by Robert P. Tinnin, Jr.

Here are a few tips to keep in mind when creating a plan to engage and retain your best employees.

1. Competitive compensation is essential

No matter what you hear or read, money makes a big difference in employee retention. The motivating factor for most people (especially young employees) to work is a paycheck, so pay must be an important factor in your employee retention plan. Therefore, the first order of business is to establish and maintain a competitive salary structure that rewards employees for outstanding performance and sends a clear message that employees are valued. Underpaying employees tells them they aren’t important and you don’t appreciate the contributions they make to your bottom line.

2. Regular evaluations are necessary

Satisfied employees are more productive, deliver high-quality service, and contribute directly to your bottom line. Communicating with them is key. Accurate and timely evaluations are necessary to retain a satisfied and productive workforce. Feedback, whether positive or negative, can help employees understand your expectations and values and reinforce feelings of importance and worth. That will decrease the likelihood that employees will seek more satisfying opportunities elsewhere.

A critical yet often overlooked purpose of employee evaluations is distinguishing strong employees from marginal ones. It’s very important for high-performing employees to be rewarded with larger raises and ratings. Nothing is more demoralizing for a high-performing employee than learning that her superior efforts have left her no better off than a marginal employee.

3. Performance rewards increase job satisfaction

Perks are an excellent way to increase employee engagement and improve retention. More money and time off are the first things that come to mind, but they are not the only way to reward employees. Using a little imagination may make it unnecessary to spend gobs of money.

A recent survey indicated that performance-based bonuses are the best way to retain top performers. Close behind performance bonuses were 401(k) plans with employer contributions, more vacation or personal time, wellness-related benefits, flexible schedules, and tuition reimbursement. Since high-performing employees improve your bottom line, give them a piece of the action. Providing perks to your top-performing employees increases their sense of importance and value to your business.

Generally, performance bonuses are not included in overtime calculations for nonexempt employees under the Fair Labor Standards Act (FLSA) if they are completely discretionary. Don’t promise bonuses ahead of time or tie them to production standards, sales goals, or profitability. You can encourage better teamwork and promote employee satisfaction by rewarding a high-performing department or another identifiable segment of employees. When a group of employees does a great job, give them a free lunch or a half day off and send out a “pat on the back” announcement to everyone.

Lessons

Employees want the same things we all want in our everyday lives—to be stimulated, challenged, and rewarded for positive accomplishments. If you follow these principles, you will take giant steps in retaining your good employees as well as attracting new workers.

Robert P. Tinnin, Jr., heads the Tinnin Law Firm in Albuquerque, New Mexico. He may e contacted at rtinnin@tinninlawfirm.com.