EMPLOYEE RETENTION

Building a Better Machine

Daggett & Associates assists clients in developing and implementing programs for key person employee retention.  Employee retention is critical to the long term success of a business.  Among other things, retaining your best employees advances customer satisfaction, sales growth, effective working relationships, succession planning, and the embedded knowledge base of the organization.

Employee retention – or the lack thereof – can also have a significant financial impact on the organization. When a key person employee departs, the company loses training time, knowledge, and effective co-worker interactions, and incurs substantial costs for a candidate search and new employee training and orientation.  Estimates suggest that the cost to replace a mid-level manager is equal to 100 percent of his or her salary.  The loss of an executive may cause the company to incur costs up to 200 percent of salary or more.

Employee retention is also a measure of the overall health of an organization. The loss of key person employees may lead to further departures, resulting in turmoil and changing expectations for remaining personnel.  This may ultimately create stress and job dissatisfaction. Bottom line, companies can’t afford to lose valuable talent.


Our programs include the following:

 

Compensation Plan & Implementation

Daggett & Associates believes that an effective compensation program facilitates employee development, work satisfaction and retention. Our program sets and meets the following goals:

    • Establish pay practices that are consistent with the client’s business philosophy and financial plan.
    • Ensure fair and consistent pay practices across the client organization (e.g. equal pay for equal work).
    • Establish pay practices that are competitive relative to the market and that will allow the client to attract, retain, motivate and reward the best-qualified employees.Program components include:
    • Define compensation strategies and goals, including target budget.
    • Develop a communication and implementation plan and timeline.
    • Document current pay data for target group and evaluate relative to industry benchmarks (external comparatives).
    • Match each employee job to appropriate industry benchmark and establish job level performance.
    • Develop salary structure and assign pay grades to each discreet job (internal comparatives).
    • Summarize pay data – including internal and external comparatives – and evaluate relative to compensation goals.
    • Define action items to facilitate pay equality and pay competitiveness.
    • Approve and implement compensation plan.

Well thought out pay planning will empower both employees and managers and lead to greater job/pay satisfaction. Increased benefit and impact can be achieved by matching compensation planning with Performance Standards Development & Assessment.

Performance Standards Development & Assessment

Statistics show that the most successful companies are those that invest in the success of their employees.  This investment includes a commitment to systems or programs that clarify performance standards, and that provide rewards to employees for meeting or exceeding established performance objectives.

Daggett & Associate’s Performance Appraisal System provides our clients with clear and relevant guidelines for performance measurement and reward. 

At its foundation, the Performance Appraisal System (PAS) provides a roadmap for effective standard setting, training and program execution.  This foundation is then tailored to respond to the client’s individual goals and requirements. Goals of the PAS may include:

    • To create a standard model for performance measurement and to apply this consistently across the organization.
    • To establish explicit accountability for employee development.
    • To clearly establish job responsibilities and expectations.
    • To evaluate past job performance and set standards for future performance.
    • To determine eligibility for promotion and promotional pay increases.
    • To identify exceptional performance that warrants merit pay.
    • To recognize deficiencies in performance that need to be addressed through corrective action, or increased training and employee development.
    • To provide a record of the employee’s performance history.

Key components of this program include:

    • Establish performance standards for the organization.
    • Establish process criteria (e.g. rating period, frequency, time to complete, eligibility, rating supervisor, reviewing officer, and follow-up)
    • Develop a communication, training, and implementation plan and timeline.
    • Develop Performance Appraisal Form(s) and related documentation.
    • Test the Performance Appraisal System (pilot group).
    • Training and program implementation.
    • Summary of performance results for integration with Compensation Plan.

A well-executed Performance Appraisal System will provide a framework for employee success, job satisfaction and career growth.

 

Incentive Programs

Key employees may need additional inducements to promote long-term job satisfaction and retention. Their professional aspirations may be furthered – to the benefit of the company – through incentives that are tied to the achievement of both individual and corporate goals.

Daggett & Associates guides our clients in developing targeted, key-person incentive programs. The process is commonly referred to as “Management by Objectives” (MBO), first outlined by Peter Drucker in 1954 in his book, “The Practice of Management.” MBO endeavors to increase the performance of the organization through a process that aligns the individual employee’s goals with the company’s goals.

Employees receive strong input on qualifying objectives and a timeline for completion of objectives. At the executive level – CEO, COO, CAO, CFO – the individual is likely to be responsible for setting the overall strategic objectives of the organization as well as individual goals. 

MBO requires ongoing tracking and feedback, with clear guidelines for judging when an objective is reached and the resulting benefit accruing to the employee. MBO objectives are considered valid if they meet the following SMART criteria:

    • Specific
    • Measurable
    • Attainable
    • Relevant
    • Time-limited

The reward for achieving objectives is commonly a defined bonus, though other forms of incentive may be used (e.g. increased responsibilities, promotion, or time off).

If used effectively, MBO can more closely align desired employee behaviors across the organization, leading to increased synergies and a razor focus on key business goals.
 

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