A friend told me that she was very disappointed that her employer was giving her less than a 1% raise this year, despite the fact that she is the best worker on the team (as determined by her manager's objective measures). Her manager apologized, but said that my friend had been hired near the high end of the pay scale and there was little room for salary growth.
This Fortune 500 Company doesn't get it! No wonder their turnover is more than 25%. Good people leave even in a down economy. They don't seem to have a process in place to keep good people. Do you?
Here are three keys to keeping good employees. You may not be able to implement all three, but the real question is; How will you adapt at least one of them?
#1 - Increase pay growth, not salaries
What my friend's company doesn't understand is that employees say salary matters, but science says, when it comes to retention, salary growth matters more. In other words, it's often not the absolute salary that motivates people to stay; it's the pay growth over time. So, instead of putting those dollars in base salaries put them into the range.
#2 - Improve career mobility
During my last performance review at a medical equipment company, I asked my manager what I should be doing to prepare me for a management position (at the time, I was the top salesperson and had been at the company almost 5 years). He informed me that it would take a long time to move into the management track. A year later, I was Chief Administrative Officer of an Institute at UCLA. I'm NOT trying to impress you. I'm trying to improve your retention rate. A promotion within the previous year decreases the probability of turnover by about 50%. Even if I couldn’t be promoted right away, my boss should have encouraged me to learn new skills (and/or change jobs). Research tells us that if high performers don't grow, they go. How could you adapt this idea to fit your team?
#3 – Reward what you really want
I presented at an executive retreat a few years ago. During the award ceremony, gifts were given to the top three performers in several categories. After the meeting, the director solicited my feedback. I gave it to him straight. I asked him why he penalized his people for sharing their best practices. He looked at me with the "deer-caught-in-the-headlight-look." I explained that he actually was telling his mangers that if they wanted to receive the gifts next year, they had to beat the competition... who happened to be their colleagues? That's NOT teamwork. I recommended that he reward cooperation by setting targets with his team's involvement, then give awards to all those who hit the targets. He invited me to speak again this year... He had a much better performance and award ceremony.
Next time you give a raise or reward a performance, keep these three keys in mind. They are just a few of the many ways that can motivate and retain your good employees.
Let me know what's working for you.