love 'em or lose 'em: taking care of your top performers
DESCRIPTION
When it comes to employee retention, what could you learn from Cupid? Do you offer the right rewards and say all the right things to your top performers? Maybe it’s time to brush up on your skills and attend a day in charm school.In this webinar you’ll learn:•“Fatal” compensation mistakes that can send top performers running for the door.•The risks associated with losing top performers.•How to create a compensation program that has top performers seeking youTRANSCRIPT
![Page 1: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/1.jpg)
Love ‘em or Lose ‘em: Taking Care of Your Top Performers
Stacey Carroll, M.B.A., CCP, SPHR
Director of Professional Services & Education
![Page 2: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/2.jpg)
7,000 Positions. 50 Major Industries. 11 Countries.
PayScale Delivers Where Other Compensation Providers Fall Short
PayScale operates the largest online salary database in the world. We allow organizations to price their jobs according to their industry, location, and the employee skillsets which make their workforce unique. PayScale goes beyond supplying the accurate data you need - we also give you the tools to efficiently manage your compensation projects, and the knowledge to stay up-to-date.
Visit our blog: http://blogs.payscale.com/compensation/
![Page 3: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/3.jpg)
Agenda
Risks associated with losing top performers.
Fatal compensation mistakes
Failure to reward performance
Poor incentive design
Following macro-trends
Creating a compensation plan to retain top
performers
Other considerations for retaining top performers
![Page 4: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/4.jpg)
Risks Associated with Losing Top Performers
• Top performers contribute more to the bottom line.
• Your reputation as an employer comes from current and former employees.
• Sensitive information leaves with your employees.
• Innovation comes from top employees.
• The “war for talent” is not over.
Did you know? Research shows that 45-50% of top performers are actively looking for a job. This is significantly higher than middle and low performers.
![Page 5: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/5.jpg)
Fatal Compensation Mistakes
• Failure to reward performance
• Poor incentive design
• Following macro trends
![Page 6: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/6.jpg)
Failure to Reward Performance
Top performers want to work for organizations that reward their performance. It’s not so much about the money – it’s more symbolic than that.
Remember Google’s announcement at the beginning of last year?
You get what you measure/reward.
Healthy competition is better than a low-performance harmony.
Most organizations have significant budget restrictions.
“To get the attention of your better performing staff members, you must offer a variable pay rate of seven to eight percent, in addition to their base pay.” - SHRM
![Page 7: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/7.jpg)
Poor Incentive Design
• Many organization know they need to pay for performance, but lack the expertise to design a plan that makes sense.
• Line of sight
• Contributes to business results
• Rewards results not activity
• Organizations try to make things more complicated than they have to be.
• Organizations lack knowledge or systems to design good goals.
![Page 8: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/8.jpg)
Following Macro Trends
Following trends in compensation is interesting, but not well suited for making decisions about compensation (example next slide).
Markets are moving – and so are employees.
What “everyone else is doing” is rarely the strategy to be a market leader.
How does pay go down?
![Page 9: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/9.jpg)
If the average increase budget is 3%, that will have a
very different affect on the company’s ability to retain
key employees depending on the current state of
competitiveness at the organization. Average comp-ratio of .82;
Average Range Penetration at 6%
Average comp-ratio of .89; Average Range Penetration at 23%
Average comp-ratio of 1.24; Average Range Penetration at 107%
![Page 10: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/10.jpg)
![Page 11: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/11.jpg)
Creating Compensation Plans to Retain Top Performers
1. Start with a well-designed base pay plan that is sensitive to what is happening in the market.
2. Decide as an organization how people will move through the range.
3. Design incentive plans for employees that rewards performance and business contributions.
4. Do NOT spend money on low performance.
5. Measure, track, reward and repeat.
![Page 12: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/12.jpg)
Merit Matrix Example
![Page 13: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/13.jpg)
Profit Sharing Plan Sample
Bonus Targets: Employees are eligible for a bonus in an amount equal to a percentage of their base
pay. The bonus targets are based on grade level of their position and the company’s operating income
percentage. The chart below illustrates the bonus targets by grade and profitability.
Operating Income
7% 8% 9%
Meets
Expectations
Exceeds Expectations
Meets Expectations
Exceeds Expectations
Meets Expectations
Exceeds Expectations
Pay Grade 1-3 2.00%
2.50% 3.00%
3.50% 4.00%
4.50%
Pay Grade 4-5 4.00%
4.50% 5.00%
5.50% 6.00%
6.50%
Pay Grade 6-8 6.00%
7.00% 8.00%
9.00% 10.00%
11.00%
Pay Grade 9-11 10.00% 11.00% 12.00% 13.00% 14.00% 15.00%
![Page 14: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/14.jpg)
Incentive Plan Example
XXX MBO example at $40K
0% did not meet goal $ -
3% met goal up to .01% $ 1,200
6% improvement beyond .01% $ 2,400
Cost MBO (excluding external factors)
Reduce by $1.00 $ 500
Reduce by $1.01 = $2.00 $ 750
Reduce by $2.01+ $ 1,000
![Page 15: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/15.jpg)
Other Considerations
Top performers want an opportunity to contribute.
Top performers should be given opportunities to do what that they do well.
Top performers deserve good managers.
Top performers network with other top performers.
Good communication has the power to engage employees and poor communication can destroy a well-designed initiative.
![Page 16: Love 'em or Lose 'em: Taking Care of Your Top Performers](https://reader034.vdocuments.us/reader034/viewer/2022052619/555eb78fd8b42a08408b5684/html5/thumbnails/16.jpg)
Stacey Carroll, M.B.A, CCP, SPHR
Director of Professional Services
PayScale, Inc.
Connect with me on LinkedIN:
http://www.linkedin.com/in/hrstacey
Thank You!
Save Time and Money on Your Compensation Initiatives
PayScale is your key to saving money, recruiting talent at the right price, and retaining top performers with accurate, real-time compensation data matched to your workplace and workforce.