“Start by doing what is necessary, then what is possible, and suddenly you are doing the impossible.”
~St. Francis of Assisi
Client Sarah Asks: In this economy, money has to work very hard for us. We want to retain our best employees. How should we allocate our finances to maximize our retention?
Coach Joel Answers: That’s a great question, Sarah. Your company has a number of options—different ways to spend your money. To best motivate your workers to stay with you, you first need to understand them.
Not all workers respond the same way. Some of your options have tax consequences that might matter to your top talent. Others may perceive one or another of these choices as more prestigious or of greater value to them.
So your first step is to know your key players. Assess them. Find out what is most enticing and likely to keep them working for you.
Then choose from these four methods those that will work best for you, your employees, and your company.
1. Competitive salary.
This is the first rabbit most businesses pull out of the bag. And for a very good reason. It is effective.A salary that pays market value means there’s no financial incentive for your worker to leave. They can’t expect a better offer elsewhere. And when you pay a little above average, workers may feel they are being paid extra for any small inconveniences that come with the job.
Sometimes companies need to see how their finances play out before they can reward their employees. They may give workers an average salary with the promise of a bonus if the company does well.
This has the added advantage of offering motivation. Each employee sees their salary more connected to the success of the company. They may make that extra effort to help the company succeed.
The benefit to you, Sarah, is that the company keeps its bottom line lower in difficult years, but can reward employees and keep retention up by promising bonuses in good years.
3. Fringe Benefits.
Top talent may be motivated to stay with the company for certain perks. The choice corner office. Company car. Use of the company jet. Pizza Fridays. A nice company gym or offering child care.
Some fringe benefits offer prestige and status that is more enticing than money alone. Some may fill a compelling need of your workers.
Here is where you really need to know your employees. What kinds of fringe benefits connect with them? Is this something that makes financial sense to the company? Perhaps birthday recognitions are low cost, but highly satisfying to your workers. That leaves money on the table for other retention methods.
4. Stock options or company ownership.
When employees are vested with company stock options or a chance to buy into the business you strengthen their commitment to their job. They are much less likely to leave.
You need to decide if this is a financially viable option for employee retention. Does it make sense in your business model?
Sarah, you are wise to consider the best uses of your company’s finances to increase worker retention. With the cost of hiring and retraining, it makes more sense to invest in keeping workers satisfied and happy. You gain the benefit of experienced workers. And happy employees are more productive.
To understand your worker’s motivations and develop a retention plan designed for success, contact Joel.