– This article on executive retention was first published in Human Resources IQ
by David Perry
After all the effort and expense an organization goes through to acquire and develop top talent, how do you ensure your Key Performers remain for the long run — that they don’t get raided or head for greener pastures?
At Perry-Martel, we know about executive talent retention because we’ve learned what it takes to keep ‘A-Players’ by talking to them every day.
We’ve identified ten essential keys derived from three fundamental management principles: Challenge; Communication; and Compensation.
CHALLENGE: A stimulating and challenging environment provides the first three keys for Executive Talent Retention:
1. Vision and Goal-Setting – At the Top
Your Key-Executives want to know where they fit into the big picture and how they can position and plan for their own success. Your job is to help them see it. How? Communicate the company’s goals, its vision, its mission. Put performance goals in place, with a formal review process as part of the program to measure performance at realistic intervals. When executives’ personal goals are tied to the company’s mission and to the achievement of the organization’s goals they feel connected and can gauge their own value contribution. This makes it very difficult woo them with the promise of “greater challenges.”
2. Your Expectations of Executive Excellence
High energy high impact executives like to run with the business equivalents of a Gretzky or a Jordan. Healthy egos thrive in an environment that not only recognizes excellence but expects it. There is tremendous pride that goes with being associated with the best, with being recognized as a top performer. So make your company a magnet for exceptional employees. Earn a reputation for top level performance by expecting executive excellence. Others will want to join you and your current staff won’t want to leave.
3. Creative License
A challenging environment offers not only the ego-satisfying satisfaction of reaching tough goals, but the spirit-building, competition-crunching exhilaration of finding new ways to reach them. Sadly, the opportunity for creativity is not a part of most corporations.
COMMUNICATION is the management tool that allows vision, expectation of excellence and creativity to become second nature to your company’s success. Good communication offers four more keys to retention to Executive Talent Retention:
4. Dialogue, With Attitude
Everyone’s talking about “communication,” and there is a dizzying array of courses which stress communication via quality circles, TQM, empowerment and team-building. Many of them have failed to live up to their promises, and so will many of those that are invented to replace them. Successful programs are based on an attitude which allows two-way dialogue to exist and flourish. The best performers will go where they can be heard.
5. Positive Reinforcement
As Ken Blanchard of One Minute Manager fame showed, positive reinforcement encourages repeated desirable performance. This is possibly the simplest part of any communication plan, yet without fail the main reason people change jobs is lack of recognition. Honest praise is better than a raise — financial incentives are very important, but a pat on the back is often the most effective executive talent retention strategy.
Key performers contribute a lot: education, brain power, experience, creativity and energy. They know they will be right more often than they are wrong and need an environment where they can fully use their talents and creativity. The problem is that not everything they try will work. So give them and yourself room to adapt. that’s a major key to Executive Talent Retention.
7. Involvement in Decision-Making
Top performers need involvement, and stay where they have a voice and a responsive ear. With exceptional performers, however, it is mandatory that they be involved in key decision-making. If top performers aren’t involved, they’re gone.
COMPENSATE: A good compensation program holds the final three keys for attracting and keeping the best executives.
In the real world of compensation management if the money is insufficient you have no room for error in any of the other areas of retention. Money can be a highly effective lever for prying executives loose. It won’t generally be the only, or even the deciding factor, but it gets them to listen hard to the other components of an offer. As an executive’s existing financial package gets better and better, it puts increasing pressure on any new deal to be not only better, but to be outstandingly better in the other areas (challenge, opportunity, visibility etc.), in order to balance the risk involved in making a change.
8. Exceeding Industry Norms
Few companies choose to exceed the market in base salaries for their key executives. Those that do usually also have better-than-industry plans in long term compensation and bonuses. These companies attract high quality executives who don’t want to leave. How do employees rank compensation elements? As motivators to remain, two areas rank high with employees — salary and long term incentives. Three other areas — short term incentives, benefits and perquisites are moderately important to them.
9. Long-Term Ties
The second component of a good compensation program – the use of long term financial ties — is perhaps the most important. Make it expensive for executives to leave before you want them to. Incentives must be real and attainable, but you can stagger payouts or associate payouts with loyalty and longevity. Take care, however, to construct a package that is perceived by the executive as a positive incentive rather than restrictive hand-cuffs.
10. Over the Top Rewards
The final component of a good retention compensation package is one that rewards exceptional performance generously. This means performance that significantly exceeds high expectations. Cash, gifts, airlines tickets, weekend or week-long getaways, a golf or fishing trip with the boss, an invitation to dinner — all are valued and appropriate rewards that will contribute to a long term relationship. Achievement is usually a group effort and a spouse who feels appreciated is less likely to support a move to a new situation. Make the package first class. Do it right, or don’t do it.
Executive Talent Retention in Summary
The three principles of Challenge, Communication and Compensation embody the ten keys to retaining your key executives. If you want to retain them, let them know it and take the necessary steps to prove it! Executive Talent Retention is pretty simple in the end.