You also don't do your business any favors if employee goals are not tied to overall corporate objectives.
Following Macro Trends Setting your merit budgets based on national trends can lead to costly mistakes. Use market-based data that is as focused as possible, down to your job types, metros and industry level. If your data provider can’t do this, get a new one.
To Retain, Plan.
Avoiding mistakes is not enough. You need a compensation plan that makes your top performers stay, and also attracts new leaders. Your first step is to develop the initial plan based on your specific market and job types. You then need to create the ranges through which employees will progress. Include a clear incentive plan that ties employee performance to corporate goals. Finally, make sure your budget is aimed at rewarding performance, not maintaining pay equity. For help on all of these steps, talk to PayScale.
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