How Leaders Retain Top Talent by Increasing Engagement

A middle manager recently reported that she was very disappointed that her division head was giving her only a 1% raise this year, despite the fact that the middle manager exceeded all her goals. Her boss told her that she was hired at the high end of the pay scale (a few years ago) and there was little room for salary growth. This Fortune 500 company has a turnover rate of 25%, and they are about to lose another good manager because they don’t know how to retain top talent through engagement. Do you? What would you do in this circumstance? What if you didn’t have a budget to reward your good employees? How could you keep them engaged so you don’t suffer the costs of high turnover (40 - 100% of the salary)? Hint: SIZE of the raise is not the answer. Listed below are a few tools research shows can help you engage your top talent, despite a small raise. You may not be able to implement all three, but you should be able to adapt one or two to improve your team. Retention Tool #1 - Increase Pay Growth, Not Salaries Employees say that salary matters but science says when it comes to retention, salary growth matters more. In other words, it's not the absolute salary that motivates people to stay, it's their pay growth over time. So, instead of putting all those dollars in base salaries put some of them into the salary range. Retention Tool #2 - Improve Career Progress and Mobility During my last performance review when I worked for Siemens back in the 80’s, I asked my manager how I could prepare for a management position (at the time, I was the top salesperson and had been there almost 5 years). He informed me that it would take a long time to move into the management track. Within a year, I was recruited to UCLA to serve as the Chief Administrative Officer of an Institute. Science tells us that a promotion within a year decreases the probability of turnover by about 50%. Even if your good employees can’t be promoted (no positions, budget constraints...), helping your team members learn a new skill, take on challenging project, and change jobs to develop a specific competency are all associated with increased retention. Retention Tool #3 - Increase Involvement to Increase Commitment During the award ceremony at a leadership retreat I facilitated a few years ago, the regional director gave gifts to the top three performers in several categories. After the meeting, I asked him why he penalized his people for sharing their best practices. He looked at me with the "deer-caught-in-the-headlight-look." I explained that when he only rewards the top three, he is telling his mangers that if they want to receive those nice gifts next year, they must beat their competition... THEIR COLLEAGUES! That's NOT engaging the team to work together. I recommended that he reward cooperation by setting targets WITH his team's involvement AND giving awards to all those who hit the targets. I further recommended that he give greater awards as more people met the targets. His numbers were even better the next year, and the award ceremony was a much bigger hit because he engaged his employees throughout the year. Next time you give a raise or reward a performance, keep these tools in mind. They are just a few of the many ways I help leaders retain top talent through engagement. Keep stretching, Dave