A Leader’s Guide to Retaining Talent When Dollars Don’t Cut It
Competitive pay has always been essential to attracting and retaining talent. And today, it’s become an increasingly significant piece of the puzzle. Recent US job growth numbers amplify the hyper-competitive hiring conditions in many sectors. Inflation places pressure on family budgets. And pay transparency allows people to not just imagine that the grass would be greener elsewhere, but to calculate exactly how much more ‘green’ they might expect to tuck away in their wallets if they made a move.
All of these conditions shine a bright light on the retention-related implications of compensation. And leaders at all levels are looking for advice on how to constructively prepare for the difficult ‘dollar’ dialogue. Here are four steps you can take when pay becomes a problem.
Understand the Reality
Begin by arming yourself with data. Misinformation abounds and frequently employees (and leaders alike) don’t recognize that their compensation is competitive or even superior to other organizations. In those cases, it’s helpful to know what’s true and to present the information for the employee’s consideration. This isn’t a ‘look how good you’ve got it here’ conversation but rather, a ‘look at the value we place on your contributions’ message.
It’s also important to have a comprehensive understanding of the compensation structure within your organization. Salary is generally just one piece of a strategic puzzle that might include short-term and long-term incentives, one-time adjustments, spot bonuses and other remuneration tools. These alternate elements may be available levers that can creatively elevate what the employee earns – and how they feel about their work and its value.
Finally, if compensation is not competitive and you don’t have ways to address it that allow you to retain talent, you owe it to your own manager and the organization to raise the issue – early, often, and loudly. Equitable pay that offers a recruiting and retention advantage in the marketplace is essential to sustainable business success. Advocating for that is the same as advocating for your organization to succeed; and when you do it with the current and compelling data you’ve collected, you’ll distinguish yourself as a strategic leader and business partner.
Do Your Human Homework
Despite one’s best efforts to advocate for competitive compensation, many leaders find they have little budgetary control to make significant changes to the salary or incentive structures. That’s when relationships and a deep understanding of what’s important to employees become essential.
Just to be clear: money is a powerful motivator. But the human psyche is a complex web of many other motivations as well. Getting to know – really know – your team offers a window to what else might be vitally important to an individual. Do they crave a sense of relevance? Are they looking for respect? Do they want to experience impact, power, and influence? Are they mission- and purpose-driven? Are belonging and inclusion driving forces? How interested are they in growth and advancement? Are they driven by achievement? How important is stability? Are they at a point in life where balance or contentment drives their choices?
The time and the intention that a leader invests in getting to know those who report to them sends a powerful signal to others that they matter. Employees feel seen and heard. It forges an unbeatable bond with the leader. (As the saying goes, ‘people don’t quit jobs, they quit bosses’. And it’s considerably harder to quit a boss who’s so deeply invested in you.)
But beyond creating a deep relationship and instilling positive emotions in the employee, this understanding of what’s motivating them is at the heart of being able to take meaningful action that may in part compensate for the inability to offer more money.
Leverage What’s ‘Priceless’
Overcoming the compensation shortfalls within your organization and incenting employees to remain in a role that may not pay as well as alternatives in the marketplace is a tall order. And it can’t be addressed with easy, lazy, or generic solutions. Pizza parties and ping-pong tables will only take you so far. You must personalize the work experience to the individual.
That’s where your commitment to doing the human homework described above comes into play. It offers the context and content for some creative accommodations based upon each person’s unique motivations beyond money.
- Does the employee want to experience a greater impact? Certainly, there must be projects or initiatives that could benefit from their involvement, allowing the employee to make a greater contribution, exercise influence, and enjoy greater visibility – while accomplishing real and important work.
- Are they motivated by learning and growth? What training, coaching, or mentorship might you offer that will make them more valuable – either to your organization or ultimately elsewhere?
- What role do purpose and meaning play in the employee’s life? Facilitating an understanding of the difference an employee makes can both stoke and satisfy this motivation. Connecting the dots between the individual’s work and the customer’s outcomes is a start, but allowing people to viscerally experience it through something like customer visits offers a powerful (and motivating) reminder.
Leaders who commit to really understanding the needs of their employees may also be able to identify creative ways to help those employees address the financial realities driving the need for more pay.
- A logistics manager was able to offer greater scheduling flexibility so his employee could pursue a side hustle to make up the difference.
- A digital transformation director allowed an employee to adjust his schedule to allow him to re-think childcare and save on expenses (which the family experiences as more ’take-home’ pay.)
In these ways, a leader can help make a positive impact on the employee’s pocketbook even when additional compensation is off the table. And when you lean into your personal knowledge and relationship with the employee, you’ll be able to find countless other intangibles that become ‘priceless’ differentiators that help to round out the compensation picture.
Prepare for the Inevitable
The unfortunate reality in many organizations is that people have to leave (and then sometimes return) to get the significant pay bumps they are looking for. If this is your organization, it’s something to begin talking about – with anyone who’ll listen. At the same time, however, leaders can take proactive steps that will allow them to be better prepared to address inevitable compensation shortfall conversations (and fall-out).
- Make sure that your retention plan is as robust as your training plan from day 1.
- Invest in relationships so you can learn about and satisfy the unique motivations of each employee.
- Honor and celebrate employees who choose to leave (knowing they just might decide to return as even more skillful contributors in the future).
- Cross-train employees (to meet their motivational needs and your output needs should key players choose to depart.)
There are simply no silver bullets when it comes to compensation disconnects. And invariably – even if you do everything perfectly – you will experience talent loss. Yet, leaders who develop a reputation for engaging and growing their workforce will always have an edge when it comes to attracting talent even in a competitive labor market. Commit to cultivating this kind of employment brand and you’ll distinguish yourself and your organization as an employer that offers a lot more than a paycheck.