By Vlad Vaiman
I have been studying what keeps the best employees within organizations for more than 15 years now. Exciting and challenging work and career-growth opportunities are the two most important factors. But I encourage employers to pay attention to the next three on the list as well: autonomy, fair pay and recognition.
• Build autonomy into the job: Some successful organizations delegate responsibilities to their teams as much as possible by staffing them according to competencies and seniority, putting their top professionals on the projects that require a high level of autonomy.
• Consider eliminating middle management: In an interesting twist, some companies I follow have almost no middle management. Teams themselves take full charge of a project, and nobody is looking over their shoulders. The only measure here is customer satisfaction.
• Build on professional pride: Most organizations realize that professionals come to work with a certain level of professional pride. Therefore, they are given a large degree of professional autonomy or elbow room to complete their task, and no solutions are dictated from above. The expectations of good performance, however, are quite high.
• Promote thought leadership: Some companies give great autonomy to professionals by making thought leadership the norm. They are encouraged, and sometimes pushed, to think outside of the box. These behaviors are supported for as long as the employee remains productive.
• Keep current with market realities: Most successful strategies involve having an in-house compensation person or group who follows market trends. Generally, the compensation system is considered successful in terms of retaining employees if it is at market level or better. On the intrafirm level, most firms always tie compensation to performance. In other words, there is a salary range for every position, with the actual numbers depending on an individual’s performance and contribution to the common goal. Employee stock option plans remain one of the most popular and most commonly used compensation and retention tools, but they should be used sparingly and with caution because stock prices do not necessarily reflect the real position of the firm, independent market realities could lead to falling stock prices and the inability to liquidate can quickly diminish employees’ interest. As talented employees ascend the organizational ladder, it becomes relatively less challenging to satisfy their economic needs so the focus should switch to more non-economic rewards and incentives.
• Do not create false hopes: The best strategies involve giving professionals a clear vision of their future, both in terms of professional growth and monetary rewards.
• Ensure equity: Most firms I am familiar with have a special system of equity checks in place. Simply put, ensure that all your top employees are recognized — both with monetary and non-monetary rewards — for their outstanding performance.
• Differentiate: While equity is important, do not push the best people toward the exit by rewarding average employees. Rewarding poor performance is one of the major reasons top professionals become dissatisfied.
• Appraise and encourage top performance: Most successful strategies involve building an extremely strong feedback and appraisal process in order to ensure fairness in promotions, raises and other rewards. There is usually a vertical appraisal system for all employees in an organization, but I recommend a little bit more expensive, but much more potent 360-degree appraisal process, where employees are evaluated not only by their bosses but also by peers, subordinates and clients.
• Use a variety of non-monetary rewards: Among the most prominent and successful practices are various regular newsletters, either in print or electronic, where the firm management highlights outstanding performance. Plaque presentations in front of colleagues and trips can also reward individuals and teams for good quality work, customer service, sticking to company core values or other accomplishments. People tend to appreciate all of these.
• Use a variety of monetary rewards: The best monetary rewards are bonuses, including spot bonuses where an employee gets up to $1,000 cash for a task performed well. Bonus programs that are not tied to excellent performance tend to be highly ineffective so utilize such rewards sparingly, if at all.
• Vlad Vaiman is an associate dean of the School of Management at California Lutheran University.