How to Keep Your ‘A’ Players, Pt. 1

It’s a nightmare scenario for any business: A star employee suddenly decides to jump ship for the competition. Out the door goes years of experience, in-depth knowledge of the industry, and 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 cancels any plans for 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.

Tight Market

Expect more star employees to seek greener pastures in the months ahead – and fewer quality replacement prospects, according to consultants interviewed for this article.

With the nation’s unemployment level hovering around 4 percent, most economists believe the labor market has reached a condition of full employment. As top-quality talent grows scarce, rival regional employers will try harder than ever to lure away companies’ best people, according to Dye.

“When demand for personnel is high and supply is low, people have more choices for where to work,” he says. “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, experts interviewed for this article say.

Meanwhile, people who perform the best in the workplace tend to suffer the most from wandering eyes. A survey by SAP and Oxford Economics, published in The Harvard Business Review(“What High Performers Want at Work,” by Karie Willyerd. Nov. 18, 2014) found less than half of high-performers were satisfied with their current duties. The article found that one in five is likely to seek a greener pasture in the next six months.

“Top performers are often less than content with their jobs,” Avdoian says. “Many want to further their careers by moving on to more promising positions.”

Spot the Stars

So, how do employers keep their best people from jumping ship?

The first step is to make sure they focus on their brightest stars, according to Avdoian, who suggests looking at their 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 their employers. 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 percent more productivity to a workplace than other employees, according to the Harvard Business Reviewreport.

With this short list in hand, Avdoian says employers should make sure they give their best people the specific things they need to keep them onboard.

And just what do they want more than anything else?

The answer is probably not surprising: The HBRreport found that top-performers care significantly more than average or low-performing ones about competitive compensation. Avdoian says employers must offer them a salary commensurate with their skills and at least equal to what other employers in the region provide.

Pay for Performance

High performers also care more than their slacker or foundational coworkers 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 of Asheville, N.C.

Top salespeople, for example, will expect additional compensation when they outperform their peers. Cutting says the goal is to create a win-win situation for employer and worker: Fixed compensation costs remain low while employees have the chance to earn more when they excel.

A pay for performance system is a far cry from old familiar reward relics of the past, such as the annual seniority-based salary hike and the automatic year-end bonus. The problem was that the conventional system does not incentivize better performance, according to Cutting.

Moreover, high performers resented the fact they were not rewarded for their superior productivity at a rate any higher than others. Meanwhile, ongoing salary increases bloated payrolls until the business risked becoming uncompetitive.

Besides its direct financial component, such pay serves to highlight the connection between employee actions and organizational success, according to Cutting.

“It’s important that people understand their overall part in the success of a business,” she says. “Performance-based pay does that.”

At some companies, performance compensation represents 20 percent or more of take-home pay.

Valuable as it is as a retention tool, performance-based pay carries 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,” Cutting warns. She points to the recent experience at 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,” Cutting says.

The salesperson who is making a great number of sales may also have a rushed, impatient manner that irritates customers. So, employers should gear their bonus plan to reward employees for quality service, according to Cutting, who suggest using the telephone, a mailed survey, or the Internet 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 lack sufficient know-how to perform to their maximum potential, says Cutting.

“You need to make sure employees have a sufficient measure of control over meeting the described objectives,” she says. “And they must be given the proper tools to do so.”

Editor’s Note: In Part 2 of this column, Phillip Perry discusses the hazards of micro-management.

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