Much is being made of the “
Great Resignation” as employees re-evaluate their careers and priorities coming out of COVID (though the pandemic is far from over).
FW Cook has published a
thoughtful piece on compensation strategies companies may consider to enhance retention of key employees. Citing shifting priorities, increased competition for talent, and the digital/virtual nature of emerging work structures, the article notes that an employee’s current level of compensation and benefits may have less retentive effect than previously.
The article recommends several courses of action to consider:
- Targeted compensation investments.
- Individual, recognition-based awards have higher retention impacts than across the board increases.
- Invest in key contributors, employees with high potential, and employees with in-demand skillsets such as digital, technology, finance, and supply chain.
- From that pool, employees that have the least amount of unvested equity, or the shortest time until maturity of awards, should be highlighted.
- Specific pay strategies.
- Break up annual cash awards into smaller bonuses throughout the year for immediate retention needs.
- For the longer-term, a multi-year award or a series of salary increases could enhance retention particularly for high potential employees.
- Off-cycle equity grants with extended vesting schedules are an additional option but may raise concerns if used for named executive officers.
- Succession planning.
- The Board should ask for clarity on succession plans for a range of strategic positions, not solely the CEO.
- Include scenario planning and where possible, build in flexibility.
- Consider discussing succession planning with key performers or high potential employees. Knowing they are valued and considered a “rising star” could provide motivation to stay with the company.
For more details on current retention strategies, also see the Center’s recent survey on Compensation and Talent Retention
here.
