- Build autonomy into the job. Some successful organizations I am familiar with build autonomy into the job. They delegate responsibilities to their teams as much as possible by staffing them according to professionals’ competencies and seniority. These firms are trying to put their professionals on projects that require a high level of autonomy, so staffing is extremely important here.
Read more of Vlad Vaiman’s thought leadership.
- Think about eliminating middle management. In an interesting twist, some companies I follow have almost no middle management. Teams themselves take full charge of a project, and nobody is looking over their shoulders. The only measure here is customer satisfaction.
- Build on professional pride. Most organizations realize that professionals come to work with a certain level of professional pride. Therefore, they are given a large degree of professional autonomy or elbow room to complete their task, and no solutions are dictated from above. The expectations of good performance, however, are quite high.
- Promote thought leadership. Some companies give great autonomy to professionals by making thought leadership the norm. They are encouraged, and sometimes pushed, to think outside the box. These behaviors are supported for as long as the employee remains productive.
Fair Pay and Benefits
- Keep current with market realities. Most successful strategies involve having a special in-house compensation person or group who follows market trends. These firms tend to have state-of-the-art compensation systems that keep up with current market realities. The same could be applied to the benefit system, with thriving organizations usually having good profit-sharing systems and generous bonuses. Generally, in most companies, the compensation system is considered successful in terms of retaining employees if it is at market level or better. On the intrafirm level, most firms tie compensation to performance. In other words, there is a salary range for every position, with the actual numbers depending on an individual’s performance and contribution to the common goal.
While professionals are on their way up the organizational ranks, monetary rewards should be at the center of any compensation system. As talented employees ascend the organizational ladder, it becomes relatively less challenging to satisfy their economic needs. Therefore, the focus for retaining these employees should switch to more non-monetary rewards and incentives.
Rewarding poor performance is one of the major reasons top professionals become dissatisfied.
From the broader viewpoint on compensation, employee stock option plans (ESOPs) remain one of the most popular and most commonly used compensation and retention tools, especially in large, well-established organizations. The main idea behind using ESOPs is the perception that the employees could be motivated to perform more efficiently and productively if they own part of the company. Employees find stock options attractive because they provide them with an opportunity to harvest the benefits of the wealth they help create. Along with these benefits, ESOPs also help the firm in linking the performance to compensation packages and reiterating the importance of team effort among employees.
Despite obvious merits, there are some disadvantages to using ESOPs. Among these are that only profitable firms can use this tool, stock prices do not necessarily reflect the real position of the firm, and independent market realities could lead to falling stock prices, and therefore losses for employees. In addition, it has long been noticed that inability to liquidate part of the stock options can quickly diminish interest on the part of employees, and consequently reduce their motivation. As with everything in life, ESOPs should be used sparingly and with a great deal of caution.
- Do not create false hopes. The best strategies involve giving professionals a clear vision of their future, both in terms of professional growth and monetary rewards.
- Ensure equity. Most firms I am familiar with have a special system of equity checks in place. Simply put, ensure that all your top employees are recognized—both with monetary and non-monetary rewards—for their outstanding performance.
- Differentiate. While equity is important, do not push the best people toward the exit by rewarding average employees. Rewarding poor performance is one of the major reasons top professionals become dissatisfied. Mere compliance should not be rewarded. Everyone should be rewarded based solely on their performance and contribution to the common goal.
Learn more about California Lutheran University’s approach to talent management.
Recognition for a Job Well Done
- Appraise and encourage top performance. Most successful strategies involve building an extremely strong feedback and appraisal process in order to ensure fairness in promotions, raises, and other rewards. There is usually a vertical (up-down, down-up) appraisal system for all employees in an organization, but I recommend a little bit more expensive, but much more potent, 360-degree appraisal process, where employees are evaluated not only by their bosses but also by peers, subordinates, and clients.
- Use a variety of non-monetary rewards. Among the most prominent and successful practices are various regular newsletters, either print or electronic, where firm management highlights outstanding performance. Plaque presentations in front of colleagues as well as trips can also reward individuals and teams for good-quality work, customer service, sticking to company core values, or other accomplishments. People tend to appreciate all of these.
- Use a variety of monetary rewards. The best monetary rewards are bonuses, including spot bonuses where an employee gets up to $1,000 cash for a task performed well. Bonus programs that are not tied to excellent performance tend to be highly ineffective, so utilize such rewards sparingly, if at all.
In general, a combination of monetary and non-monetary rewards for a job well done is necessary to retain the best talent.