- The Find: Successful companies pay salaries that are 5 percent lower than those of their peers, through retention tactics and avoiding the need to pay for expensive outside talent.
- The Source: Deeper analysis of Fortune’s “Most Admired Companies,” from the consultancy Hay Group.
The Takeaway: So how do Apple, Berkshire Hathaway, GE, Google, and Toyota actually manage to get more out of their employees while paying them (slightly) less? The foundation of their success is retention, Hay found. Mel Stark, Vice President of Hay Group sums up the findings:
They tend to have less of a need to hire expensive outside talent for jobs, because they are better at grooming people internally and retaining employees. The lower costs of recruiting and training new people have a ripple effect across an organization.
So how do they retain talent? They make sure their reward programs let employees’ know what their work is worth. The 20 most admired companies do a better job of communicating both the tangible and intangible rewards of working for the company to their employees.
- 79 percent regularly provide employees with total reward statements, versus 53 percent of peer group respondents
- 82 percent regularly reinforce the company’s reward philosophy in communications with employees, while only 64 percent of peer companies do the same
- 74 percent state that their employees understand and appreciate that rewards consist of both tangible and intangible components, compared with 61 percent of their peers
- 41 percent say that line managers in their organization create a positive work climate, whereas only 21 percent of peer companies respond similarly
- 28 percent state that line managers utilize financial and non-financial recognition programs, compared with 16 percent of peer companies
- 41 percent believe that their reward program is internally fair, while only 27 percent of their peers believe the same
The Question: Would a greater focus on intangible rewards boost your own performance at your company?
