Think Methodically When Your Employee Asks You to Counter

These last few weeks in HR, I have been struck by the calls and emails from business owners and customers, whose employees are leaving for better pay, benefits, flexibility, opportunities, title, etc. Every business at some point experiences employee attrition, and they will be able to look back and say, “We should have matched their offer or bested it.” Why? Because usually, attrition due to pay follows market forces, meaning, just because you were once able to pay $X for a position at your business – when your employee is lured away with better pay and benefits, the “invisible hand of the market” is signifying a change due to a complex web of supply and demand: Wages have risen and your business will need to compete for talent. Best to pay the market rate and keep your employee, than to have to go to the drawing board to find and train someone new.

We talk endlessly about business strategy in our HR consulting. When you experience turnover, that’s a signal that your business strategy should be assessed methodically. Stay with me, I’m extrapolating to answer a very important dilemma we see everywhere today…

Strategic Business Leadership will either be a shared purview of skilled HR professionals, or we’ll fall behind as business continues evolving and our work stagnates and specializes in transactional minutiae. Strategy in business is about achieving sustainable competitive advantage in markets where the business trades. In our consulting, we are not just helping business owners avoid clumsy HR operations that frustrate employees, but we also help employers think strategically about HR functions like Recruiting, Talent Management, Compensation, Compliance, and so many others.

When I was scrolling LinkedIn this last week, I came across this meme from Daniel Abrahams, whom I don’t follow or know. And Wow! The simplicity of his post blew my mind! It illustrates a very common friction between HR, who should be thinking about and planning for all the if, then costs and burdens, and business owners / leaders, who may still be thinking key employees are dispensable.

Wage hikes are on everyone’s mind these days. You have an economy where the housing market has flagged to an edgy crawl with Federal market manipulation (rising cost of capital, tightening capital markets), which always presages depressive or recessive events, you have mass layoffs at really big multi-national corporations, war drums beat all over the world, big bank presidents caution consumer markets with dour predictions, meanwhile, hiring is at a sustained high, wages rise, and to top all of these themes off – AI is set to replace all of us in a matter of decades.

How do we make sense of all this? There’s not much we can do on a micro level to impact all of the themes I listed above. I don’t like to concentrate on matters I can’t control in business—maybe that’s because I’ve heard and recited the serenity prayer through grief and challenges, so I tell my customers all the time to “focus on what you can control.” Don’t lament poor organization-level results when discussing performance with your workers—translate results into activities within their control. Most of the time business outcomes at the macro level have drivers that are outside of the control of the individual. We can control the number of prospect dials, we can control the thoroughness of research when proffering advice to our customers. We can’t control the interest rate; we can control some accounts receivable terms and conditions. We can’t control consumer behavior; we can control how we respond, how we merchandise, which suppliers we use, whether the team goes on site or settles for Zoom calls to save on travel expense and time wasted in the car, etc. The choices are endless when we think about activity within our control.

When it comes to paying employees, giving raises, etc. We can’t control the fact that our best employees will be recruited by employers who can pay more. There’s a real war for talent that will drive up your wage burden, if you’re lucky. Every employer / business leader must take time to:

• Craft a strategic vision, which includes a litany of capabilities your business needs to compete and sustain – to achieve its goals. Knowing capabilities allows you to distill your vision into the realm of practicality, not the philosophical and excessively aspirational.
• Identify key employees. Once you’ve created an org chart with asterisks next to key employees, start thinking about how you can strategically invest in them to keep them happy and to ensure they continue contributing to your business in a meaningful, aligned way.
• Think through the value of each role – how much revenue is this person responsible for? What would happen to my value chain if this one left? What’s that role’s dollar-impact on my balance sheet? Compare with your budget and think about how long it takes to achieve revenue-positivity for each position (everyone starts out as a cost to your business; it usually takes time to start making money on each employee). Calculate the costs of recruiting that key employee, that limbo period where the employee isn’t making you money but learning and its cost, plus the cost of the employee’s salary and all the time other employees spend on extra work, training, etc. There’s roughly your cost of turnover.

When your key employee comes to you with a request for a raise, be prepared by following those steps. Think constantly about the market you’re serving and how your business creates superior value long term. Suddenly the employee’s value has real meaning and a context in real numbers—in the realm of your control, not broad extraneous forces. I am not saying bury your head in the sand and ignore political, social, technological, economic, and environmental trends and goings on, I’m saying keep the main thing the main thing, and that’s the stuff you control.

PHILIP CARRILLO, MBA, SHRM-SCP
Director, HR Services
Philip began his 12-year Human Resource career in HR Project Management and Recruiting in the legal tech sector, working for startups that were listed among Forbes Fastest Growing Companies. Philip has managed human capital operations in almost all 50 states and in parts of Europe. His experience ranges from compliance to leadership coaching. After achieving his MBA from Tulane University in 2019, Philip transitioned from in-house Director to consulting, where he focuses on helping leaders understand, document, and improve productivity and visibility through Performance Management, Mission Vision and Values integration, and Professional Development. Compliance remains a cornerstone of his strategic assistance to companies that want to scale carefully and smartly.

Philip believes that every employer can methodically create an attractive and inspiring Employer Brand and Human Capital strategy. “Every challenge can become the building block of a breakthrough opportunity through a dynamic HR strategy.”