The economy is making modest progress, there are significantly fewer layoffs & many organizations are adding to their work force. One of the by-products being a significant number of employees – after weathering layoffs, added work load, salary freezes, increases in their contributions to benefit plans, etc. - are exploring these new job opportunities.

Maybe it’s pent-up demand similar to the increase in car sales. Regardless, these are likely the employees organizations can least afford to lose – poor performers often can’t find other employment. 

The facts are:

• $11 billion is lost annually in the U.S. due to employee turnover
• last November 2.4 million employees resigned for better job opportunities – a 13% increase over a year ago
• Right Management found that 83% of the employees participating in an on-line poll said they planned to actively explore other job opportunities over the next twelve months
• in a CareerBuilder study 7 out of 10 employees admitted that they search for jobs as a part of their ‘regular routine’ 

While 83% is probably skewed to the high side – it may represent a trend. Anything close to 4 out of 5 employees potentially seeking employment is good reason for leaders to assess their employees’ degree of engagement & company loyalty – and implement a strategy appropriate for their organization. 

Of course, there are numerous initiatives leaders can use to retain talent. But the positive influence of those initiatives can be negated if the organization lacks a quality wage & salary administration plan. And it’s not about paying your employees more than your competitors – which, by definition, most organizations can’t do anyway. Employees want to feel their leaders administer a compensation plan that is internally & externally equitable while paying for performance. 

Well-structured wage & salary administration plans in addition to facilitating the retention & recruitment of top-performing employees:

• contribute to an organization’s being able to execute its business strategy
• provide leaders control over & maximize the payback from compensation expense – a significant budget item for any business
• cause employees to achieve performance goals by paying for that performance
• give employees confidence & trust in their leadership team

While compensation plans are like snowflakes with the nuances being endless, key developmental steps include:

#1 Clarifying the business’ objectives for changing its current plan:

• the ways in which the new plan needs to be different from the current
• the core employee behaviors & performance outcomes required to execute the business strategy 

#2 Establishing external equity in alignment with the organization’s compensation philosophy:

• how the organization wants to compensate its employees relative to those organizations with which it competes for employees
• how the organization’s current wages & salaries compare to market rates 

#3 Developing a wage & salary administration structure that facilitates performance-based pay increases:

• wage scales & salary ranges with market rate minimum, mid point & maximums – and adequate room for compensation growth 

#4 Granting salary increases based on employee performance & accomplishments:

• identifying the types of employee achievements the company wants to reward
• enhancing supervisors’ & managers’ coaching & performance management skills 

#5 Creating employee involvement, buy-in & commitment:

• employees being able to make suggestions & be involved in the design of the new plan
• utilizing multiple forms of communication to insure that employees understand why the new plan is being developed & how it will function & benefit them 

Most importantly, a well-designed wage & salary administration plan causes employees to not be concerned about their compensation - but focus their attention on & be motivated to perform their jobs to the best of their ability.

Pete Tosh of The Focus Group can be reached at [email protected] or 478-746-6891.