When it comes to employee retention, what could you learn from Cupid? Do you offer the right rewards and say all the right things to your top performers? Maybe it’s time to brush up on your skills and attend a day in charm school. In this webinar you’ll learn: •“Fatal” compensation mistakes that can send top performers running for the door. •The risks associated with losing top performers. •How to create a compensation program that has top performers seeking you

1. Love ‘em or
Lose ‘em:
Taking Care of Your
Top Performers
Stacey Carroll, M.B.A., CCP, SPHR
Director of Professional Services & Education

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3. Agenda
 Risks associated with losing top performers.
 Fatal compensation mistakes
 Failure to reward performance
 Poor incentive design
 Following macro-trends
 Creating a compensation plan to retain top
performers
 Other considerations for retaining top performers

4. Did you know? Research shows that 45-50% of top
Risks performers are actively looking for a job. This is
significantly higher than middle and low performers.
Associated
with Losing
• Top performers contribute more to the
Top bottom line.
Performers
• Your reputation as an employer comes
from current and former employees.
• Sensitive information leaves with your
employees.
• Innovation comes from top employees.
• The “war for talent” is not over.

5. Fatal Compensation Mistakes
• Failure to reward performance
• Poor incentive design
• Following macro trends

6. Failure to Reward Performance
 Top performers want to work for
organizations that reward their
performance. It’s not so much about the
money – it’s more symbolic than that.
 Remember Google’s announcement at the
beginning of last year?
 You get what you measure/reward.
 Healthy competition is better than a low- “To get the attention of your better
performance harmony. performing staff members, you
must offer a variable pay rate of
seven to eight percent, in addition
 Most organizations have significant budget to their base pay.” - SHRM
restrictions.

7. Poor Incentive Design
• Many organization know they
need to pay for performance, but
lack the expertise to design a
plan that makes sense.
• Line of sight
• Contributes to business results
• Rewards results not activity
• Organizations try to make things
more complicated than they have
to be.
• Organizations lack knowledge or
systems to design good goals.

8. Following Macro Trends
 Following trends in
compensation is interesting,
but not well suited for
making decisions about
compensation (example next
slide).
 Markets are moving – and
so are employees.
 What “everyone else is
doing” is rarely the strategy
to be a market leader.
 How does pay go down?

9. If the average increase
budget is 3%, that will have a
very different affect on the
company’s ability to retain
key employees depending on
the current state of
competitiveness at the
organization. Average comp-ratio of .82;
Average Range Penetration at 6%
Average comp-ratio of .89; Average comp-ratio of 1.24;
Average Range Penetration at 23% Average Range Penetration at 107%

11. Creating Compensation Plans to Retain Top Performers
1. Start with a well-designed base pay plan
that is sensitive to what is happening in
the market.
2. Decide as an organization how people
will move through the range.
3. Design incentive plans for employees
that rewards performance and business
contributions.
4. Do NOT spend money on low
performance.
5. Measure, track, reward and repeat.

12. Merit Matrix Example

13. Profit Sharing Plan Sample
Bonus Targets: Employees are eligible for a bonus in an amount equal to a percentage of their base
pay. The bonus targets are based on grade level of their position and the company’s operating income
percentage. The chart below illustrates the bonus targets by grade and profitability.
Operating
7% 8% 9%
Income
Meets Exceeds Meets Exceeds Meets Exceeds
Expectations Expectations Expectations Expectations Expectations Expectations
Pay Grade 1-3 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%
Pay Grade 4-5 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
Pay Grade 6-8 6.00% 7.00% 8.00% 9.00% 10.00% 11.00%
Pay Grade 9-11 10.00% 11.00% 12.00% 13.00% 14.00% 15.00%

14. Incentive Plan Example
XXX MBO example at $40K
0% did not meet goal $ -
3% met goal up to .01% $ 1,200
6% improvement beyond .01% $ 2,400
Cost MBO (excluding external factors)
Reduce by $1.00 $ 500
Reduce by $1.01 = $2.00 $ 750
Reduce by $2.01+ $ 1,000

15. Other Considerations
 Top performers want an opportunity to contribute.
 Top performers should be given opportunities to do
what that they do well.
 Top performers deserve good managers.
 Top performers network with other top performers.
 Good communication has the power to engage
employees and poor communication can destroy a well-
designed initiative.

16. Thank You!
Save Time and Money on Your
Compensation Initiatives
PayScale is your key to saving money, recruiting talent at the right price, and retaining top performers
with accurate, real-time compensation data matched to your workplace and workforce.
Stacey Carroll, M.B.A, CCP, SPHR
Director of Professional Services
PayScale, Inc.
Connect with me on LinkedIN:
http://www.linkedin.com/in/hrstacey