If you are an employer considering offering a retention bonus to some of your key employees, it is important to consider whether this is the best option. If your company is facing a time of change or disruption, the typical approach is to induce your executives or star performers with a financial incentive to stay with the company. Very few employers stop to ascertain whether the employee would remain anyway without a financial incentive. Additionally, few employers fail to consider a plan to keep the middle performers who can be retained for fewer dollars.
If there are certain key employees that are critical to the merger, acquisition or other organizational change, the first step is to identify them. Next, establish whether the key employees intend to remain with the company and if non-financial incentives would be enough to guarantee their retention.
An employer should also look for the “diamonds in the rough,” or those employees that may be able to get the job done but are not as obvious on the retention list. Several average employees performing the critical work could be less expensive than paying to retain one high-salaried executive. An employer should focus on the impact that the company would feel at the loss of the employee. What is the probability that the change in the company would cause the valued employee to leave.
Employers should also create unique retention packages that are tailored to meet each employee’s needs. The use of a one-size-fits-all approach is often not successful when dealing with a diverse group of people. Take time to understand what each employee’s situation is and the best approach for meeting their needs. How do you accomplish this? The best way is to have conversations with your employees and see what they focus on. You might be surprised that money isn’t always the most important concern. Topics such as relocation, working from home, career advancement, benefits, training and other similar matters should be discussed.
What is the bottom line? Employee retention is about more than just money. Financial incentives are still very effective, but you might be able to save the company significant sums by exploring other incentives as part of the retention package.
When it comes to retention agreements, negotiation is crucial. Whether you are an executive or an employer considering a retention compensation package, let our knowledgeable and experienced attorneys assist you in negotiating the best possible terms for you. Contact our office today to schedule a consultation.