COMP NEWS – As the war for talent continues, HR managers are determining how different compensation structures may affect employee retention.

Another component for boards and leadership teams to evaluate is compensation structures.  Everybody has understood that tech companies are experiencing especially high turnover and massive burnout. Different compensation structures are already being employed for critical tech teams.

Boards ought to look at key jobs they “must have” if the company is going to remain competitive….in other words, if the company cannot recruit and retain this set of talent, the company will not win. Understand what your highest value areas are. Think about them differently. Identify which jobs you must really overpay for and offer outsized packages.

Ensuring that employees are reminded of their full compensation package is one way of utilizing pay structure to promote retention.

Employees very often as you go deeper into the organization don’t understand all the upsides of their packages. You should assume your employees are potentially being recruited and contacted regularly and being presented competitors compensation packages that at first glance may seem appealing. Be sure you re-communicate all the value of their current full compensation and benefits package.

In addition, using variable pay as a method of retaining talent has appeal as clear employee recognition is of the utmost importance. Paying employees as a result of their performance serves to align incentives of the company and the employee, helping to alleviate the principal-agent problem that companies face.

Consider how an unexpected bonus is typically more exciting and immediately can improve an employee’s current circumstances vs a small increase in pay that is quickly forgotten. It is important employees feel management recognizes and appreciates their critical contributions and great work.

To read more about human capital retention in the Great Resignation, click here.

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