By Claudine Kapel
For organizations it’s big news when a new competitor arrives on the scene.
For example, there’s been a lot of press lately about U.S. retailers – from Target and J. Crew to Nordstrom and J.C. Penney – setting sights on the Canadian market.
Organizations must contend with competition for talent on an ongoing basis. But the emergence of new competitors raises the stakes even higher.
That’s why it’s so important to keep your finger on the pulse of competitive market practice. While this is especially critical when preparing for new market entrants, it represents a wise strategy to support the retention of talent in general.
To that end, from a compensation or total rewards perspective, how are you positioned today relative to the organizations with whom you compete for talent? What steps do you take to assess how your organization measures up?
From a total rewards perspective, any major gaps can leave you vulnerable to having top talent poached. As a starting point, it’s important to monitor how compensation practices stack up against market.
- How competitive are salaries?
- How competitive are annual incentive opportunities?
- How do actual bonus payments compare with what other organizations are delivering?
- Are there jobs that aren’t bonus eligible in your organization although they’re generally bonus eligible in the market?
- Which jobs in the organization are eligible for long-term incentives – and how does that compare to competitive market practice?
You can gain a lot of valuable insights by comparing your own compensation practices to market data from published compensation surveys or by conducting customized research.
There are other data inputs that you can monitor as well that can serve as early indicators of potential problems.
- How much turnover is the organization experiencing, overall and in given business areas?
- Are there any types of jobs that are especially hard to fill?
- How do other aspects of the total rewards offering compare to competitive market practice?
- What feedback is the organization getting from job candidates or new hires regarding the reward elements or competitiveness of the organization’s total rewards offering?
- What feedback is the organization getting from departing employees? Is there a formal exit interview process that monitors trends or patterns relating to why people leave?
- Are any comments being posted about the organization on social media sites?
Knowing where you may already be vulnerable is important when you start to consider the implications of new competitors for talent:
- What types of talent are these new competitors likely to seek?
- How well positioned are you to retain the talent that could be desirable to new market entrants?
A thoughtful talent retention strategy will often have a compensation component. Sometimes organizations will apply retention bonuses or other financial incentives to keep key talent during a period of upheaval, either due to internal restructuring efforts or increased external competition for talent.
But pay alone is rarely the solution, as any organization can match pay if it really wants to recruit your talent.
That’s why the best strategy is to make talent retention an ongoing business objective, supported by a holistic approach to managing total rewards. That way, if a new competitor arrives on the scene, you’ll be ready.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.