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Developing a Retention Strategy for Key Employees

As discussed in my previous blog, retaining key employees during times of ownership/management transition is vital to your business’ success.  Therefore, it is important to develop a strategy to retain those employees when developing a comprehensive succession plan.  Below are four key components of a successful retention strategy that will help motivate key employees to stay with your company.

 

  • Identify Key Employees and Their Goals - Identify all employees who are critical to the success of your business, and then a retention strategy can be formulated.  The key to any retention strategy is designing incentives to motivate each particular employee.  For example, some employees may be motivated by additional income opportunities or equity ownership.
  • Alleviate Concerns through Communication - Open communication is a good way to alleviate the key employees’ fears about your company’s future. To the extent possible, make the key employees aware of your plans for succession.
  • Share the Responsibility for Success - Involving key employees in the development and implementation of future business plans gives them a vision of the future that they are helping to create. They are more likely to be excited about staying and convinced that the visions can become reality.
  • Use Monetary Incentives Effectively - Money is a motivating factor for most employees. Ensuring that employees are paid at or above industry standards is important to maintaining high employee retention rates.  One of the biggest mistakes you can make is to increase key employees’ responsibilities during a transition in ownership/management, without adequately adjusting their pay. In addition to providing competitive base compensation, there are other monetary incentives that may be offered as part of a total compensation package.    Examples include bonuses for achieving short-term performance goals; stock options, deferred compensation, etc. for reaching longer-term objectives; and providing for the employees’ retirement.

Once an appropriate plan is in place, it should be evaluated periodically (at least annually) to see if it is working as intended or requires adjustments.


Posted By Robert Milligan, Thursday Aug 22nd @ 11:07 am

I wrote the following article on retaining top talent for my monthly newsletter. I think it builds on Josh's excellent comments. I title the article: "Top Five Ways to Drive Away Top Performers."



We talk about high milk production, great milk quality, outstanding forage quality, and modest cow turnover as keys to dairy farm success. All of these are extremely important; however, my choice for most important key to success is hiring and retaining outstanding employees, especially in management positions. These exceptional employees are often called top performers.



Based on my years of experience and my younger son’s experience of the last year, here is my list, in Top 10 format, of the top five ways to drive away top performers:




  1. Under pay them.


  2. Withhold information needed to excel.


  3. Lie to them or mislead them.


  4. Criticize them especially for things over which they have no control.


  5. Take credit for their accomplishments.




You may be thinking that this top five would apply to all employees. You would be correct; I would, however, have a slightly different list for all employees because top performers have some common and different characteristics.



Top performers are driven; they are self-motivated; top performers are committed to the success of the business (in some cases more committed than the owner); top performers very often are easily frustrated; they are achievers having little compassion for poor performance; top performers take great pride in their work; top performers will not stay in a position that is not fulfilling.



These characteristics only enhance the importance of being absolutely certain that your actions are perceived as fair by your top performer.



A couple comments about each of the five follows:




  1. Under pay them. You may be surprised that compensation is in this list because top performers are not typically motivated by money. That point is correct. The reason it is here is that top performers often become very frustrated, even angry, when they perceive they are not being paid what they are worth. Extra pay does not especially motivate them, but failing to reward them fairly for their contributions to your business can be devastating.


  2. Withhold information needed to excel. Top performers act like owners! In reality, they own the business in their heart and their mind. Withholding information inhibits their ability to succeed. Withholding information includes your failure to establish clear performance expectations. Top performers need you to set clear expectations, hold them accountable for those expectations, but otherwise get out of their way. Micro-managing is a NO-NO.


  3. Lie to them or mislead them. Top performers are driven and have great pride in their accomplishments. Not only does anything that misleads them inhibit success, top performers also consider it as completely unfair!


  4. Criticize them for things over which they have no control. Providing feedback to achievers, I am one, is difficult but very important. Achievers are driven to succeed so they actually cherish feedback on both accomplishments and ways to improve. I call the corrective ways to improve redirection feedback. Top performers initial reaction to redirection feedback, however, is often negative because they hate failure. Giving negative feedback – criticizing – to top performance must be minimized. They are driven to succeed and thus rarely need to be reprimanded; redirection feedback is almost always sufficient and will be much better received. Most criticism will be perceived as unneeded and unfair!


  5. Take credit for their accomplishments. Top performers are self-motivated and thus motivated by their accomplishments. Taking credit for those accomplishments diminishes them in their eyes. Remember the long standing adage: leaders give credit to their followers for success and accept responsibility for failures.




Leadership Lesson: Top Performers, exceptional employees, are a great asset, but one that can be easily lost.


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