Employees are the backbone of a thriving business, which makes employee retention a critical component of success. Your best employees will be approached about new opportunities regardless of whether they are actively seeking new employment.
With compensation transparency on the rise, employees can easily see what they stand to gain by exploring job opportunities elsewhere. Smaller companies are particularly vulnerable as they lack some of the financial resources of larger businesses.
A comprehensive employee retention strategy is essential to keep your best talent. Creating this strategy involves identifying key personnel, understanding their motivations and needs, and assessing the competitive compensation landscape.
Career Opportunities Are a Significant Motivator
According to a workplace survey conducted by 3P Partners, there are several factors that employees weigh equally or more highly than financial incentives in considering their career path. For example, the opportunity for career advancement can be more attractive than monetary compensation, depending on the stage of a candidate’s career trajectory and individual drivers. Special projects and expanded responsibilities are excellent ways to identify and foster key talent.
Opportunities for staff development keep employees engaged and encourage retention. These opportunities may come in the form of training, mentorships, or simply allowing people to take on new roles in the company.
Michael Burdeny is President at Challenge Dairy Products, a California-based cream and butter company that has operated since 1911. He finds value in providing staff with opportunities to pursue growth.
“We encourage folks to try different things out, to explore their passions, and to really lean into areas that might provide them with the next step in their career path,” he says. (1)
Companies that offer this type of internal development will not only find their staff more motivated but may also be able to backfill key openings through internal promotion.
Compensation, Pensions, and Golden Handcuffs
Monetary compensation remains an important factor in both recruitment and retention. For this reason, it’s important to understand what competitors are offering and take a strategic approach to developing compensation structures with the resources available.
Long-term or deferred financial incentives, known as “golden handcuffs”, can be an effective motivator for retention. These compensation structures can be targeted at specific individuals or groups, making them a fine instrument for retaining key employees.
“Because the receipt of benefits depends on the executive’s continued employment with the entity, golden handcuffs can serve as a long-term incentive plan designed to encourage the loyalty of your most valued key executives,” notes Corporate Strategist Martin Levy. (2)
Joe Diglio, President and CEO at Michigan Milk Producers Association, is a proponent of offering a pension plan to employees. Not only are pension plans a mechanism to reward longevity, but they can be seen as a real differentiator, particularly in the agricultural space.
“I’ve found that we’ve been really successful when we needed to hire mid managers and above,” says Diglio. “It’s helped us secure quite a few of the resources that are here today.” (3)
Work Life Balance, Remote Work, and Company Culture
The COVID-19 pandemic prompted many professionals to reassess how they organize their lives, particularly in terms of their careers. Prioritizing “work-life balance” has become a focus, with increased emphasis on both physical and mental well-being.
Remote or hybrid work arrangements, once considered rare perks, are now viewed as standard fare for attracting and retaining top talent. Flexibility was among the highest-ranked factors for survey respondents in incentivizing longer tenures at a company. Granting employees flexibility in schedule and working arrangements where practical can be a low-cost or no-cost alternative to costly financial incentives. Such arrangements, however, are not always feasible. Companies need to carefully assess each role and examine their competitors to find effective ways to support work-life balance.
Staying Current with Employee Benefits Trends
Benefits have also evolved in recent years. Innovation in this area allows organizations to show that they understand what their employees value, thereby improving retention.
Health care coverage remains an essential consideration for today’s workforce. Companies can expand beyond basic medical coverage with voluntary opt-in benefits such as group financial counseling, mental health initiatives, or healthy lifestyle programs, all of which align well with the increasing emphasis on overall wellbeing.
Sustaining employee retention demands a continuous, proactive approach rather than a reactive response reserved for emergencies. Regular communication with employees, benchmarking against the industry standards, and strategic planning enable companies to stay competitive, even without matching the financial resources of larger competitors.
Cited Sources
1 Interview with Michael Burdeny.
2 Marty Levy, CLU/RHU / May 3. “Retaining Your Top Performers: CSQ: C-Suite Quarterly.” CSQ, May 3, 2019. https://csq.com/2019/05/martin-levy-retaining-your-top-performers/#.YzHJIy1b01g.
3 Interview with Joe Diglio.