3 Ways to Retain Your Best Employees Without Raising Salaries

For many of the employed millions, the market is shifting.

The number of vacant jobs is on the rise and discretionary choice is slowly returning. What are companies to do to retain their best talent? For some like Microsoft facing intense competition from companies like Facebook and Google, this has meant boosting salaries for top performers.

In a recent company-wide memo announcing these changes, CEO Steve Ballmer even acknowledged that "these changes represent the most significant investment in overall compensation we have ever made," reported the WSJ.

But not everyone is Microsoft and the competition for talent differs from industry to industry. So what can companies do to hold on to their best performers?

I reached out to executive search firm DHR International's EVP Dwain Celistan.

Having worked for several global companies (Procter & Gamble, Nestle, Nabisco and most recently Sears Holding) Celistan has done a fair amount of job hopping himself. "I've changed jobs enough times that I felt I understood the process, the challenges, and some very crucial gaps in the career transitioning process," he said.

His biggest lesson: Because you're good at one thing doesn't make you good at another.

Emphasizing that leadership must recognize the shifting marketplace for talent, Celistan described a three-step process:

1. Get Rid of the Recession Mindset: "The current workforce has survived several cuts. They are deemed the strongest because they have survived and in many ways are the best at their jobs," he said. At the same time, the downside for many employers has been that "they have taken many of these people for granted."

"They've taken a posture of 'Jobs are declining so where will they go? We don't need to invest more in them because we are already investing just to keep them on staff.' This mentality needs to be abandoned."

2. Change Gears: "Now that the market is moving, you must realize that some of your best talent that previously had no opportunities will now begin to look around. Now it's time for incentives," he said. "And incentives can be cash and non-monetary as well."

Referring to a recent study that showed that 14 percent of the Fortune 100 used incentives compared to 6 percent of those that are not in the top 100, Celistan emphasized that for some organizations, cash incentives in the form of spot bonuses, stock options and grants work best.

"As long as they are incremental or success-based, incentives work," he advised.

"Then there are the non-cash incentives. Not everyone is in the position to merit a meaningful cash incentive," he continued, adding, "For them, recognition plays a larger part. A 'Thank you' or a 'Job well done' stated in a public setting, newsletter, personnel file, etc. work very well."

But you have to be honest and on target. "They cannot be empty platitudes. People like to be complimented on okay jobs but they really respect being recognized for a job well done," he cautioned.

3. Educate the Boss: "When we talk to candidates and see why people want to change jobs, it is largely because of the supervisor and not the company as a whole. They are so critical to your experience at the organization that you cannot separate the boss from the company because the boss is the company," says Celistan.

Solution? Emphasize training. "Having an emphasis on training, coaching and encouraging managers to become effective leaders of their workgroups are some of the most important things a company can do that has long term value."

Even better, says Celistan, put this on their report card. "Introduce measurement [because that] makes them accountable, which in turn pushes them to do a better job in leading their teams."

But Celistan also had a few words of caution for candidates.

Advice for Job Candidates

Make sure you ask yourself what it is that you want, he advised. "What are your career goals for the next three to five years? Once you've answered that question, then you ask whether you can accomplish these goals with your current employer."

"If advancement within your company is not fast enough for you, then the question is does this external opportunity allow me to achieve those goals?" he advised, adding, "It's surprising how many times you find that what you are looking for in a new job is available within your current organization but in a different department."

"I would first exhaust options within a company before leaving," he said.

Related:
WSJ: Microsoft to Boost Cash Pay for Employees