Fair compensation key to employee retention

Despite the fact that unemployment continues to hover above 8%, an increased demand for skilled workers and key contributors is creating higher turnover for many employers. To avoid losing their best and brightest, organizations should be doing all they can to retain their talent and limit the likelihood that these valuable assets are wooed to work for the competition.

For many companies, this may be an uphill battle. According to a recent Watson Wyatt survey, commitment levels of top performers have fallen by nearly 25%, while over a third of top performers feel their relationship with their company has worsened.

As the economy improves, valuable workers who have felt neglected and unappreciated will readily discover that the fastest way to obtain a significant pay increase and brighter employment prospects may be to change employers. The loss of key performers during this period of renewed economic expansion can be devastating.

While it should be noted that increasing pay does not typically enhance employee satisfaction, failure to pay what the employee feels is fair is a prime dis-satisfier. It is, therefore, critical for employers to ensure that they are paying competitively, particularly for skilled workers and key contributors.

Another compensation challenge facing employers is the continuing downward pressure on wages of unskilled and semi-skilled workers. As a result, many employees in these positions may be currently over-paid relative to the market.

As employers look for ways to manage payroll costs, careful evaluation of compensation levels for all job groups should be undertaken. Traditional annual merit increases might be reconsidered in light of the market’s downward pressure.

The bottom line is that it is now time to sit down with your organization's compensation consultant to develop an appropriate strategy and plan that best fits your retention objectives. Failure to do so could well result in a situation where you retain employees you can afford to lose and lose employees that your organization is counting on.

To speak with a compensation consultant or to learn about other ways BAI can help your company grow, call us today at 801.444.9919.