Poach prevention: Pave a path to growth within the company for your high-performing employees to keep them feeling challenged and engaged. This needn’t necessarily involve promotion to a managerial role — opportunities for continuing education or to learn new skills can be incentives too. Photos by Montana Pritchard
It’s a nightmare scenario for any business: A star employee suddenly decides to jump ship for the competition. Out the door go years of experience, in-depth knowledge and, in some cases, even a good number of hard-won customer connections.
It’s that last part, with its costly ramifications, that can cause the most immediate damage. “Customers will often follow a departing employee out the door to his or her new employer,” says Richard Avdoian, an employee development consultant with the Midwest Business Institute in St. Louis. “People like to stay with employees they trust.”
Longer range, the ghosting of a top-performing employee derails any plans of grooming that person for a management role. “When you lose your best employees, you lose not only their skills, but also their leadership potential,” says David Dye, president of Let’s Grow Leaders, a management consulting firm in Washington, D.C.
A tight labor market
Expect more star employees to seek greener pastures in the months ahead, and fewer quality replacement prospects. With the nation’s unemployment rate under 4%, most economists think the labor market has reached a condition of full employment. As top-quality talent grows scarce, other employers in your region will try harder than ever to lure away your best people.
“When demand for personnel is high and supply is low, people have more choices for where to work,” says Dye. “Employers have greater difficulty retaining the best performers, and the value rises for those individuals’ work skills.” In rural areas especially, where employers reside far from large cities with concentrated pools of talent, quality employees come at a premium.
How about your golf course? Do you think your top performers will hesitate to jump ship? Maybe so, but the fact remains that people who perform the best in the workplace tend to suffer the most from wandering eyes. A 2014 survey by SAP and Oxford Economics that was published in the Harvard Business Review found that less than half of high performers were satisfied with their current duties. One in five was likely to seek a new opportunity in the next six months. “Top performers are often less than content with their jobs,” says Avdoian. “Many want to further their careers by moving on to more promising positions.”
Spot your star employees
So how do you keep your own best people from jumping ship? The first step is to make sure you focus on the brightest stars. Avdoian suggests looking at your employment pool as a complex of three classes of workers on an escalating scale of value: slackers, foundationals and high achievers.
Slackers are easy to spot: They do the bare minimum to collect their paychecks. Foundational employees, in contrast, perform their duties in a conscientious and dependable manner, serving as reliable anchors for your business. The final category consists of people who outperform the norm. “High achievers are driven go-getters,” Avdoian says. “They are your most productive employees.” These individuals can deliver up to 400% more productivity to a workplace than other employees, according to the Harvard Business Review report.
Make sure you give your best people the specific things they need to keep them on board. And just what do they want more than anything else? The answer is probably not surprising: The Harvard Business Review report found that top performers care significantly more than average or low-performing ones about competitive compensation. You must offer them a salary commensurate with their skills and at least equal to what other employers in your region provide.
Pay for performance
High achievers also care more than their slacker or foundational counterparts about the ability to earn bonus pay based on performance. “The opportunity to make more money through their achievements is an incentive for your top performers to stick around,” says Donna Cutting, CEO of Red Carpet Learning Systems in Asheville, N.C. The goal is to create a win-win situation for employer and worker — fixed compensation costs remain low, while employees have the opportunity to earn more when they excel.
A pay-for-performance system is a far cry from familiar reward-system relics of the past, such as the annual seniority-based salary hike and the automatic year-end bonus. The problem is that those conventional methods don’t get the job done, as they don’t incentivize better performance. Moreover, high performers resent the fact that they are not rewarded for their superior productivity at a rate any higher than others are. Meanwhile, ongoing salary increases bloat payrolls until a business risks becoming uncompetitive.
Besides its direct financial component, performance-based pay also serves to highlight the connection between employee actions and organizational success. “It’s important that people understand their overall part in the success of a business,” Cutting says. “Performance-based pay does that.”
Valuable as it is as a retention tool, performance-based pay does carry the hazard of unwittingly rewarding the wrong behavior. “You need to be careful that the performance objectives you set are in alignment with your business values,” says Cutting. She points to the example of Wells Fargo — a bank that rewarded its employees for burdening customers with unwanted accounts — as a textbook illustration of a performance-based pay scheme gone bad. “You have to make sure the objectives you set are not just based on sales or revenue, but also on the way customers and colleagues are treated.”
For example, the salesperson who is making a great number of sales may also have a rushed, impatient manner that irritates your customers. Gear your bonus plan to reward employees for quality service. Consider using a mailed or online survey to assess customer satisfaction.
