Human Resource Management Strategy: Pay for Talent Model Helps Employers Retain Key Employees
This insight is from: "Pay for Talent: The Next Generation of Talent Management Strategy"
One of the biggest challenge facing professionals in human resource management today is the development of an effective HR strategy that aligns with and supports your organization’s short- and long-term business goals. But even as high unemployment persists, employers are still facing a shortage of candidates with the right skills and experience to fill critical jobs. To further complicate matters, employee engagement is at its lowest level in years, putting you at risk of losing critical talent. That’s why retaining key employees should be a top priority for effective talent management that supports your human resource management strategies and overall corporate objectives. This paper discusses the Pay for Talent model, which incorporates performance management, succession planning, and compensation management, as well as recommendations for determining organizational readiness and implementing a successful program that drives business results today and into the future.
Lack of Employee Engagement Creates a Talent Flight Risk
A 2011 Mercer report reveals that employee engagement is at the lowest level in years, with 32 percent of employees planning to leave their current jobs. At the same time, research by Bersin and Associates shows that organizations with a deliberate and defined process for identifying high potential staff are seven times more effective at delivering business results. Given this significant financial pay-off, putting processes in place to identify, manage, develop, and reward top talent with in-demand skills should be a strategic priority for effective human resource management.
Make Employee Retention a Human Resource Management Imperative
The first step in developing an effective Pay for Talent program involves identifying key staff and critical organizational roles, a process that is increasingly being addressed through assessment and calibration. These steps benefit human resource management by aligning managers around consistent criteria and generating quality discussions about people, roles contributions, performance, and potential — all of which are important considerations in the Pay for Talent model. The next step is to develop talent management strategies for retaining key employees through effective day-to-day management, employee development and mobility, and compensation management that rewards past performance and incents future contributions.
Use Compensation Management as an Effective Lever for Driving Business Results
When it comes to compensating employees, you want to get the biggest bang for your buck. This means optimizing your compensation spend in a way that rewards and incents key employees for performance that drives business results — past, present and future. As important, you want to make sure you’re compensating your workforce fairly based on clearly-defined criteria and benchmarks to help ensure employee engagement and help minimize compliance risk. This paper discusses how the Pay for Talent compensation model broadens the discussion of employee retention to encompass a number of talent management processes, including performance management, succession planning, employee development, and talent assessment against future leadership criteria.
The Next Generation of Talent Management Strategy:
Pay for Talent
Putting Pay for Talent into Practice for More Effective Human Resource Management
Since Pay for Talent integrates many key talent management functions, including talent assessment, performance management, succession planning, and employee development, your organization may or may not be ready to implement a full-scale program right out of the gate. This paper provides guidelines for determining your organization’s readiness as well as recommendations for developing a Pay for Talent implementation roadmap that is aligned with your current talent management state and unique corporate culture.
Lay the Groundwork for the Next Generation of Talent Management Strategy
Unlike the traditional Pay for Performance model that focuses on rewarding employees for past contributions, Pay for Talent uses compensation as a key lever across all talent management processes to drive business success. However, an effective Pay for Talent program requires up-front discussions around performance, key talent, critical roles, potential and future success to align managers based on consistent criteria; and time is needed to design a program that will work with your current compensation management strategy and overall business goals. As important, make sure you implement Pay for Talent within the context of your organization’s unique culture to optimize your compensation spend and achieve a lasting competitive advantage.
*A complete list of sources and citations can be found in the full report.
About This Report: Report data and conclusions are based on a 2011 ADP Research Institute survey of HR managers in 319 small and midsized businesses nationwide that looked at current business issues and examined levels of confidence related to key areas of HR compliance. See full report for details on research methodology. The ADP Research Institute is a specialized group within ADP that provides insights to leaders in both the private and public sectors around issues in human capital management, employment trends, and workforce strategy.