Page 100 - Retaining Top Employees

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88 Retaining Top Employees

What to Include in Your Compensation Plan

Having established the retention-related goals of your compen-
sation package, let’s now look at the individual elements of the
compensation package that you’ll use to achieve those goals.
All compensation elements come under one of six main
headings:
1. Base pay
2. Incentives
3. Bonuses
4. Deferred compensation (including stock options)
5. Benefits
6. Perks
We’ll examine each category in turn, looking at the main
ways in which you can use it to attain your retention goals.
Base Pay
Base pay is the fixed element of compensation, paid in cash,
usually monthly or biweekly. From a retention perspective, as
we’ve already seen, base pay is the most fundamental of sat-
isfiers: it causes grief if it’s not there or it’s less than the
employee believes to be fair market value, but it contributes
little to retention.
It should be your goal
Market value The average
to use the tools later in
compensation an employee
could get elsewhere for this chapter to regularly
performing the same task. Later in review base pay in your
this chapter,we’ll consider some tools compensation packages
for establishing market value for your (say twice a year), to keep
major job categories. it at or near market value.
As we’ve seen, you
can reserve some element of base pay to help develop account-
ability in top employees, if necessary. (See pp. 85-86 for more
details.) Similarly, while the consistent and regular payment of
base pay does not in itself build trust in the employee (another
retention-related compensation goal), failure to pay it—even
once—will enormously undermine any trust that you’ve built.