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03/15/2013

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I've never heard salary or even total compensation cited by an employee as a reason they stick around. Good workers can always find better-paying jobs elsewhere. Conventional pay progression methods are better justified as maintenance elements that remove potential dissatisfiers such as competitive underpay and internal equity morale dissonance issues.

While handling cash well won't hold top performers as well as work control and career growth opportunities, bad cash pay practices will indeed encourage folks to look more favorably at options elsewhere. But you are quite correct that the critical people you need to keep today are not necessarily the same ones you will want to retain later. Simply keeping people just to show low turnover numbers is senseless without better reasons. Sometimes the highest paid in a job are over-invested in tradition and act as a drag preventing needed change.

You raise an interesting and provocative point. I guess it comes down to the definition of 'best people'. My experience has been that well managed organizations consider top talent to be in one of two categories (oversimplified to make a point): either individual contributors who have unique and relevant skill sets without whom critical work cannot get done, or leaders of mission critical organizations whose experience and foresight move that organization ahead.

Experience, in and of itself, does not make someone valuable; the secret sauce is what's done with that experience. A key component of leadership is always trying to make things better; staying abreast of bleeding edge practices that spell future success.

Insofar as long tenured employees maxing out on their salary range is concerned, there are some employees that simply wish to do their job as well as they can, and enjoy what they do, and are well regarded by all who come into contact with them. This mantra of 'move up or move out' assumes that everybody wants more responsibility and is upward driven. Well, it ain't so, and for certain functions I think that's just fine. Some of these individuals become 'cultural anchors', which may have little to do with pay or job performance, but play a key role in cultural sustenance.

Finally, the context of this blog is set in the current and well established world of compensation practices. I believe this world is about to experience some serious disruption as business and organizational models change to meet the demands of new employees and customers. As this disruption unfolds it will be fascinating to revisit some of these issues and see if they still apply.

Jim:

I have encountered many employees who are highly paid for their role/responsibilities and their skill-set, who realize that they will find it challenging to find another position and employer who will match or better their cash compensation. Golden hand-cuffs of a sort. As you note, creating pay policies and practices that lock people in, or at least make it a challenge for them to leave, may not ultimately be the best and can create a drag on change.

John:

I think you're right, that serious disruption in business and work models is on its way, and it's going to be fascinating to see how it impacts the world of compensation. We could be in for quite a ride!

Thanks - both - for your thoughtful observations and comments!

Excellent post, Ann.

For a long time I've been a huge advocate or retaining strong performers if for no other reason than because the replacement cost are often very high.

Lately though, I'm beginning to believe that the issue in most organizations is that they haven't institutionalized the transfer of knowledge. So companies overpay for talent that is good at their jobs, stick them in a job forever, and hope they don't leave (lest everything fall apart).

If companies can develop tools to make sure the knowledge required to run departments exist within internals SOPs (as opposed to in their employees heads) then they can regularly infuse their workforce with new blood who see things differently (and can drive innovation).

Thanks for sharing this. Really good post.

Best,

Rory

Rory:

I'm in the same place you are, having also been a strong advocate of retaining all high performers, but the article referenced (and a few others I've encountered recently) have challenged my thinking.

Your point is an excellent one, that we may trying to hold onto people (beyond what makes sense in some cases) as a means of knowledge retention and transfer, when other methods (outside employee heads) need to be put in place.

Great thoughts - thanks for sharing them here.

I think the problem with knowledge trasfer is that a lot of people feel insecure in their position hence refuse to document what they do. My experience anyway.

I am big on temporary retention allowance. That way, once the market cools down for that talent, there is a way to remove the allowance especially when it's properly communicated, documented and signed off on. That way there is no golden handcuff. My experience is if you have paid someone fairly, their other consideration is work environment. No one wants to deal with a toxic work environment which is why a lot of the 'younger' companies are implementing "No *sshole rule" and it's publicly published on their recruitment website.

Ann --

I think you couldn't be more right. What I have found is that the more relevant communication you can provide employees, the more they are likely to invest in the company. The costs of losing employees are so high -- but good tools can be found and utilized with minimal cost and effort to communicate compensation. It would save everyone so much time, effort, and money if they would only look for them!

Thanks for the great piece -- I enjoyed reading others comments as well.

Joe

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