Buying talent?
A recent article in the Financial Times (by Lina Saigol and James Polti) described how investment banks in this country and the U.S. are 'writing big cheques to attract talent'. As an example, the journalists cite HSBC as having been offering 'golden hellos' of $½ million to some bankers.
Clearly any particular bank has to keep the pay it offers reasonably in line with competitors or risk losing talented people. Equally, it is a pity that the Financial Times article seems fascinated only by large cheques as the means of attracting and retaining talent. As major banks know perfectly well, a strategic approach to talent management is required to win the talent war. Rewarding people with big cheques is only one element of the talent war. To be a winner, you have to be overall the best employer that people want to work for. Furthermore, offering financial incentives needs to be carefully thought out if it is to be a winning strategy. It is likely to be counter-productive if banks simply fling money at everyone. Not only will they just indulge in a round of inflation for themselves: They will also turn-off the truly talented people who get no impression that their special contribution is recognised.
For pay to be a winning part of a talent management strategy the best people must be paid competitively. This means having a pay-for-performance system that accurately identifies and rewards high-performers. An article in last winter's edition of Personnel Psychology goes into great detail to demonstrate how the costs of a pay plan aimed at rewarding high performers are far outweighed by the benefits from retaining high performers.
However, competitive pay only makes you a competitor. To win the talent war you need to address all the other factors that attract and retain people. A second article in the same edition of Personnel Psychology illustrates the benefits of a comprehensive and strategic approach. It looked at organisations that had featured in the 1998 Fortune Magazine list of the 100 best companies to work for in the U.S. The authors matched these companies to others not in the list, but in the same sector and of the same size. They found, not surprisingly that staff in the 100 best companies have attitudes to their employers that are highly positive and stable over time. Such attitudes surely do not come from pay alone. They are the result of the employer addressing people's diverse needs from work. The attitudes are seen by the researchers as part of the explanation for the 100 best companies having a superior financial return on assets and exhibiting superior stock-market performance to their comparators. The article underlines that there is a financial pay-off from doing all that is required to be one of the best companies to work for.
How can Human Assets help?
We have a long-standing expertise in helping clients with issues of talent management. We have written several articles on talent management, as well the book Winning the Talent War, published by John Wiley. We can help you identify all the factors that will help you offer a proposition to staff that is competitive. And this means:
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Identifying your high performers - the true talent
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Finding out what each of them is looking for - what will motivate and retain them
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Rewarding and motivating them by meeting their individual needs -development, recognition, money, advancement, challenge etc.
References
Lina Saigol and James Politi. Banks write big salary cheques again. Financial Times 24 May 2004.
Ingrid Fulmer et al. Are the 100 best better? Personnel Psychology, Winter 2003, vol 56 no 4, pps 965-993.
Michael Sturman et al. Is it worth it to win the talent war? Personnel Psychology, Winter 2003, vol 56 no 4, pps 997-1035.