It is a known fact that many of the employers face a challenge to keep the talented workforce with them and control the attrition, especially during the times of the company's disability to reward their employees as per the industry standards. Today I would like to share and idea while i was surfing online and talking to friends from different organizations. I gained this knowledge with some constant interaction with some HRs of different companies on social networking sites such as facebook, linkedin and also through a live discussion with them.
The first thing you should do is during their annual review identify those whom you think can be convinced to stay if you give them a counter offer after they got an offer letter from another company and pay them the minimal hike or rewards for that year. This is true regarding almost all the employees so if you cant identify them then assume that all can be convinced with a counter offer since people often would like to stay with a long term well known devil than an unknown entity. When you pay the minimal hike to all, then you can be sure that not more than 40% of the people will try out irrespective of the amount of hike that you have given that year, may it even be 0%. Most of them would like to stay with the false notion and hope that their loyalty might be counted next year and since this year they are rewarded less, then the next year they will be compensated or may be when others go they will be the most tenured and senior and they can grab the opportunities in the company but they fail to consider the other possibility that it it is less likely that they will respect someone who doesnt have the courage or capability to get a job outside even with such blatant negligence of their talent is done to them and their colleagues.
Counter them with counter : Let us say an employee is getting 4k p.a. as his salary and you give him a raise and his salary now becomes 5k p.a. and then he will get a job outside and based on his salary the new company offers him atleast 6k p.a. and he resigns from your organization then you will be at a double loss since you gave him a hike of 1k (from 4k to 5k) and instead you might have given that to another employee who is bound to stay. If you want to retain him now you have to give him 6k or more p.a. (per annum) then you (Boss or organization) will be spending 2k to 3k extra on him now. Many companies are countering this with a counter offer tactic. Instead of giving any annual hike to their employees, you don't give them any hike or give them a minimal hike of 1% or 2% of their current salary. So, as discussed in the above example an employee of 4k with 1% hike will still have an approximate p.a. salary of 4k and with disappointment and frustration he will go out and get a job but now since his salary is 4k and based on that he will get a raise of 1k so he will get a 5k p.a. salary in the new organization and when he resigns you can tell him how great, awesome and efficient contributor he is and how you want him to stay in the same company and for that you are willing to do anything. You will tell him that you will try to get the same salary to him in the present company by talking to the upper management since you like him very much. After this when you offer him the same salary as the new company he is more likely to stay with you than the new company because
a) he now believes that his boss likes him a lot and thinks so highly of him
b) he has his friends, colleagues with whom he has a comfort zone.
c)its natural human tendency for anyone to choose to be with something or someone whom they know for a long time than someone or something new.
When the management uses the same technique on many of its employees the recruiting team of other companies stop considering the job applications from the employees of your company or they will consider them only at the last since now you have branded your employees as unreliable and made them taboo to the recruiting teams of other companies by deceitfully creating a negative impression about your employees in their eyes.
One of the many other advantages of keeping your employee's salary low is the fact that if they now go out no company will give them industry standard pay but they will only give them a % of hike based on their existing salary. Job or employment may depend on a person's talent and skills but his salary always and only depends mostly on his current salary. If you increase an employee's salary who is underpaid then it is most likely that you will lose him instead of retaining him since now he has a new higher pay check on which he can bargain more in the market. If your engineer's pay is 6 lakhs and if you make it 7 lakhs then another company gives him 10lakhs (30% hike) but if you dont raise his salary then he is most likely to wait till it is raised to a level where he can have a good bargain, meaning he will wait and stay in the same organization till it becomes 7 or 8 lakhs because out side for the same skills as his others are getting around 13 or 14 lakhs. He do not want to go out for a pay which is less than the industry standard (most likely) but by the time you make his salary from 6 to 7 or 8 lakhs p.a. the market might have moved to 16 or 17 lakhs p.a. so the cycle of him staying in the same company will continue. you may keep doing this till the demand for his skills in the market reduces or you have enough lesser paid manpower with you to replace him.
