Can you retain your workforce? Incentive compensation strategies for workforce retention

The demand for trained employees has never been higher and with this comes more competition to attract your desired workforce. 45% of contractors are having a hard time filling key professional positions and 65% of contractors believe it is or will become harder to hire qualified professionals[1]. These statistics validate the need to focus on employee retention. In today’s competitive employment climate, you cannot afford to lose your talent, as it is highly unlikely that you could replace it. 

People are your most valuable asset. They are responsible for your business results and competitive advantage. Compensation can be much more than a way to recruit and retain employees. Best-in-class contractors are using incentive compensation to improve organizational effectiveness, incent desired results or improvements in productivity or profitability, achieve strategic goals and serve as a funding source for future ownership transition.

Compensation strategy

To remain competitive, contractors should understand how to align compensation strategies and trends with organizational goals. Total compensation is comprised of five factors; base salary, short term incentives, longer term incentives, benefits and culture.

The effectiveness of each component of compensation is determined by the goal or objective you seek; recruiting, rewarding or retaining employees. 

Culture and employee engagement are two of the most important issues faced by companies and especially critical to recruiting and retaining key employees. Employees want to feel connected to their companies and have their core values align with the company’s mission and their desired culture. As a result, some companies utilize weighted performance and core value criteria in compensation scoring.