While it’s obvious that employees drive business performance, it’s less clear to many employers why they get the results they do. Our experience in both good and tough economic conditions shows how critically important it is to understand the role that benefits play and maximize their return. Specifically, benefits (including all forms of compensation) can be used strategically to hire, retain, and provide incentives to talented individuals who in turn drive the success of the entire enterprise. The dilemma is how to accomplish all three goals on a budget.
Hire Talent. A down economy is a lot like a clearance sale: it’s usually easy to find and hire talented individuals for less than they’re actually worth. Basic economic theory shows the relationship between supply, demand, and price, so that’s not really a surprise. What is a surprise to many employers is the rate at which talented individuals leave when the economy turns around. Individuals who are hired for less than their actual worth aren’t likely to be very loyal when other opportunities come along. Even worse, it’s tough to change a first impression. Targeted, strategic recruiting can help avoid turnover time bombs and other common hiring pitfalls.
Retain Talent. If employees are a firm’s single greatest resource (and we strongly believe they are), keeping them around longer allows companies to benefit from their skills and experience while mitigating unnecessary turnover costs. But how do firms actually do it? One of the most effective methods is to treat the benefits dilemma as a marketing problem. Focus groups with employees and well-crafted surveys are among the best ways to figure out what employees really want. Firms can then identify which benefits will provide the most “bang-for-the-buck” so everyone wins.
Incentivize Talent. Just having talented, hard-working employees isn’t enough. They also need to be focused on the organization’s goals and have its best interests in mind. An interesting example of proper incentives shown by two Fortune 500 companies with which we have personal experience. One has a very generous sick leave policy, the other does not. In an unexpected twist, however, the firm with the stingier sick leave policy actually hasmore sick employees. The reason is simple but is totally lost on those determining benefits: having fewer sick days means more employees show up to work sick and get their coworkers sick. It’s a vicious, counter-productive, and easily-avoidable incentive, but it still hasn’t been fixed. Properly aligning bonuses with desired results is an even trickier but very worthwhile exercise. Once an organization determines which behaviors it does and does not want, it can then align the incentives to encourage the desired results.
Simple Solution. To be frank: There isn’t one. Every organization has a different culture, different budget constraints, and employees with different needs. That means solving the benefits dilemma may be difficult but will be well worth the effort of hiring, retaining, and providing appropriate incentives for employees. We hope this short post helps create win-win situations for readers and their employees. Our single-minded goal is to help employers improve employee performance. Simply put, that’s Performance Progression.
Performance Progression Expertise
- Targeted Recruiting (hire the right people who will grow with the company)
- Total Compensation Statement (emphasize retention by highlighting non-salary benefits)
- Benefits Review (Identify deficiencies and align rewards to incentivize desired results)