Should I reward loyalty financially?
A. Richard Mugnaioni of Unique Distribution writes:
One thing you can be sure of is that your staff are being headhunted all the time, especially the good ones. Their names are appearing on headhunters’ hit lists, and you probably are yourself. They are being offered more money, better jobs and better lifestyles. This is unsettling for you and your staff, but there is nothing you can do about it. What you can do is mitigate the effects.
My two ways of dealing with headhunting might seem trite and obvious, but most companies handle it badly. Firstly, it’s important to make sure that your staff feel a sense of commitment to the business. Through regular communication they should understand the company’s vision and strategy. By setting intelligent objectives that flow from clear business planning they will be part of the drive to achieve this. Your staff are more likely to feel valued and remain loyal if they are included in business decisions, rather than engaging in the simple financial transaction of ‘I work, you pay’.
Secondly, be sure to reward employees appropriately. This does not mean paying the highest salaries in your sector, but matching reward to expectation. Set clear objectives and measure your staff’s progress against them, not just annually but quarterly or even monthly. Include a bonus element in salaries wherever possible so that your people can see the value of over-orunder performance. You can also make one-off awards for spectacular achievement, but make sure that everyone knows about it.
And remember, people are being headhunted all the time but choose not to talk about it, whether they pursue the offer or not. The ones who rebuff their suitors are all equally loyal, but you don’t know about it. So giving the person in question more money would be rewarding chattiness, not loyalty. This would send a negative message to the others. Say thank you, explain how loyal the others on your team are and give an assurance that good performance will be rewarded, but do not meet the demand for more money. After all, you know that they will go away and talk about it.