Retention of top talent is imperative to long-term growth of a company, and it’s currently one of the top challenges for many HR leaders. In fact, 87% consider “improved retention” a critical or high priority over the next five years. The advantages of employee retention are nearly endless; cost-savings, optimistic workplace culture, positive employee morale, and experienced employees all help organizations move the needle toward business success.
Evidence suggests there’s actually a season to voluntary employee exits—and it’s called “bonus season.” This is when valued employees make calculated career moves to other companies just following the payout of their annual bonus. Since those who are eligible aren’t willing to leave money on the table, they may accept an offer with a future start date. As an HR professional, you may even be scheduling start dates of new hires around their bonus payouts from previous employers.
This merry-go-round of talent doesn’t have to burden your organization with lost time and increased financial costs. Through strategic planning, you can retain your firm’s top talent and recruit others through a strong retention initiative. If your retention strategy is based solely on compensation and bonuses, you are at risk of losing your top talent. To ensure employee retention is maximized, efforts to retain top talent need to be in full swing long before bonus season hits.
Here are five creative ideas to avoid the March madness of employee churn:
#1: Leverage the power of coaching
Educate employees on job and career transition options long before they’re due for a bonus. While employees might focus on looking for new careers options at a certain time of year, providing visibility into career options and paths within the organization will help keep current employees engaged. One retention strategy is to make career coaching available to your existing workforce. Career coaches can help instill a spirit of continuous development and encourage employees to make moves that will help them grow professionally and personally, even if it means moving into a new position and leaving a potential bonus on the table. You can help employees experience a more fluid and mobile workplace environment by not tying bonuses to one specific position. Instead, create and encourage internal mobility opportunities among valued talent, and tie bonuses to organizational and personal goals to encourage retention.
When employees are encouraged to set long-range goals and align those ambitions with the company’s stated goals, it becomes clearer how their work fits with the future of the company. Career coaching also helps employers woo new talented employees by showcasing a vested interest in their personal goals and long-term career trajectory.
When employees are encouraged to set long-range goals and align those ambitions with the company’s stated goals, it becomes clearer how their work fits with the future of the company. @KJSchneiderman #SmartTalkHR https://bit.ly/2DL81Rn
#2: Start employee development conversations long before “payout” time
This is a sensitive topic for many HR practitioners, who don’t like to talk about layoffs or outplacement. The reality is, it’s a topic that needs to be addressed in the context of career transition options for employees. Employees should be able to see the value of the outplacement and career transition services you offer so they can fully take advantage of these services if a layoff occurs. In addition, consider offering the career transition support offered by an outplacement provider to all employees who leave your company without another job, either voluntarily or not.
Employees should be able to see the value of the outplacement and career transition services you offer so they can fully take advantage of these services if a layoff occurs. @KJSchneiderman #SmartTalkHR https://bit.ly/2DL81Rn
Don’t overlook the power of regular, honest conversations between managers and employees. When managers are helping employees along their career paths, creative options like redeployment or career transitions are often brought to the table. Openness and transparency regarding an employee’s career path will encourage employees see growth potential and help managers better understand their team members’ goals and professional desires.
Before meaningful conversations can take place, managers must be well-equipped to focus on the employee experience from start to finish, onboarding to outplacement. Through regular goal-setting sessions and meetings to discuss a team member’s future, employees are more likely to stay engaged throughout the year, including bonus season. Developmental opportunities also give employees a reason to stay beyond the bonus handout and a monetary boost.
#3: If you have to initiate a layoff, think about the timing
When possible, push layoffs to the spring months, just after bonus season. Helping employees exit with a bonus in hand will boost your employer brand and help you avoid the backlash that often comes from disgruntled employees. In addition to keeping your promise of a bonus for good work, there are typically more jobs available in the spring. When employees are able to land jobs faster, employers realize the benefits of less unemployment tax costs, better employer branding, and a lower risk of litigation.
Whether or not you can push a layoff off until after bonus season, providing outplacement services is critically important. Outplacement and career transition services are designed to help employees land back on their feet quickly. When employees exit your company with the assistance they need and hopes of a new job, they are more likely to talk positively about you to their peers, networks, and social media channels. For the sake of your employer brand and the individuals you employ, timing is everything and should be a major consideration when contemplating a layoff.
#4: Don’t tie bonuses entirely to business results
Bonuses should have components that enable employees to feel like they have impact and control. When yearly bonuses are based entirely on the overall business results, it’s challenging for employees to see how their day-to-day work has any impact. Instead of tying bonuses to business results alone, help employees see how they impact company goals. Regular feedback, employee development, and individual rewards are motivating for employees who want to improve and go that extra mile for their employer.
Perhaps a percentage of the employee’s bonus could be evaluated based upon department or individual goals that the person feels they can really impact. Having personal and team goals helps drive retention prior to bonus and beyond. To keep people engaged, show transparency and review progress towards goals on a quarterly basis and relate progress to the bonus payout -- both on a company and individual level.
Some companies have even found that shifting to a quarterly payout of bonuses with frequent performance reviews serves as an advantage for the company and the employee. Employees feel the emotional boost of the financial appreciation for their work more frequently, which can deter them from the dissatisfaction that often leads to a job search.
In some years, your company may not reach its earnings goals. In those years, consider finding ways to acknowledge the efforts of your employees. While you may not be able to offer the entire payout they may be expecting, giving a reduced amount will show them you value their contributions. Be transparent in your communication and let employees know the realities behind the reduced bonus payouts and reiterate the value of your employees and their contributions. Be sure to include plans for improvement and your vision for a better year to come.
#5 Share tax breaks and windfalls
Given the recent tax break news, now is a great time to show employees that you care about them, value them, and want to keep them. Many forward-thinking businesses are passing their tax break on to their employees.
Bonus season, or not bonus season, it’s important to recognize and reward employees for a job well done. When employees feel appreciated, they’re more inclined to stay with your company and perform at their best. Focus on developing your employees for the long-term; this is far more valuable for your company and the individual than a bonus loosely tied to performance.
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