Executive Retention Strategies: Beyond the Salary War
During a recent Weekly Growth & Recovery Webinar, Tyler Ridgeway, Director of Human Capital Resources at Kreischer Miller, and Mike Trachtman, Partner at Wisler Pearlstine LLP, discussed executive retention strategies that go beyond the salary war.
Ridgeway focused his discussion around two critical stages in the recruiting process. In Stage One, Ridgeway makes it his goal to turn an intrigued candidate into an engaged candidate. Potential hires are intrigued when they express interest in your company. This includes applying for a potential position or having a discussion with your hiring manager.
Now that they are intrigued, how do you get them engaged?
According to Ridgeway, HR professionals need to be prepared to discuss non-cash considerations in order to fully engage potential candidates. In today’s market, these considerations include:
- Family considerations
- Am I going to be in the inner circle? Can I make decisions and collaborate with the owner?
- Where are we going strategy wise?
- What do owners want to do with the business?
- How strong is the management team?
- Is the company recruiting me considered an A opportunity?
- How did the company recruiting me react and pivot during COVID-19? Are the executives who helped the most during the pandemic still there?
Answering these questions will help your organization recruit top talent. After this, it is critical for hiring managers to get to know and start to develop relationships with your candidates. A big part of this process involves understanding the personal drivers of each individual candidate. This can be tricky, according to Ridgeway, but it is critical to hiring candidates.
During Stage 5, the pre-offer stage, Ridgeway focused on crafting a package that appeals to the personal drivers specific to that candidate. At this point, you have gotten to know your candidates and understand their personal drivers. Knowing this will help you put together your offer. Some non-cash considerations to include in your offer are:
- Healthcare benefits
- Match and profit share
- Commute issues including gas cards
- Family considerations
- Elder care or day care
- Women in key roles
- DEI initiatives
During Mike Trachtman’s section, he discussed what motivates executives to stay at a company or to leave. In order to retain top talent, Trachtman recommends that you focus on the job before you focus on compensation.
Does the job provide meaningful involvement and have a substantial impact on the company? Does the position afford professional and personal respect? Are their clear and sensible policies uniformly applied? Do you recognize and celebrate the successes of your employee? Answering these questions can also build intrigue and interest in your company and positions.
According to Trachtman, the keys to non-salary compensation include:
- Meaningful rewards for both personal and business success
- Clear and objective compensation in established policies
- Achievable and budgeted discretionary compensation
- Are you paying for value?
At the end of the day, your organization needs to find a balance between treating employees fairly and recognizing their successes with deciding whether the compensation you offer creates value for your organization. Once you have done this, set an objective. If (x) success happens, (y) compensation is awarded.
According to Trachtman, here are bonuses to consider for successful compensation:
- Goal achievement bonus
- Phantom equity based on “profit”
- Change of control bonus
- Bonus pool distributed by earned profit
When developing these bonuses, it is imperative to consider:
- Maintenance of employee-at-will status
- What about (cause/no cause) termination?
- Sole discretion to interpret and apply
- Tax withholding
- Section 409A pitfalls
- Non-exempt issues: will it affect OT rate?
Regardless of what you offer, developing a non-salary-based compensation strategy is imperative to recruit and retain top talent in today’s environment.
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