Each company has a different approach to performance management process and these should be the base on how to identify this top talent pools
Most companies nowadays have a ‘pay for performance' approach in order to differentiate their performers and non performers
Companies need to start using their financial resources to reward employees according to their contribution to the survival and success of the organization.
We are seeing organizations, global and local, big and small, suffering the effects of the economic crisis. Some companies will be disappearing or merging with others in the coming months. An Emeral study showed few years ago that in less than 10 years time, less than 10% of the organizations that were part of FT 500 at that time are still in top positions today, well this might happen earlier than expected. Organizations that will lead change and will be able to implement innovative approach to productivity and cost control will have more chances of survival and success.
For an organization to be able to change, adapt and survive it requires employees that take charge and see themselves as investors. Those employees will question, contribute and lead change in the organization. Those are the employees companies should consider ‘top talent’ in the organization.
Companies need to start using their financial resources to reward employees according to their contribution to the survival and success of the organization. Companies that used to have a more egalitarian approach need to start turning their reward practices towards differentiating employees based on contribution. This is not only required because of budget constrain, but is also fair and acceptable.
Strategic Focus: Employees that define themselves as investors
Each company has a different approach to performance management process and these should be the base on how to identify this top talent pools.
The evolution on how companies see their workforce has had a significant turnaround over time: from the 80s, that employee were considered the highest cost, towards the 90s, that employees were the ‘highest assets’, we are now moving toward CEOs believing that employees are the companies’ ‘highest investors’. Employees ‘invest’ their time and effort for the wellbeing and survival of the company, and that shift is truer today than even before.
A research from Towers Perrin suggest that only 11 percent of employees sees themselves as ‘investors’ and more than 60 percent are either actively looking for another job or would consider another offer if the compensation is slightly higher.
Companies need to ensure that the top performers are within the 11 percent of employees that see themselves as ‘investors’ and that are the ones that are not looking out in the market. The rest of attrition might even been considered healthy for the organization as it decreases your workforce where companies want to.
How to create HR strategies for attracting, retaining and motivating top performers?
This is important as this might change from company to company depending on type of workforce, business strategy, and financial situation. But the objective should be the same: attracting, retaining and motivating top performer employees.
Towers Perrin research suggests that top performers want ‘challenging work, for which they are competitively and fairly paid, and which provides opportunities for fast career progression and skills development’
There are many areas in the human resources practices that can have a drastic impact on attracting, retaining and motivating top performers. In this article, we will focus on total rewards.
Focus on Compensation Strategy
Most companies nowadays have a ‘pay for performance’ approach in order to differentiate their performers and non performers. But even today most of the compensation and benefits professionals take the median as a starting data point and construct their compensation structure as a linear function. The consequence of that might be that companies could be ‘overpaying’ the low performers and underpaying the high performers, and hence losing your top performers to the competition.
Competitive total reward (base pay, short term incentive and long term incentive mainly) has a direct correlation on retention of top performers.
Surveys suggest that companies should have a reward system that clearly differentiates between premium, standard and discounted salary levels to reward fairly as per contribution to the organization. Companies to fail to differentiate will see their low performers remaining in a secure position and fast track employees leaving the organization to the competition.
Company’s compensation strategy is also an element to create fairness within the system: the more the contribution, the more the involvement, the more value created for the organization, the higher the pay for the individual.
Other important aspects related to reward strategy will be transparency about the ‘how’ and the ‘why’ and not on the ‘how much’. Employee are interested in knowing why does the company position themselves as median, or upper quartile and they will also want to understand what is the process followed to determine the compensation of each individual. Successful companies have a genuine intention to pay competitively to their top performers, but this will not suffice to retain and motivate top performers. The difference will lay on the ability of the companies to be transparent with the reasons for compensation decisions and the process followed to arrive to the individual compensation.
All these efforts will also need to be complemented with a non monetary recognition program that will create a connection between the employee and the vision of the organization.
Those are the aspects in the reward strategy that will contribute management to attract, retain and motivate the fast track talent pool: differentiation, competitive pay, emotional recognition and communication.
The survival of the organization depend on their ability to change, reinvent themselves and evolve faster that their competition. Those organizations will need the talent pool to take them to the next steps and will need to identify those talent pool among the top performers in the organization. There is a need to identify and differentiate these top performers’ talent pools in the organization and create career opportunities and development for those pools. One of the most significant roles that HR Management will play going forward to support the future of the organization will be a fair and transparent compensation strategy that will be able to differentiate and retain top performers in the organization.