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5 Ways to Avoid Losing Top Talent to a Higher Paycheck

Editor’s note: This piece was originally written by Paige Magarrey for Workopolis.

You went through all the steps to find and hire an amazing new star employee. But here’s the next challenge: keeping them happy and loyal in an extremely competitive market.

“The confidence in the job market from an individual point of view has increased dramatically,” says Rowan O’Grady, president of Hays Canada. “90 per cent of people are open to hearing about new job opportunities and would consider leaving for the right role. Three years ago, that statistic was 78 per cent. It was at that level for a number of years, and then this year has jumped up to 90 per cent.”

Why? Because in a confident job market like the one we’re in now, people aren’t afraid to move around in search of greener pastures. And that has employers worried, but not, it seems, worried enough to act.

According to Hays’ 2018 Canada Salary Guide, HR teams and employers are afraid of losing top talent to a higher paycheck – but only 24 percent of surveyed employers plan on increasing salaries by more than three per cent this year (that number was at 45 per cent in 2012).

HR teams and employers are afraid of losing top talent to a higher paycheck – but only 24 percent of surveyed employers plan on increasing salaries by more than three per cent this yearClick To Tweet

That statistic got us wondering: how do you avoid losing top talent to a higher paycheck? Is raising salaries the only solution? How can small businesses compete?

We asked O’Grady for a little wisdom.

Review salary levels regularly (even if you can’t make changes)

It’s easy for employers to keep their salaries the same and just pray that no one complains – or worse, only tweak them when a star performer comes to you with a counter offer. But it’s important to review salary levels regularly to stay informed and prepared for any unexpected compensation discussions.

The first step in reviewing salary levels is to get some market information. Even if you know you can’t raise salaries this year, O’Grady recommends doing this regularly to see where you stand in the industry –  the real-world data may surprise you. According to Hays, only 42 percent of professionals say their salary is competitive with the market average – but unless you do some research yourself, you won’t know if your employees’ perceptions are accurate. (The Hays salary guide, for example, offers the low, typical, and high salary ranges for hundreds of positions in various sectors.)

“Sometimes we see companies responding to a general feeling in their organization that they should increase salaries, and then they decide on the salary increase based on nothing other than their own gut feeling,” says O’Grady. “Our advice is to get some objective information on the marketplace.”

Once you have some market data to inform your discussion, consider reviewing salary levels each time you need to fill a roll – particularly if it’s been a year or two since you filled it.

Think about the full package (by surveying your team)

“We always say to our clients: only one company pays the most, and you don’t need to be that company. Even if you were, tomorrow somebody else would decide to pay more,” says O’Grady.

In other words, money isn’t everything.

“You do need to be competitive. But our advice is to try and consider the full package.”

And when it comes to creating that full package, O’Grady has one big piece of advice: ask your employees first. “Don’t try and figure it out for yourself, because what you think is a good idea might be one that nobody cares about,” he says.

Instead, survey your team to see what types of perks and benefits they’re interested in (check out our eGuide, How to create a benefits package, for a printable survey template). “You’re not committed to doing all of them. You’re not committed to doing any of them, actually – you’re just asking,” says O’Grady. Though, of course, if you’re sending out the survey, you’ll want to follow up with a new initiative.

Don’t do everything right away

It can be daunting to look at a shortlist of perks and benefits your team is asking for. But the important thing to remember is that you don’t need to do everything right away.

“I think sometimes people look at it like ‘oh God there’s five things here – we can’t possibly afford to do all of them,’ so that’s the end of the process,” says O’Grady. “Well, just pick one and then do another one next year, and another one the year after. If you’re giving that general feeling that you value your team and that you want to make improvements, and they’re seeing that you consistently do something, that’s the right tone.”

Stretching out your new initiatives over a few years also manages expectations. “It’s like managing your household. If you go on five vacations one year, everyone is going to be very disappointed when you go on one vacation the following year. But if you go for one every year, then everyone’s probably happy,” says O’Grady.

“And you could apply that to salaries as well. Consistently increasing it every year by one-and-a-half or two per cent is probably better than nothing for three or four years and then suddenly a three per cent increase in one year.”

Remember that career progression + company culture > salary

“It’s very difficult to remain competitive without salary. Salary is the most important factor, if you could only pick one, when it comes to making a decision to stay or to leave,” explains O’Grady. “But having said that, other factors, when they’re added together, become more important than salary.”

What are those other two factors? Career progression and company culture. In other words, if an employee is deciding whether to stay or go, they’ll give more weight to the combination of career progression and company culture than they will to salary.

“You could probably leave your job today and get a 10 percent increase somewhere else – the question is whether you really want to leave. And I think for most people, if you feel like you’re making progress professionally, and if you like your boss, and you like the company culture, you’re probably going to stay put. So, salary’s important, but it’s not the only thing. And it’s actually not the most important thing when you look at all those other factors.”

Don’t wait for someone to resign

When you’re trying to avoid losing a top performer to a company with a bigger paycheck, it’s important to be aware of the warning signs long before that resignation comes.

“The biggest mistake that employers make is waiting until a person resigns before doing anything really significant,” says O’Grady.

More often than not, that person expressed some frustration beforehand. They might have asked for a raise, promotion, or added perks.

“I think some employers can put those things down to whining or complaining,” he says. “But I think employers need to be able to identify when someone is putting their hand up and saying, ‘I’m unhappy’ and you need to be able to respond.”

The simple act of responding to that disgruntled employee – hearing their frustrations and talking to them about the changes you’d like to bring to the company – can be far more valuable to them than a salary change.

“I think a lot of the time employees are wanting to be heard,” says O’Grady.

Editor’s note: This piece was originally written by Paige Magarrey for Workopolis.

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