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.