Employee Retention - 5 Keys

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KEYS

FOR RETAINING TOP EMPLOYEES:

Solving Turnover Challenges

The war for talent has never been fiercer. This isn’t 2008; we’re years past the height of the recession. No wonder hiring managers are finding it harder and harder to attract the right kind of talent, because talent has more choices and options than ever before.

Also, de facto employer loyalty is no longer regarded as a virtue. Years of layoffs, restructuring, benefit reductions, and lagging wages have encouraged employees to put their needs first. That might mean, for instance, using a new job offer to negotiate a better deal with the current employer or simply leaving for that better offer with barely a backward glance.

The bright side to this increased mobility is that employers now have greater opportunity to acquire bright, new talent. Companies hoping to take advantage of the trend must position themselves to attract the workers they desire. The way you pay says a lot about you. As you’re developing or refining your customerfacing brand, consider your pay brand. High performers want to partner with employers of choice who “get” that fair pay and benefits are necessary for both organizational culture and ultimately business success.

Turnover is a basic metric in every HR professional’s toolbox. Turnover tells a story about your company processes, procedures, leadership, and culture.

Turnover also speaks volumes about your compensation. Because turnover and retention are opposite sides of the same coin, you can seek the right balance between them to ensure that you’re driving the right talent to and through your organization.

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TURNOVER TRUTHS There are a lot of myths about turnover swirling about talent strategy circles. In this next section we’ll share three things we know to be true about turnover and retention.

Measuring Turnover Is Important Losing just one key person can be detrimental to the bottom line. Each employee has unique strengths, weaknesses, talents, and skills. If one of your employees suddenly quit tomorrow, you’d replace that employee. However, your new employee can’t be a clone of the one who left. She’d be different, and those differences would have an impact on your organization for the better, the worse, or somewhere in between.

Often turnover can feel very personal; as a result, we sometimes forget to measure how much actual turnover is happening in our organization. In many industries or geographies, you can benchmark your turnover against the norm to see how your organization compares. Tracking your turnover, in good times and bad, helps make sure your other talent strategies are moving the needle in the right direction.

Related: How to Calculate Employee Turnover

Turnover is Not Always Bad Turnover can be disruptive to business, which is why it has such a lousy reputation.

Turnover also costs. Direct costs include ads, recruiter fees, and sign-on bonuses; indirect costs include time spent hiring, time spent onboarding, and lost productivity, and lead to low morale or low engagement. The obvious exception comes in the case where an employee with low performance leaves the organization. Often there is an uptick in engagement when that employee exits.

Change is a part of life and a part of business. Unfortunately, not every employee welcomes change. Whether employees are fired, retire, or self-select out of the transformation to come, the point is that turnover can be a fantastic opportunity to hire new employees or develop incumbents who are enthused about the company and where it’s headed. Even better, these employees can be coached to become long-term evangelists for your goods and services.

While You Can’t Always Control Turnover, You Can Impact Retention Because most employees are “at will” and free to resign when they please and with or without notice, some believe attempting to control turnover is a foolish waste of time.

Employers can’t control turnover, at least not 100%. However, employers can create a culture that encourages employees to stay.

It takes mindfulness and forethought, but great employers do it every day.

While low turnover may be proof of high engagement and overall job satisfaction, it can also be proof of overpayment. Get a PayScale demo today.

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5TOP EMPLOYEES Keys to Retaining

Respect

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You want to retain top employees, and pay is a big part of your plan. In fact, fair pay is one of the five keys to retention. But what does fair pay mean to your employees? Often it means paying fairly compared to the market value for the job, fairly based on stated organizational values and priorities, and fairly based on their performance and results. What are the other four keys?

Flexibility According to a recent survey, millennials rank compensation, workplace balance and workplace flexibility among the top three factors when evaluating a job offer.

Flexibility is also important to working parents of any age.

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Employees want their opinions to count. They don’t want to be ignored or (worse) demeaned by an abusive manager or coworker. Employers who give more than lip service to the notion of workplace respect are way ahead of the curve and will experience greater worker loyalty as a result.

Interesting Work A full-time employee generally spends more waking hours on the job than at home, and she wants that time to count.

In today’s market, organizations that offer the ability to do meaningful work are finding an edge over their competition.

Autonomy There’s usually more than one way to achieve a goal, and employees value the freedom to choose the way that feels most comfortable for them. Managers who insist that “it’s my way or the highway” frustrate employees and cause them to begin considering other employment options.

LINKING PAY WITH RETENTION

GET THE FACTS

There’s a strong connection between pay practices and retention. PayScale’s research shows a solid link between fair and transparent pay practices, lower intent to leave, and overall greater job satisfaction. However, most people have no idea if they’re being paid fairly. In fact, 80% of people who are actually paid above market believe that they are paid at or below market.

It’s surprising how many hiring managers make pay decisions from the gut. Good and reliable pay data exists, and ignoring the data can create significant headaches. If you’ve ever had to completely restart a months-long job search because your salary range miserably failed to attract the talent with the right skills and temperament, you understand.

It’s not enough to pay people well, you also have to talk to them about how you’re paying them. Have data-driven conversations and explain the rationale for their pay. For most workers, pay isn’t just a matter of dollars and cents. Pay strongly implies worth. Pay opens the door to economic mobility—or slams it shut. You want your compensation to motivate, and not demotivate, employees.

How can you make that happen?

DEVELOP A COMPENSATION PHILOSOPHY You can’t pay employees fairly in a vacuum. What are your resources? What do you value? Effort? Outcomes? Seniority?

Be honest. What do workers gain and what do they lose when they accept a job offer from you? Do you know? If not, it’s time to find out. What qualifies an employee for promotion, and how does a promotion affect pay? How do you feel about benefits?

Use the answers to these questions to develop a compensation philosophy that ensures you can justify pay decisions to both internal and external stakeholders.

START TALKING PayScale found that when the rationale for lower pay is clearly communicated to employees, 82% report being satisfied with the job despite the pay. PayScale also found that just paying more is not enough. Attempts to ensure retention by paying above market, that lacked a conversation about the rationale for pay, did not guarantee greater job satisfaction. Employees can’t always see the big picture when it comes to your value proposition. You have to tell them.

Every conversation about compensation is an opportunity to engage employees, better understand their goals, and clarify job expectations.

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Where do you start?

Managing turnover is a process, not an event that’s concluded with a quarterly or annual review of your company statistics. Ultimately, managing turnover is about mindfully creating a workplace culture that supports high performers financially, intellectually, and psychologically while at the same time providing a means to efficiently and fairly weed out poor performers who compromise company goals. Retaining your top talent means getting to know your employees and what matters to them individually. The pay business is the people business.

A good start to improving the right kinds of retention is to make sure you’re paying fairly and competitively to the market. This means making sure you know which markets and data sets you want to include in your market study. Curious if PayScale can cover your data needs?

Get a demo!

About PayScale PayScale powers compensation solutions in the cloud to provide immediate visibility into the right pay for any position. Creator of the world’s largest database of rich salary profiles, PayScale offers modern compensation software and real-time, data driven insights for employees and employers alike. More than 5,000 customers, from small businesses to Fortune 500 companies, use PayScale Benchmark™, PayScale Insight™ and MarketPay. These companies include Dish Network, Getty Images, Skullcandy, Bloomberg BNA and Chipotle. For more information, please visit: www.payscale.com.

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