Should You Salary-Match-Guarantee Top Talent – to Stop Them From Leaving?
Most of us will be familiar with the concept of a price-match-guarantee, which you often see in supermarkets or big electrical retailers. You know how it goes: If you can find the same product for the same price elsewhere, we’ll match that price. It’s a great way to encourage customer loyalty and obviously works well as it’s a very prevalent customer retention tactic.
But, I am going to dare to ask the extraordinary question of whether this price-match-guarantee concept can be quite audaciously applied to the HR environment, in the form of a salary-match-guarantee should employees get an external job offer, given the employee loyalty crisis we face. What employee loyalty crisis? The one, highlighted by Hays Group recently, where they suggested that a global talent exodus was occurring with employee turnover levels having soared by 12.9 percent since 2012. They are predicting that average global employee turnover levels will rise from 20.6 percent to 23.4 percent over the next five years. It seems like drastic action is needed if employers are to be effective in retaining talent.
Simply agreeing to boost top talent’s salary to match external offers is a crude employee retention tool (that might work in a price centered supermarket environment). This is a woefully inadequate retention device in our age of enlightened job seekers inspired by loftier notions, such as career development opportunities, great culture, flexible working etc. Well, actually no; when you look at the survey by CareerBuilder, it’s clear that lip-service is paid to softer, gentler motivations like career and culture, but the real motivators underlying employee retention and defection can be boiled down to dirty, hard cash. Yes, a deep dive into their data showed that of the segment of workers most dissatisfied with their jobs, 58 percent planned to change jobs this year. And of this unhappy, hardcore group of potential levers, 66 percent of them cited concerns over salary and 65 percent said that they don’t feel valued enough.
So, there you have it: although industry commentators contribute to a lot of smoke and mirrors around this issue (me included), the inescapable truth is that this year’s leavers will mainly be motivated to leave due to lack of money. It’s not inspirational, it’s not pretty, but it’s the reality.
This makes me wonder whether employers should stop dancing around the issue and get right to the core and offer a salary-match-guarantee for top talent. That is, if they secure a better offer from another employer that you’ll match it – and this should be made clear in the handbook.
Of course, a carte blanche, salary-match-guarantee policy such as this would be dangerously high risk. It could send out a bad message that you mismanage talent, making them want to leave. It could create an avalanche of unwieldy, unmanageable salary match requests. (Although it’s not that easy to walk into a company and get a cast iron, gold plated job offer.)
Of course it would be downright reckless to apply a salary-match-guarantee in a like-for-like way to supermarkets as people are not cans of beans or 40 inch screen televisions. So, you’d really be only interested in the spirit of the price-match-guarantee, which is where you send a signal to the market that you won’t let your top talent go without a fight. You get a built-in, last-chance saloon opportunity to retain top talent as they bring offers to you for a counter offer.
You have a safety net too. While I think it could make sense that it’s a publicly known policy, (rather than stealth for the reason mentioned above), you could apply restrictions, for example, that it’s only open to employees with performance appraisal scores above a certain level and/or perhaps those employees in recognized shortage areas. You can, of course, reserve the right to not match the offer if it will cause damage to team harmony, or it’s not affordable. Or you can reserve the right to make up some of the salary difference in other ways, such as with flexible working, training, etc.
There are lots of low risk ways you can implement a salary-match-guarantee style employee loyalty strategy, which could act to deter the market from trying to poach your talent, or even make offers, if they know it will be automatically matched and even raised. It could also make your employees less committal in the offer room with prospective new employers as the higher salary incentive for moving has effectively been neutralized.
I think this is a potentially interesting way to address the employee loyalty crisis over the next few years, (as part of an integrated talent management program naturally), but what do you think?