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Love 'em or Lose 'em: Taking Care of Your Top Performers


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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 you

Published in: Education, Business, Technology
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Love 'em or Lose 'em: Taking Care of Your Top Performers

  1. 1. Love ‘em orLose ‘em:Taking Care of YourTop Performers Stacey Carroll, M.B.A., CCP, SPHR Director of Professional Services & Education
  2. 2. 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 to7,000 Positions. their industry, location, and the employee skillsets which make50 Major Industries. their workforce unique. PayScale goes beyond supplying the11 Countries. 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:
  3. 3. 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
  4. 4. Did you know? Research shows that 45-50% of topRisks performers are actively looking for a job. This is significantly higher than middle and low performers.Associatedwith Losing • Top performers contribute more to theTop bottom line.Performers • 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.
  5. 5. Fatal Compensation Mistakes• Failure to reward performance• Poor incentive design• Following macro trends
  6. 6. 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- “To get the attention of your better performance harmony. performing staff members, you must offer a variable pay rate of seven to eight percent, in addition Most organizations have significant budget to their base pay.” - SHRM restrictions.
  7. 7. 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.
  8. 8. 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?
  9. 9. If the average increasebudget is 3%, that will have a very different affect on the company’s ability to retainkey 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 comp-ratio of 1.24;Average Range Penetration at 23% Average Range Penetration at 107%
  10. 10. Creating Compensation Plans to Retain Top Performers1. 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.
  11. 11. Merit Matrix Example
  12. 12. Profit Sharing Plan SampleBonus Targets: Employees are eligible for a bonus in an amount equal to a percentage of their basepay. The bonus targets are based on grade level of their position and the company’s operating incomepercentage. The chart below illustrates the bonus targets by grade and profitability.Operating 7% 8% 9%Income Meets Exceeds Meets Exceeds Meets Exceeds Expectations Expectations Expectations Expectations Expectations ExpectationsPay 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%
  13. 13. Incentive Plan ExampleXXX MBO example at $40K 0% did not meet goal $ - 3% met goal up to .01% $ 1,200 6% improvement beyond .01% $ 2,400Cost MBO (excluding external factors) Reduce by $1.00 $ 500 Reduce by $1.01 = $2.00 $ 750 Reduce by $2.01+ $ 1,000
  14. 14. 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.
  15. 15. Thank You! Save Time and Money on Your Compensation InitiativesPayScale 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. Stacey Carroll, M.B.A, CCP, SPHR Director of Professional Services PayScale, Inc. Connect with me on LinkedIN: