Although median-base pay projections next year are projected to remain flat at 3%, employers might be dishing out additional cash in the form of retention programs aimed at holding onto the company’s top performers.
More than half (53%) of respondents to Xerox HR Services’ 2017 Compensation Planning Survey reported that the highest priority in the coming year is to retain top talent.
The tenth annual survey found that while pay raises are expected to remain at 3% — consistent since 2012 — nearly all survey participants who plan to offer lump sum payments in 2017 will do so to reward employees who have reached or are above their pay range maximums. In addition, 37% of employers intend to determine market pay adjustments for high potential employees.
See also: Increases to salary budgets stall at 3%
“Attracting and retaining top talent is increasingly critical, and organizations need to continue — or start — finding creative ways to do so,” says John Gentry, president at Xerox HR Services. “These findings reflect a sign of optimism among employers as they shift gears from controlling costs to engagement.”
Participants report that their No. 1 employee engagement priority in 2017 is the retention of talent, adds Tom Burke, principal and career practice leader at Xerox. A majority of employers are planning to hire as they normally would in the coming year, with only 4% reporting a “talent war” where they can’t hire fast enough, he says.
That being said, the study shows employers are using a variety of methods to retain their talent from offering lump sum payments (51%) to offering career development opportunities as a retention tool for top performers (60%).
“Without a salary increase budget, it is vital to develop and execute high-potential employee programs to ensure that retention efforts are focused toward top talent,” Burke notes, adding that 50% of participants formally identify their high potential employees through an assessment that extends beyond a formal performance evaluation.
Burke says once those employees are identified, 50% of the participants offer additional training and development opportunities to these employees that go beyond the programs available for “regular” employees.
In fact, the majority of employers (61%) cite new career development opportunities as the No. 1 action taken to retain top performers, with market pay adjustments a distant second (37%), according to the Xerox survey.
Burke cautions employers ignoring the talent war.
“In an improving economy and job market, they may be at risk of losing their top tier talent without taking the time to deliberately identify those ‘at risk’ employees and seeking alternative ways in which to engage them, such as high-potential programs, career development opportunities, and non-cash recognition programs,” he says.
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