Retain highly qualified employees without increasing salary

Labor shortages are rampant today, and high-wage employees are especially hard to retain. Engineers, executives, and finance and marketing professionals were already hard to attract and retain, but historically low unemployment has increased turnover and salary expectations.

Most managers believe the mistake that they have to pay higher salaries to avoid churn. While wages are the main driver of churn for low-skilled workers (catering, hospitality, etc.) salary increases will not prevent highly qualified employees from leaving your company. This is because high earners have enough disposable income to be picky about their employer. Often these employees will choose a lower salary with a better work environment rather than a high salary in a traditional workplace.

Here’s how to retain highly skilled employees for a long time.

Provide career growth opportunities.

Lack of career opportunities is the number one reason skilled professionals leave an employer. Growth means different things to each person, but worker expectations typically include:

  • A clear promotion opportunity in the next 1-3 years
  • Challenging new assignments outside of their past experience
  • Mentoring by senior executives
  • Encouragement to pursue extracurricular activities (i.e. lectures or new creative projects)

Create a unique work environment.

Management‘s relentless pursuit of efficiency makes employees feel like interchangeable commodities. Stop the commodity mentality by creating a unique work environment compared to your peers. You don’t need draft beer or a nice desk. Here are low-cost but high-impact improvements to your workplace:

  • Empower staff entirely remotely. A fully remote work option retains employees who want to live in smaller towns with fewer employers. At CFOshare, one of our accountants moved to Granby, Colorado (pop. 2,039) after creating a fully remote working mode. Since there are no other accounting organizations in Granby, he plans to stay there for several more years.
  • Be flexible with working hours. 4 day work weeks. Weekend Wednesdays. Late departures. These irregular work schedules come with challenges (like scheduling team meetings), but provide employees with a special arrangement that most employers don’t offer.
  • Support disadvantaged communities. Systematically disadvantaged groups like TGD, BIPOC, or women (especially in male-dominated professions) value fair pay in nurturing communities more than high pay in oppressive or even normal work environments.

Beware of the common mistake when deploying the tactical of a better work environment without integrity (e.g., unlimited PTO while subliminally discouraging employees from taking time off.) The result is a dishonest policy that will ultimately create more churn. If you employ any of these strategies, do so completely and with the intention of bearing the short-term costs in the name of reducing long-term churn.

Outsource non-essential functions to professional agencies.

Small businesses cannot maintain staff in certain occupations. This happens when:

  • The professional team is too small. If there are less than 4 professionals in a team, there may not be enough career advancement opportunities to retain talent.
  • The company is too small. Small businesses are unable to provide competitive benefits, such as health insurance.
  • The HR team is too small. Some professions simply have a high turnover rate and expensive HR systems must be built to always keep the talent pool full.

This is why marketing, Financial direction, recruiting, HR, and IT are typically outsourced to agencies that have the ability to retain talent, manage turnover, and ensure service continuity.

Build competitive moats.

The most successful companies create competitive moats around their products and services. If your business requires a highly skilled workforce, you also need to build a competitive moat around your talent. Consider your company’s unique workforce opportunity and capitalize on it.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

About Donnie R. Losey

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