These are my personal views based on my readings, experiences of my friends working in many different companies, online articles, HR forums and it has nothing to do with any one particular place of work of which i might be a part of. I like where i work and this post isn't related to that.
The first thing you should do is during their annual review identify those whom you think can be convinced to stay if you give them a counter offer after they got an offer letter from another company and pay them the minimal hike or rewards for that year. This is true regarding almost all the employees so if you cant identify them then assume that all can be convinced with a counter offer since people often would like to stay with a long term well known devil than an unknown entity. When you pay the minimal hike to all, then you can be sure that not more than 40% of the people will try out irrespective of the amount of hike that you have given that year, may it even be 0%. Most of them would like to stay with the false notion and hope that their loyalty might be counted next year and since this year they are rewarded less, then the next year they will be compensated or may be when others go they will be the most tenured and senior and they can grab the opportunities in the company but they fail to consider the other possibility that it it is less likely that they will respect someone who doesnt have the courage or capability to get a job outside even with such blatant negligence of their talent is done to them and their colleagues.
Counter them with counter : Let us say an employee is getting 4k p.a. as his salary and you give him a raise and his salary now becomes 5k p.a. and then he will get a job outside and based on his salary the new company offers him atleast 6k p.a. and he resigns from your organization then you will be at a double loss since you gave him a hike of 1k (from 4k to 5k) and instead you might have given that to another employee who is bound to stay. If you want to retain him now you have to give him 6k or more p.a. (per annum) then you (Boss or organization) will be spending 2k to 3k extra on him now. Many companies are countering this with a counter offer tactic. Instead of giving any annual hike to their employees, you don't give them any hike or give them a minimal hike of 1% or 2% of their current salary. So, as discussed in the above example an employee of 4k with 1% hike will still have an approximate p.a. salary of 4k and with disappointment and frustration he will go out and get a job but now since his salary is 4k and based on that he will get a raise of 1k so he will get a 5k p.a. salary in the new organization and when he resigns you can tell him how great, awesome and efficient contributor he is and how you want him to stay in the same company and for that you are willing to do anything. You will tell him that you will try to get the same salary to him in the present company by talking to the upper management since you like him very much. After this when you offer him the same salary as the new company he is more likely to stay with you than the new company because
a) he now believes that his boss likes him a lot and thinks so highly of him
b) he has his friends, colleagues with whom he has a comfort zone.
c)its natural human tendency for anyone to choose to be with something or someone whom they know for a long time than someone or something new.
When the management uses the same technique on many of its employees the recruiting team of other companies stop considering the job applications from the employees of your company or they will consider them only at the last since now you have branded your employees as unreliable and made them taboo to the recruiting teams of other companies by deceitfully creating a negative impression about your employees in their eyes.
One of the many other advantages of keeping your employee's salary low is the fact that if they now go out no company will give them industry standard pay but they will only give them a % of hike based on their existing salary. Job or employment may depend on a person's talent and skills but his salary always and only depends mostly on his current salary. If you increase an employee's salary who is underpaid then it is most likely that you will lose him instead of retaining him since now he has a new higher pay check on which he can bargain more in the market. If your engineer's pay is 6 lakhs and if you make it 7 lakhs then another company gives him 10lakhs (30% hike) but if you dont raise his salary then he is most likely to wait till it is raised to a level where he can have a good bargain, meaning he will wait and stay in the same organization till it becomes 7 or 8 lakhs because out side for the same skills as his others are getting around 13 or 14 lakhs. He do not want to go out for a pay which is less than the industry standard (most likely) but by the time you make his salary from 6 to 7 or 8 lakhs p.a. the market might have moved to 16 or 17 lakhs p.a. so the cycle of him staying in the same company will continue. you may keep doing this till the demand for his skills in the market reduces or you have enough lesser paid manpower with you to replace him.
These are my personal views based on my readings, experiences of my friends working in many different companies, online articles, HR forums and it has nothing to do with any one particular place of work of which i might be a part of. I like where i work and this post isn't related to that.