HR strategy Recruiting Talent Management Well-being

How to effectively retain talent in today’s volatile economic environment

Recently, it has been rumored that corporations are paying large bonuses to help employees offset the growing cost of living in recent months. This week, we’d like to know if this is something your organization provides. Would you switch employment for a firm that offered this? Should this be usual fare? What effect would this have on employers?

What are considered retention bonuses?

You may have already implemented a perk program that gives employees additional financial incentives based on business performance and profitability and/or individual performance.

You may even pay ad hoc optional lagniappes outside of the parameters of a perk program (similar to  a cost-of- living perk). Another option is a retention bonus.

However, what exactly is a retention bonus?

This is a one-time guaranteed sum that you offer to pay an employee at an agreed time to persuade them to stay with you during the interim period. They are widely used to ensure that critical personnel are kept during a transition, acquisition, or pivotal business cycle. Offering such a bonus in exchange for their ongoing employment can help to ensure they do not abdicate during this time. Still, there’s nothing stopping you from employing retention perks to keep employees from quitting while you’re attempting to acquire and retain employees due to a competitive reclamation request.

The advantages and disadvantages.

If you’ve promised a retention bonus, the hand could still abdicate before the bonus is paid (they just won’t earn the bonus). Alternatively, they may abdicate as soon as they enter the perk. Thus, retention programs can only go so far in terms of retention. For many, the money isn’t the most important incentive!

According to a CIPD survey, 34 of those planning to resign stated they wanted better income and benefits, 26 wanted to boost job satisfaction, 23 wanted a better work-life balance, and 22 wanted to do something different. So, if you want to improve worker retention rates, you may need to look beyond delivering fiscal incentives.

Consider the following:

If you do decide to provide a retention benefit, the quantum must be sufficient to keep the employee. Consider the following:

Who will be eligible for the benefit—specific individuals, departments, or the entire company? Be extremely cautious. Keep an eye out for illegal demarcation. Is it fair, even if it’s legal?

How is this determined?

What is the duration of the appropriate retention period? The longer this goes on, the less probable it is to entice the hand to stay for the duration.

How long will the perk be paid after the applicable retention period?

Of course, it may help with gift retention in the short term, but maintaining and attracting gifts isn’t that straightforward, and it shouldn’t be.

Employee retention is a complex issue, failing to invest in retention is costly.

According to Gallup, the cost of replacing an employee is one-half to two times the employee’s periodic salary.

Consider the expenses of reclamation, training, functional inefficiencies, under-resourcing and detainment, the impact on employee morale, the loss of organizational knowledge and expertise, the impact on the customer, and so on.

Additionally, businesses must preserve reserves in an intensely competitive — and more global — labor market, and retaining top talent becomes critical to remaining competitive.

All of this is of course great for brand image, showing you’re committed to your employees. However, in the long run this needs to be supported by ensuring employees feel they are being fairly paid and feel valued.

Finally, if you wish to be accompanied on one of your HR challenges, do not hesitate to contact us via the form below.

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