Is your Organization Prepared for Turnover Armageddon?
By: Evan Rodd, PayScale.com
Is it time to restructure or revaluate your company’s compensation plan? The answer may be yes — particularly if you want to retain your most valuable employees and avoid employee turnover costs.
According to the Quarterly PayScale Index, wages have started to climb across various industries and organizations. In particular, small and medium-sized companies experienced growth that outpaces larger competitors, while high-demand jobs in energy and tech wages have continued to climb along with food services and real estate. As a result, a growing number of companies surveyed by PayScale rank employee retention as a main concern, as noted in this compensation infographic.
As wages increase, new job positions begin to open, possibly tempting your top performers with thoughts of greener pastures. As more companies begin to hire, you may risk losing valuable employees in what some are calling “turnover armageddon.”
Turnover is expensive, often costing an estimated 60-70% of an employee’s annual salary. Depending on which employees leave, it can also negatively impact your business goals and operations.
To avoid employee turnover in your organization, make sure your compensation is keeping up with the current trends. Whether or not you think valuable employees are looking to move on, it is always a good idea to revaluate your compensation strategy to assure you retain talent and compete with other companies when it comes time to make new hires.
Your Compensation Strategy
Here are some important questions to ask when assessing your compensation strategy:
- How do you pay your employees in comparison to competing companies?
- Do you offer market premiums for desirable positions?
- What is the current state of wages in your industry?
Also, keep an eye on your high-priority employees and assess where their positions fall in relation to the market. It may also be beneficial to do an individual analysis of high priority employees, depending on how your industry is currently defined by market trends. This is especially useful when evaluating the job market value of specialized positions within your organization.
Managing Employee Compensation
As a leader in your HR department, be sure to guide your company through the compensation planning process with ease and finesse.
As wages increase, address high-priority employees and positions in regards to current market trends, especially if you are fearful of competitors who are looking for top talent.
Perhaps you are currently unable to offer raises across your entire company. Recognizing and engaging top employees has to remain a key ingredient in your continued success.
During this process, make sure you have as much data as possible to back up your decision-making. If and when turnover armageddon strikes, you want to make sure you win the war for talent.