Building A Winning Retention Strategy In 2022

It’s no time to just throw money at the situation to make your employees stay

Employees today have more leverage than ever with their careers. With a record number of job openings and salaries on the rise, more people are making a move to achieve greater work-life balance and financial security. Some call it the Great Resignation, but I think a White House economist put it best when he called it, the Great Upgrade.

What’s certain is that many of the factors that used to keep employees in a job have changed with the move to remote work. Job seekers now have a better idea of their worth with more compensation information at their fingertips – and a bigger pool of companies to choose from now that they can work from anywhere.
 

In this environment, it’s critical for companies to design an effective retention plan, or risk losing their best employees. Counterintuitively, this doesn’t mean your company must chase the increases and pay top-of-the-market salaries to keep your talent. There are other levers to pull to keep employees happy and productive, from bonuses to benefits. But it does require building trust with employees by rewarding them consistently and communicating effectively about why and when they will be rewarded.

One of the biggest reasons employees jump ship is because they can’t see the direct correlation between their compensation and their work performance. They want to know that their hard work is seen and appreciated. That might mean a $500 Amazon gift card given to all employees thanking them for a season of excellent work, or a more targeted equity award to key contributors for successfully reaching an important milestone.

Employees are not willing to wait for six to eight months to hear if they are doing a good job. They want consistent feedback, and an economic acknowledgment pegged to their contributions. This becomes especially critical in more difficult times, such as biotech companies dealing with a rejected FDA approval, or software companies shedding certain parts of their workforce, or facing a lawsuit that has caused the stock to plunge.

At times like these, it’s important to get ahead of fear and uncertainty and develop incentives to retain the key talent capable of pushing the company over the finish line. Let’s face it, new hire bonuses look very attractive when a company’s prospects are dimmed.

The goal is always to move employees to the next big milestone or win for the company. And that doesn’t have to mean permanent increases in salary. Take for instance that biotech company that needs to go back to the drawing board and submit new data to the FDA for drug approval. It got ahead of the problem by offering key employees who agreed to stay for 12 months a cash bonus with 50 percent being paid out in six months, and the remainder at the end of the term closer to the company’s FDA deadline. In addition, a new set of off cycle equity awards was granted, vesting at certain percentages tied to achieving key clinical milestones and dates starting 18 months out.

Not every company requires this kind of crisis approach, but the same philosophy applies. Employees at all companies want to feel rewarded even if they can’t be paid the highest salary in the marketplace. They want to feel seen and appreciated and have something to look forward to as they make a meaningful contribution at work.

Make no mistake, it’s still important to remain competitive on salary and benchmark more than just once a year at your annual review. The market has moved a massive amount, even in the last six months. But just as critical as salary is regularly evaluating your total rewards package from bonuses and equity awards to the match you’re offering on your 401 (k) and your mix of wellbeing perks.

Once employees start looking at their paychecks because they’re not feeling valued, you’ve already lost. They need to understand the why and when of your rewards and that means a well-articulated compensation philosophy that’s transparent and intentional and aligned with your mission as a company.  

It’s no time to be reactive and just throw money at the situation, in hopes that employees will stay. This is the time for companies to proactively figure out their goals and how changes in compensation can help their employees achieve them. That’s how you win with people.

Kyle Holm is Vice President, Total Rewards Advisory at Sequoia Consulting Group. Visit https://sequoiabiotech.com/  Connect Kyle Holm