Money doesn’t buy loyalty: Build a better compensation program

The Great Resignation looms large in any HR team’s vision, and the culture of retention is evolving rapidly.

Employees aren’t satisfied with average pay and average benefits anymore. Even an above-average salary isn’t enough if an employee doesn’t care about their work.

According to a panel of senior HR executives, a competitive salary is only the first step; companies also “have got to create the right kind of ecosystem to support [their] employees.” 

Without that ecosystem, in today’s war for talent, keeping the best talent will be a continual struggle. Most employers experienced higher turnover rates in the last six months.

What’s more, many openings go unfilled for longer than normal. It’s not only retaining employees, but also attracting new talent that we have to worry about in this tumultuous time.

And with 57% of employees saying that they will look for a new job in the coming year, according to research in the Harvard Business Review, this trend of turnover is here to stay. How do employers keep employees from leaving and get new talent to consider filling empty roles?

Why they leave

The first thing to do is find out exactly why employees are leaving and what’s attracting them to other opportunities. In one study, we learn that there’s a disconnect between why employees are leaving and why executives think employees are leaving. Consider the following:

• 53% of employees are searching for new jobs because they want better compensation.
• 26% of executives think employees want better compensation.

And that’s not all:

• 36% of employees are searching because they want better benefits.
• 28% of executives think employees want better benefits.

It’s clear that there’s a big disconnect between what employees want and what executives think employees want. Leaders need to realize that in order to recruit talent and build loyalty. They need a comprehensive compensation strategy. But money isn’t the only way to do so. Loyalty isn’t created with dollar signs. It grows in an environment of care and emotional connection. See how you can improve your compensation strategy in non-monetary ways.

How to boost a compensation strategy

In order to keep good talent and attract new talent, you need to ensure your people feel valued. They also need to know that they will be rewarded with the compensation that they deserve for the work they put in. In fact, organizations that rate their culture of recognition highly are also three times more likely to see increased employee retention.

But offering a higher salary isn’t the only form of compensation you can provide. Keep in mind, greater salaries have shown to only increase retention for a short time. There are other options to consider as employers look to increase retention.

Offer flexible work options

Working from home is becoming more and more common – it’s nearly expected in today’s work environment. Fully remote and hybrid models are both great options that can enhance a better compensation program.

Let employees work from home a few days each week, or allow them to work the hours that are most convenient for them. Some companies are even shortening their work week while keeping salaries the same to offer greater flexibility and leisure time for their workforces. That type of dedication to employees’ personal lives builds strong, healthy loyalty.

Give regular recognition

Recognition should be a big part of your compensation strategy. According to a survey done by the Maritz research firm, over 40% of people consider a company’s recognition program when considering employment.

But don’t assume that recognition and rewards need to include monetary compensation. Great examples of non-monetary recognition include verbal thanks, handwritten notes, official certificates showing appreciation, or simply meaningful conversations between a manager and a direct report.

Provide educational support

When employees know their employer values their future and their success, they’ll feel valued. That’s where educational opportunities and industry certifications come in. These lifelong learners can further their knowledge (which can make them more effective workers) and prepare for future opportunities that may arise. The founder of Virgin Group said this:

“Train people well enough so that they can leave. Treat them well enough so they don’t want to.”

Sir Richard Branson

When you tie career growth into the rest of your upgraded compensation program, employees will gain the skills they want to develop, which makes them more effective employees. Those experiences help them build loyalty to the company. Their enhanced productivity helps the company build loyalty to the employee. Loyalty is a two-way street, and investing in your employees is a great way to maintain that road.

Monetary comp – a piece of the puzzle

Despite everything we’ve said, money is still a large motivating factor, and you shouldn’t ignore it as part of your compensation strategy. But don’t be pigeonholed into thinking salary, salary, salary.

If you already offer competitive pay, or you’ve already bumped your salaries up in the last few years, here are a few creative options to entice talented employees to come and to stay.

Performance-based bonuses

The type of talent you want to retain is the type of talent that will exceed expectations more often than not. And these are the types of people you need to strive to keep satisfied with the right compensation program. As you reward them for exceptional performance, employees will stay motivated to strive for greatness.

Reward compensation

Another idea is to offer some sort of compensation program beyond the money employees get for a bi-weekly paycheck. Providing points or gift cards alongside each paycheck (even if it’s only a few extra dollars, depending on each employee’s experience) is a great way to show your talent that you care about their happiness and their personal lives.

And when you provide this reward compensation in a form that can’t be used for every-day expenses or bills – such as gift cards or redeemable points – people can use it for items or events that they’ll actually enjoy. This type of bonus compensation is icing on a compensation strategy cake; the extra effort can build loyalty because employees will feel valued and cared for. Compensation tech is a new piece of this puzzle that is coming to the forefront in many HR circles.

The Great Resignation and the War for Talent will rage on for the foreseeable future and building loyalty when there are so many employment options is a constantly evolving challenge. Existing and potential employees are looking for companies that will value them as people and provide the compensation they need to live the lives they want. Businesses need to analyze and revamp their compensation strategies accordingly to build loyalty that goes both ways. When employees are shown loyalty and care, they’ll naturally feel more loyal and invested in the places they work.