“Employee X” wrote an eye opening article in Entrepreneur Magazine, titled “Why I Finally Quit.” Employee X, wishing to remain anonymous, is “a bright, 28 year old employee with a degree from a top university and a ton of high-level computer experience who chose to bail on the Company he really believed in.” He was willing to accept a salary “$20,000 below market rate with pretty pathetic benefits while working up to 60 hours a week in a high stress environment.”
Why He Took the Job
- He was part of a great team that would create a revolutionary product from great Business Plan.
- Had a stock option plan which provided loads of incentive to help the company succeed.
Why the Employee Left the Job
- Owners hired new managers from the outside and the corporate culture completely changed.
- The trust employees had built together was immediately extinguished by constant distrust and monitoring by the new management team.
- One evening at 9pm, Employee X was asked by a Manager from a different department why he was leaving work so early.
- Low Employee Morale set in under the new management scheme; hours were long with little payoff; no downtime between projects; and labor lawsuits were filed by employees.
- Employee X asked for and received a $10,000 raise but it was “too little, too late”.
- A mass exodus of employee talent ensued.
- Employee X went to work for a 10 year old company in the same industry; got paid market rate and overtime; and most importantly, has “an employer who invests in me Employee X as an employee, via everything from extensive training to Company barbecues….”
- When asked what would keep at his new job five years from now, Employee X responded, “if they let me telecommute at least a few times a week, I’d be more than happy to do whatever it takes to help my new employers succeed.”
Lessons to be Learned About Employee Morale and Loyalty
- As experienced Turnaround Specialists, I would agree that Company A could have with success retained Employee X if they had held on to their team oriented corporate culture which fostered trust, sharing, openness, growth and hard work that was acknowledged.
- Instead, Company A’s lack of effective Compensation Planning and Proactive Performance Team Building lead to a situation where a happily underpaid, hard working, gifted employee base went looking for greener pastures.
- As illustrated, retaining talent isn’t about pay. It is more about contribution to the Company’s success and Marketing Plan; progressive compensation structures; open communications; trust fostering culture; team oriented success; investment in an individual’s growth; and vigorously placed perks.
Important Conclusions
The Central Point of this article: Compensation Planning, to be effective for both the company and employees, needs to address certain key areas in a comprehensive, yet targeted package:
- Have key incentives built in but aren’t a tax on the company’s cash flow, nor a tax liability, and importantly, give key employees rewards for company growth.
- Business Continuation Planning and Key Employee Protection
- Performance Pre-View System which proactively rewards individual and team success toward achieving the Company’s Strategic Plan’s Goals. The Performance Preview is a direct opposite of Employee Performance Review.
- A Comprehensive, Cohesive Benefits package which isn’t held to be the Golden Parachute, but rather, a strong component of a Company’s overall Compensation Plan, yet minimizes the financial burden on the Company.
- The level of Pay is not the central component of an effective, attractive Compensation Package.
- Effective execution of a Company’s well-designed Compensation Plan is vital to and oriented toward Employee Moral.
- A company can face Business Turnaround if employee morale gets too low and empolyee turnover gets to high through out a company.
About The Article Writer
Frank Goley is a business consultant, business turnaround consultant, business plan expert, business coach, small business consultant, business planner, marketing consultant, online marketing seo consultant, and business plan consultant for ABC Business Consulting. Frank is considered an expert in writing, developing and implementing business plans, business turnaround plans, funding business plans, marketing plans, strategic plans and web marketing plans. Frank offers comprehensive business consulting, business coaching, business turnaround consulting, along with web seo, web development and web marketing consulting, to small and medium size companies. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 115 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog.
