TM - October 2007 - (Page 12) [foundations] by Kate DCamp I I Do Retention Bonuses Work? n certain situations, managers managers come to HR, seeking a might become very concerned monetary solution to a problem about the retention of certain they have not really diagnosed. employees — in a turnaround, there might be a few employees Diagnosing the Problem whose experience is critical to the In HR, one of our roles is to help future of the business, or an managers “see” the problem. In the employee might have a significant case of an unhappy employee, client relationship, that is vulnera- simple questions will reveal the ble if he or she leaves the firm. In many layers within a problem. The these (and other) situations, managers might want to The best tool for retaining use a retention bonus, simply beemployees is to select, train cause they think and assess managers on their a top performer ability to not only motivate, is vulnerable to outside offers. but also to do preventative to keep critical talent. An opportunity to have more impact on the business and a chance to earn extra money by achieving business goals sends a clear signal about someone’s importance to the company. In the case of the employee who is a critical link to a key customer, do not perpetuate the problem by locking that person in place. If you have a customer relationship so fragile that one person leaving would unwind it, get wider coverage on the customer immediately. If the employee resists, he or she is holding your business hostage, and I would use the exact opposite of a retention bonus. Break Down the Problem The variety of issues managers try to address with retention bonuses is so diverse, no single solution would work for all of them. The first thing to ask is how — and why — money will address the reasons that someone might leave the company. This simple question can reveal a gap in the requestor’s thought process. It is absolutely critical, however, to know what that person is trying to say to the employee. Managers do not always realize compensation is a communication device. Having a clear message, expressed out loud, is the first step to getting at the root of the problem being solved. Many Problems, Same Solution? treatment and early-stage diagnostics on emerging motivational issues. employee might be preoccupied with an issue unrelated to work or be having a problem with a co-worker (or manager). Problems with managers are varied, but they often boil down to too few or one-way communications. Having the manager “give” something will not solve the problem. Even if employees feel underpaid, giving them a retention bonus can be perceived as proof that their hunch was right, which can actually provoke someone to look for better opportunities elsewhere. In What Cases Does a Retention Bonus Work? About the author Kate DCamp is the senior executive adviser at Cisco. She can be reached at editor@TalentMgt.com. And for unhappy employees, the solution will depend on what you discover. If the problem is workrelated, you might need to change what the employee is working on or resolve a staff conflict. If money is involved, it should come after all other solutions, and then, it should be in a more appropriate form than a one-time bonus for staying. Don’t Wait for Symptoms Compensation has become the “penicillin of motivation,” curing all ills. Compensation is frequently the first, or only, solution thought of to solve what is invariably a more complex problem. If an employee is unhappy, this is often a symptom of a deeper problem. First, make sure the manager has asked, “Are you unhappy? Why?” I have been amazed at how many The short answer is “almost none” — in 30 years, I have yet to see a retention bonus retain, let alone motivate, anyone. The limited application of this approach is for business shutdowns, for which keeping people to a certain date is important. In most situations, what works is specific to the problem diagnosed. In a business turnaround, tripling communications and sharing some of the “upside” can be very effective The best tool to retain employees is to select, train and assess managers on their ability to not only motivate, but also to do preventative treatment and early-stage diagnostics on emerging motivational issues. Actively discussing work interests and career goals with each employee gives the manager ongoing insight. Great managers use this insight to calibrate their investments of the “motivational capital” inherent in the work itself and in the best performers. 12 October 2007 talent management magazine www.TalentMgt.com http://www.TalentMgt.com
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