The Total Rewards Approach to Scarce Talent

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When talent is scarce, as was the case with IT professionals in the late

1990s, many companies respond by increasing levels of base pay and shortterm

bonuses. This popular, knee-jerk response often results in payment of

generous sign-on bonuses, stay bonuses, and in making counteroffers to

people after they announce they are leaving. Treating talent as a commodity

may serve to attract talent, but often cannot keep it in the absence of

other ‘‘total reward’’ attractions, such as having a great boss, attractive

work-life benefits, challenging work, and opportunities for career advancement.

Another downside to this approach is that it only serves to drive up

pay costs and accelerate bidding wars with other companies.

Some companies put more of an emphasis on retaining scarce talent (as

opposed to just buying it) by actually measuring their managers’ success at

keeping talent in the organization. ‘‘Percentage of employees retained’’

may be factored in to determine managers’ pay. Other employers pay cash

retention awards to key talent for each year they stay with the company.

An employer may even pay stock options to employees who make referrals

of scarce-talent candidates who are hired and stay for pre-set periods.

Employers who want to become true employers of choice typically

pursue a more comprehensive strategy—they design a ‘‘total rewards’’ approach

that balances pay as a key attraction equally along with a full range

of non-pay factors. In other words, employers that pursue ‘‘total rewards’’

strategies focus on delivering a compelling value proposition to prospective

and current employees based on practices like those presented in all the

chapters of this book.