In certain situations, managers might become very concerned about the
retention of certain employees — in a turnaround, there might be a few
employees whose experience is critical to the future of the business, or an
employee might have a significant client relationship, that is vulnerable if
he or she leaves the firm. In these (and other) situations, managers might
want to use a retention bonus, simply because they think a top performer is
vulnerable to outside offers.
*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?*
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 managers come to HR, seeking a monetary solution to a
problem they have not really diagnosed.
*Diagnosing the Problem*
In HR, one of our roles is to help managers "see" the problem. In the case
of an unhappy employee, simple questions will reveal the many layers within
a problem. The 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?*
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 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.
And for unhappy employees, the solution will depend on what you discover. If
the problem is work-related, 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*
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.
[About the Author: Kate DCamp is the senior executive adviser at Cisco.]
From India, Hyderabad
15retention of certain employees — in a turnaround, there might be a few
employees whose experience is critical to the future of the business, or an
employee might have a significant client relationship, that is vulnerable if
he or she leaves the firm. In these (and other) situations, managers might
want to use a retention bonus, simply because they think a top performer is
vulnerable to outside offers.
*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?*
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 managers come to HR, seeking a monetary solution to a
problem they have not really diagnosed.
*Diagnosing the Problem*
In HR, one of our roles is to help managers "see" the problem. In the case
of an unhappy employee, simple questions will reveal the many layers within
a problem. The 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?*
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 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.
And for unhappy employees, the solution will depend on what you discover. If
the problem is work-related, 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*
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.
[About the Author: Kate DCamp is the senior executive adviser at Cisco.]
From India, Hyderabad
Hi
I completly agree with you. retention bonus has to be the light resort. If an employee decides to leave then he'll certainly leave, if not now then after some time. In my organization i have seen such cases and even people misusing the same.
Regards
Govil Nanda
From India, Delhi
I completly agree with you. retention bonus has to be the light resort. If an employee decides to leave then he'll certainly leave, if not now then after some time. In my organization i have seen such cases and even people misusing the same.
Regards
Govil Nanda
From India, Delhi
Some organizations injects retention bonus in such a way that it retains an employee without allowing him to misuse.
One such example..
A private bank gives generous loan to its employees at a discounted interest rate of just 2%. However if he quits within 3 years, he has to repay the original interest(which is anyways more than 10%) right from the date of loan sanction.
Krishnan
http://writingsincefree.blogspot.com/
From India, Bangalore
One such example..
A private bank gives generous loan to its employees at a discounted interest rate of just 2%. However if he quits within 3 years, he has to repay the original interest(which is anyways more than 10%) right from the date of loan sanction.
Krishnan
http://writingsincefree.blogspot.com/
From India, Bangalore
The article is excellent. Thanks for posting it.
This should encourage our colleagues to look for the real reasons why employees wish to leave, and to take measures to remedy matters, wherever possible.
It is also very useful to ensure that key employees do not hold the company to ransom, and that wherever possible, employers should have backup options ready in case of sudden departures which would be disastrous for the company.
Jeroo
From India, Mumbai
This should encourage our colleagues to look for the real reasons why employees wish to leave, and to take measures to remedy matters, wherever possible.
It is also very useful to ensure that key employees do not hold the company to ransom, and that wherever possible, employers should have backup options ready in case of sudden departures which would be disastrous for the company.
Jeroo
From India, Mumbai
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