Attracting and Retaining Talent:  It’s Not Just About Money

Attracting and Retaining Talent: It’s Not Just About Money

Attracting and retaining talent is an unending, multi-faceted challenge for human resources. There are just too many things to consider. From figuring how to make work engaging, ensuring your total compensation is competitive and equitable, providing great career opportunities, work-life balance – the list goes on and on.

Today’s workforce, primarily millennials and Gen-Zs, value your entire Employment Value Proposition (EVP), not just money, in evaluating their employment relationships.  A 2019 survey by Deloitte[1] bears this out:

Percent of Millennials and Gen-Zs who would consider leaving their employer (after 2 years and after 5 years) if they did not prioritize these issues:

It’s clear there are many facets of engagement that need to be addressed besides money, but how does money fit in?  Where does an overwhelmed HR professional start?

What is the Value of Money?

Often, the easy answer to attraction-retention issues is to throw money at the problem; some assume that a competitive salary stacked with appealing benefits is all it takes to attract the right kind of talent. When the employment relationship devolves into just the transactional (e.g. “All accounts are squared at the end of the month when you get paid.”), it ceases to be attractive, long-term, or motivating.

Not valuing money enough, though, can be equally dangerous. When compensation is done poorly, it is not just a waste of resources, it engenders perceptions of inequity (e.g. “We’re doing the same work but why am I paid so much less?”) and can easily disengage staff (e.g. “Why should I work to get promoted when the pay isn’t so much more?”).

The value of money in the attraction-retention equation must be contextualized.

What are you paying for?

Compensation is about procuring talent to get the work of the organization done: it is about paying for jobs. What does this mean?

If your organization has pay grades/levels, are your jobs properly aligned against them? Is each pay grade/level distinct enough from the others that they can form the basis for equitable pay? For example: do all jobs in your grade A have similar complexity? Do jobs in the higher-grade B (that are making more money than grade A) have higher level responsibilities? If you’re unable to answer “yes” to all these questions, then your pay has a jobs issue.

Further, if you use market data or salary surveys to design your pay scale and adjust pay, the most comprehensive and accurate external market data won’t mean much if internally, your jobs are all over the place. It would be difficult to compare like-to-like in the market if jobs are not well-defined. Market data will not fix internal job relativities (e.g. determining which jobs are more complex than others) and may even distort job relationships if the wrong assumptions are made of market data (e.g. are there really occupational differences in market data?).

So, even before the pay discussion, it is important to have a job evaluation framework that is consistently applied to slot different positions in your organization appropriately to level, that these are understood by managers and staff alike, and are seen as fair by all.

One Question, Many Complex Answers

When discussing pay with clients, after getting context about jobs, the next thing we ask clients is: “Who are you (as an organization)?”

Deceptively simple, this question opens up a much longer discussion about a concept that goes beyond just pay: the entire Employment Value Proposition (EVP). The EVP is a combination of the organization’s brand or culture, the actual work being offered, the potential for career or professional growth, and lastly, the salary and benefits that its willing to offer. So, not only does human resources have to think about ways to keep pay competitive, but also make sure the other aspects of their EVP are just as attractive.

But, coming back to pay, how much weight does compensation have vis-à-vis the rest of the EVP? Is pay the primary draw to the organization? Or is pay an afterthought, preceded by a compelling mission and engaging work that has impact? There is, of course, no wrong answer to this question, and things are not so black and white. It is likely a continuum with many shades of grey – “pay is important but…”

After answering “Who are you?” you can then focus on market composition and position. It is about how an organization can take a big market survey that is designed to reflect information of and for all comers, and target what is really relevant (composition), and target where it wants to be in that group (position).

Composition is about: “with whom do you compare?” Not all employers in a survey may be relevant. It is not just about competitors to whom you have lost talent, it can be organizations with whom you cooperate or work with. Comparators may include others in your sector as well as some from other sectors. Organizations relying on funds from donors may want to include the donors themselves.

Only when composition is settled, can position be discussed. Position is about: “how do you want to be placed against your comparator group?” Are you striving to be mid-market? Do you want to be the leader of the pack? Do you only have resources enough for a conservative position?  Is the position consistent for all levels, or do you want to be more or less aggressive in some cases?

Answering these questions should guide an organization as it defines its pay philosophy, policies, and methodology. But remember, pay is only a piece of a larger whole. Money is just a piece of your EVP, but you need to get it right as part of the challenge of attracting, retaining and motivating staff.

Attracting and maintaining key talent in your organization is a multi-faceted challenge that needs a multi-faceted solution. Birches Group’s Community™ is a human resources methodology and platform that integrates job evaluation, compensation and benefits surveys, salary scale design, skills development, and performance evaluation. Contact us to learn more about Community™ and our other services.

[1] Deloitte Insights, “The Deloitte Global Millennial Survey 2019”, website  https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html (accessed 22 January 2020)