In better economic times, “throwing money at the problem” was the most prevalent approach – and a highly effective one at that. Today, for most companies large or small, TARP or not, public or private, that option can’t be broadly used. So today in these tougher economic times what can companies do?
Basically attract and retain packages will increase downside protection while increasing the upside potential and will extend timeframe to collect on these promises. Some of these might be:
1) Increase base pay
2) Decrease incentive thresholds
3) Provide one time awards, such a retention awards, paid in cash or stock or a combination
4) Offer a “career promise” for a promotion with a cash “floor” should the candidate not meet the promotion criteria
But, an even better idea is to take a “surgical approach” to designing these attract and retain packages. Never has there been a better time to differentiate packages to reward key personnel in meaningful ways while managing risk. HR won’t like it. It is much easier to use the proverbial “peanut butter” approach spreading rewards similarly across broad populations, this approach is much favored by HR, it’s easy and won’t get people upset (well at least it won’t get the average and below average performers upset).
But before you take a surgical approach or consider the components of pay to include or revise in an “attract or retain package”, you need to do a careful analysis to determine who really is important to your organization. Who are those people who drive the successful delivery of your business strategy? If you company that is a cost leader, then executives in procurement might be key (think Walmart), if you company is an innovator (think any pharmaceutical company) then perhaps the R&D executives are key.
And, although this is very traditional thinking it remain very important: Do not forget to communicate!Particularly in tough economic times, you need to let the key individuals know they are important to your company’s long-term success. Without clear, consistent communications and reinforcing messages, key individuals might think YOU think they are lucky to have a job. If they don’t “feel the love” then when that call comes in from a recruiter your top talent might be tempted by an offer.
Email Michael Graham at email@example.com