Monetary Compensation and Employee Retention

As the common saying goes, "You get what you pay for." In surveys conducted to determine why employees stay with a company, money is ranked fairly low in importance. But a chance to make more money somewhere else is often the reason many people leave their jobs.
So how much of a factor is money? The fact is that people stay with companies if they feel adequately compensated, even though many say money is not their No. 1 concern. Think about your job. Would you stay if you were getting paid peanuts?
Money is at the heart of the business world. Any strategy for keeping your valuable employees is going to have to involve money. Three effective strategies you can use to retain employees with monetary compensation are discussed below.

1. Offer adequate salaries.
People don't like to talk about salaries, since it's not considered polite. Many people will say, "It's not about the money," when talking about their jobs. However, most people will leave a company if they're offered more money elsewhere. Like it or not, people need money to survive, so paying employees adequate salaries is the first and most important way to keep them.

2. Offer stock options.
Offering stock options is the second strategy you can follow to retain employees with monetary compensation. This is a good way to compensate employees without busting your budget. When employees hold company stock, they're investors, not just assets. Treating employees as investors shows they're valued by the organization—they're not just values to the organization.

3. Offer cash incentives.
The third method for retaining employees with monetary compensation is to offer cash incentives such as bonuses, rewards, and profit-sharing programs. These are good ways to immediately compensate and reward employees for their contributions to your company's success.

When employees know they'll be rewarded, they'll be more inclined to stay. You can use two approaches when offering cash incentives.
Project-completion rewards - You can offer employees project-completion rewards. Offer employees on key projects a $5,000 to $10,000 bonus for staying and completing a project. Most employees will stay for their bonuses.
Cash rewards for exceeding goals - When the company is successful, you can reward employees with cash. When your company meets or exceeds projected financial goals, ensure that all employees share in the profits. This shows employees that your company recognizes how its employees' contributions affect the bottom line. Although most employees don't like to admit it, money is a huge motivator for how and where people work. A strong monetary compensation system, which could include stock options or cash rewards, should be a part of your retention plan.

Assessing Your Competitors' Recruiting Efforts

As a recruiter, you probably want to attract and hire the best people available to fill positions in your company. But in your quest for the best, you're in direct competition with other companies. Therefore, you should take the time to learn about your competitors' recruiting efforts.
Having a thorough understanding of the "enemy" takes time and effort, but it has its rewards. You will know where you stand in comparison to your competitors, you'll know your strengths and weaknesses as well as their strengths and weaknesses, you'll know what recruitment techniques work for your competitors, and you'll know what you're up against in order to develop an effective recruitment plan. You can use the following strategies to learn about your competitors' recruiting efforts.

1. Find out what compensation they can offer.
First, you should find out what compensation your competitors offer. By learning this information, you can determine how you measure up in comparison. Questions you should ask are:
What salaries do they offer?
What type of benefits package do they offer?
What kind of training and career development do they offer? By asking questions about compensation, you can determine what you can offer that your competitors can't or won't offer. It can also help you determine which areas of your compensation package need to be improved.

2. Find out about their recruitment approach.
Your competitors' recruitment approach is the second thing you should learn about. Do they recruit college students from big schools? Do they go after your employees or those of other competitors? What newspapers and job boards do they advertise in? How do they use their Web sites to recruit?
Learn what's working for them, and decide whether those methods can work for you. If you can't recruit the way they do, rethink your approach. Go to smaller colleges, advertise in different papers, and spiff up your Web site.

3. Find out about the differences between you and them.
The third strategy involves learning about your competition to find out what makes your companies different. What are the differentiating factors that would make a candidate choose to work for you over your competition?
For most workers, the work environment is most important, followed by fair compensation and recognition. Other issues, such as telecommuting, the dress code, the corporate culture, management styles, recognition programs, and how fast a new recruit can be brought on board are differentiating factors.
So how can you find out about your competitors' compensation packages and recruitment approaches, and the differences between your companies? You can learn this information by talking to your counterparts at other companies when you attend conferences and seminars. Ask these people what they offer and what they do to attract workers. And keep track of whom your employees are leaving you for by using exit interviews.
Remember, you're in competition with many other companies for the best job recruits. By taking the time to learn about your competitors' recruiting efforts, you'll be better able to focus on your own advantages, address your disadvantages, and ultimately create a program that helps you attract the best candidates.