I recently wrote an article about the realities of the market as it concerns pay for performance.
With that said, today I want to talk about a question every company has to eventually ask itself about one of its best employees:
Can we afford to keep this person?
Whether an employer pays at p10 or p90 of the market (or something in between), there will always be outliers who perform at a level that mandates the employer deviate from their compensation philosophy to retain them. Great talents get offers from other employers to go elsewhere (just the way it goes).
Sometimes the costs of retaining an employee in these instances will be negligible, and other times these costs can both meaningfully impact the bottom line and create significant pay inequity within the given employee population.
I don’t think there is a “right” answer here, but I do think that the 80-20 rule is as true in the workplace as it is anywhere else.
When it comes to creating significant value, a company’s top 20% of performers are (often) a group the employer simply can’t afford to lose.
I don’t know if this means those employees should simply have their compensation managed differently, or if there are intrinsic rewards that can be used to retain them… but significant pay at risk is only a viable option for certain professions. In many others to retain top talent that means raising the base or letting them walk.
Let me know what you think in the comments section below.
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