It seems that a satisfactory salary to hire and retain is an elusive global phenomenon. Even in the Middle East and North Africa regions, a significant 70% of professionals believe they are underpaid, with UAE professionals being the most underwhelmed lot by their incomes.
If we consider that cracking the desirable salary is the key to hiring and retaining talent, the booming Indian start-up industry gets us thinking. For the Indian start-up industry is a very good paymaster. A whopping 82% start-ups pay above the market median and yet they have a high attrition rate of 21%. Surprisingly, the most common reason for attrition is pay. Likewise, even in the Indian IT sector, employees were satisfied with their peers and bosses but dissatisfied with their wages, as revealed by the Monster Salary Index Report with WageIndex and IIM Ahmedabad. This is despite the fact that they enjoy the privilege of slightly higher bonuses as compared to the national average.
So, how much salary is good enough to acquire and retain talent even in the best-paying sectors This is a dichotomy that resonates across economies and sectors.
Dig deeper and one starts unveiling the layered factors responsible for hiring and retention and their relationship with salary. It is important to find out what actually matters to an employee to come on board and then not quit sooner or later Is it primarily money or do other intangible factors edge their way into making this decision
A majority of people in the West have confessed that though salary tops the list of employer selection criteria, money isnt everything. A good career opportunity is also high on the list, followed by benefits such as a good working atmosphere, a good work/life balance and a challenging job.
Similarly, in India, South-East Asia and Middle East job markets, the value at work is not just limited to money. A bunch of factors also come up such as job security, career advancement, base pay and title, learning and development, and the reputation of the organisation. Thus, salary is not just the reason that attracts talent but it is always a combination of factorsthe reason we often see talent making a beeline to work for companies with a high brand value even though they are not the best paymasters.
In the modern workplace, the perception of salary is viewed differently by Generation X and Y. Generation Y has slogged hard for qualifications, worked hard for promotions and believes it amply deserves the money it is being paid. It has the patience to weigh things between job security and getting a raise. It is ready to wait for promotions to retain its association with a valued organisation.
Whereas Generation X workforce is constantly asking itself what am I doing here Only the answer to this question will determine their employee engagement. Salary is crucial for them to get hired but job satisfaction is equally high on their agenda. Many a times, even retention pays are not enough to hold them back.
Which brings us to the question, are retention pays worth the investment If pay for performance is not good enough to retain the loyalty of a talent, does it make sense for the employer to dole out an incentive to the employee to do nothing but just remain in an organisation Many argue that if the company was better run with a fair pay for performance, one would not need to bribe people to stay. Therefore, retention bonuses should be used sparingly.
In the case of Generation X for whom mobility is an innate trait, it is best to let them go even if they are top performers and treat attrition as the cost of doing business. A window open with a returnee policy could work as an incentive.
Even though the combination of salary, designation and employer branding decides talent acquisition, the reasons for a talent to quit have little to do with money. They are more tilted towards the psychological aspects in relation to an organisations workings. It is said that employees dont leave companies, they leave managers. Therefore, the ability to retain talented employees is a critical skill for managers where money does not talk much.
One of the reasons for employees quitting an organisation is the lack of vision communicated by their managers regarding the organisations future and their role play in it. The lack of importance in this big picture leads to a lack of enthusiasm in the current role. Also, displaying no empathy to employees grievances discourages loyalty towards the organisation. So, listening helps.
Lastly, is motivation extrinsic or intrinsic Extrinsic motivators such as the traditional carrot and stick rewards (cash bonuses or no salary hikes) have ceased to work. Intrinsic ones such as feeding of internal desires to create a successful product work better. Especially with Generation X one needs to break this myth that financial compensation will be a sufficient incentive to engage and retain good talent or drive high performance.
Therefore, even though salary is one of the compelling factors for talent acquisition along with other intangible factors, its weightage in employee retention is often a misconception.
The author is managing director, Monster.com (India/Middle/East/Southeast Asia/Hong Kong)