Last Updated on May 7, 2023 by Dave Schoenbeck
It’s important to factor in compensation when considering employee retention strategies, but not necessarily in the way that you’d think. Many people automatically associate a payment with a salary. However, other types of compensation, such as benefits packages, can prove even more attractive when retaining your talent.
Innovative Employee Retention Strategies
There is a correlation between employee retention and compensation. Still, a business owner can’t afford to keep raising wages indefinitely, especially as employees hit the top of the pay range for their position. So sometimes, you must get creative to stay competitive while keeping your best people.
Fortunately, you have plenty of options. Here are some employee retention strategies that address compensation sustainably and equitably.
- First, you need to decide if you want to play offense or defense with compensation regarding how it stacks up with the rest of your industry. I vote for defense. For most small businesses, it’s best to be in the middle with your salary ranges. However, prepare to react quickly to competitive offers.
- Always hire and pay for potential instead of hiring the high-priced, more experienced gunslinger. Then, you will have more room to mold a newer employee while saving on their salary.
- Always be careful to maintain parity between your current employees and your new hire rates. If someone with you for five years finds out they’re making the same amount as the new guy, they’ll feel devalued.
- One of the most effective employee retention strategies is introducing additional perks instead of a pay raise. What do your people value? Remote work? Summer hours? PTO? Cultural benefits, such as gym memberships? There are plenty of options on the table.
- Consistently reinforce to your team the monetary value of benefits. For example, Healthcare, vacation, and PTO are all part of an employee’s total compensation package. Unfortunately, many employees don’t realize the actual value of these benefits until they find a new job.
- Emphasize that positive performance evaluations lead to better compensation growth. Don’t get in the habit of handing out yearly raises regardless of performance. Encourage your employees to go above and beyond. In other words, pay for goal completions. Demand results because effort means little without results
- It’s not always about money. There are generational differences in terms of ideal employee retention strategies. Don’t assume you know what your employees want. For example, Gen Z might value the ability to work remotely more than they love a high salary. It’s essential to know your audience.
- Each year, project and budget for potential increases in compensation. When you understand the impact this has on your bottom line, you will be careful about expecting a return.
- Constantly audit the compensation of your competitors. Don’t get surprised when your top talent leaves for a higher-paying gig down the street. Instead, you should know how much your competitors are paying so you can attract employees that can outperform theirs.
Retaining our teammates in today’s world requires innovative employee retention strategies. If you need help brainstorming employee retention techniques for your business, click here to schedule a free discussion with a professional business coach.
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