We know from the research that pay is not a primary factor driving job satisfaction. Meaningful work and the opportunity to develop and use one’s skills (among other things) emerge as more powerful employee motivators, but companies often underestimate the importance of pay in attracting and keeping top talent.

A 2006 Wall Street Journal study found that:

1. 45% of employers thought pay was a key factor in losing top talent
2. 71 %percent of top performers indicated it was a top reason for leaving

Soon, senior managers will be forced to start making strategic decisions regarding the pay structures needed to retain their key players and attract talent to their organizations. A fundamental question for organizations to ask themselves is “are we going to lead, match, or lag behind the market in pay?” Forward thinking organizations are already preparing for the economic upturn and are asking themselves:

1. Is our pay structure appropriate for retaining our best employee?
2. Can we get a head start on attracting the best talent from our competitors now?
3. What other initiatives can we put in place to retain and attract top talent (flexible benefits, recognition programs, sign-on bonuses, etc.)?

So here is today’s Daily HR Tip: Start planning to retain and attract top talent now—don’t wait until your competitor steals your key people from under your nose as they fire their first shots in the upcoming “Talent Wars”.

This takes time and money to replace and in the mean time we are at risk of loosing our competitive advantage overseas to the BRICK economies (Brazil, Russia, India, China, and Korea). As hard as it is to envision, given our current economic climate, organizations need to start thinking seriously about training and retaining younger workers and gaining the continued commitment of older workers. They can do this by creating a more flexible attraction and retention programs and approaches to retirement that allows people to continue to contribute well into their sixties and seventies. Putting in longer term workforce planning strategies now could provide a real competitive edge when the upturn comes.