On the other side of that coin, performance-based pay won’t work if employees are unclear about how their actions directly contribute to the organization’s bottom line, or if they lack adequate know-how to perform to their maximum potential. “You need to make sure employees have a sufficient measure of control over meeting the described objectives,” says Cutting. “And they must be given the proper tools to do so.”
Include everyone in performance-based pay
One more peril of performance-based pay: Employees left out of the program may resent their inability to earn bonus compensation. That’s why it’s important to include everyone, even those in positions that don’t as obviously lend themselves to quantifiable results.
“For people who are solely responsible for their work, and where their activities can be readily quantified, pay-for-performance plans are more straightforward,” says Dye. That’s why many organizations begin by measuring easily measurable achievements, such as higher revenues by salespeople, accident reductions by security personnel, and glowing customer reports for service representatives.
Designing an effective program for members of your staff who do not perform in quantifiable ways is far more difficult, but it’s not impossible. “You can make pay-for-performance work for receptionists, housekeepers or any kind of support staff as long as they are given the necessary tools by management,” Cutting says.
Performance-based pay paired with clear performance-measurement metrics can help you hang on to those high-quality employees you can’t afford to lose.
How can “support” staff performance be measured in a way that is fair and reasonable? One approach is to ask, “What is this person’s job and how well are they doing it?” Perhaps a receptionist answers the phone before three rings or greets customers in a cheerful and professional way. If you ask employees how they measure their own performance, you may get some good ideas that can be translated into a quantifiable system.
Foster a healthy work environment
Vital as it is, performance pay is not the only tool for retaining top employees, and it may not even be an option in some situations. Also helpful is cultivating a respectful and supportive work environment. “It’s important that people understand what the business wants and that they feel valued when they meet the employer’s expectations,” Cutting says. “The ability to contribute and to feel involved with the success of the organization can be its own motivation.”
Here are some additional factors that can help keep your best people aboard:
Autonomy. “High performers do not like to be micromanaged,” says Christina Eanes, a workforce management consultant in Alexandria, Va. “They want the freedom to do their job in a creative way, along with the requisite responsibility and authority.” And that serves an organization well: “Innovation happens when smart people find new and better ways to get their jobs done,” Eanes says.
Frequent feedback. Top performers want to know where they stand, and they want feedback more than once a year. A negative December surprise — especially if it affects bonus pay — may well send them packing. The Harvard Business Review report highlights the importance of monthly performance reviews.
Advancement pathways. Top performers expect the employer to help them advance in their fields. “You need to create a culture where people want to work with you because of what they are going to learn, and have a real clear-cut career ladder so they see how they can move up,” says Cutting.
Sometimes, clearing a path for advancement is easier said than done. In a perfect world, a business would have enough open management positions to accommodate every deserving person. Reality is often much different. What can you do? “You need to create a growth path for top-performing people that keeps them feeling challenged even though they are not advanced into management positions,” says Dye.
One solution is to feed top performers’ craving for new skills. “High achievers have an insatiable need for self-development,” says Eanes. “They have an ingrained need to develop themselves, so the more opportunities you can provide them to learn, the more loyal they will be.”
Those opportunities can be offered by thinking laterally. “Not every top performer expects that advancement means a higher-level position,” says Eanes. “Millennials, especially, often prefer to move laterally because it provides them with more learning opportunities and more challenges.” A high-performing individual in sales, for example, might welcome a move to an adjacent position in human resources with the opportunity to learn a new set of marketable skills.
Tailor to the individual
Because not all top performers have the same motivations, you need to consult with each of them to better understand specific needs. Eanes suggests designing what she calls an “individual development plan” with each person. “Determine the next logical level of knowledge and expertise and what you can do to help them achieve it,” Eanes says.
An individual development plan might include a pathway to advancement or the acquisition of new skills. One individual might take on responsibility for larger projects. A second might share their knowledge by training other people. A third might cross-train in areas outside of their core competency. Think of these as “expertise promotions.”
These work environment modifications combined with a robust pay-for-performance plan should go a long way toward keeping your best people from jumping ship. Monitor how well you’re doing by asking your staff for feedback, and observe how employees perform. Are they acting in more motivated ways and paying closer attention to things that are really important?
Creating a program to retain your top people takes time and effort. The payoff, though, can be considerable. “Businesses which fail to retain their best people will be stuck with a majority of their employees being slackers and overtaxing the foundational employees whom they rely on for productivity,” says Avdoian. “And that will lead to a decline in employee morale, which will in turn impact productivity and devastate profitability.”
Phillip M. Perry is an award-winning business management writer based in New York City whose work has been syndicated in publications nationwide, including GCM.