What You Donít Know about Retaining High Performers Can Hurt You

If retaining high performers is important to your organization, you might want to pay attention to a recent study that examined key variables that factor into such employeesí decisions to stay with the organization or leave. While some findings seem logical, one result in particular might surprise you – and I donít mean that in a good way.

The study¹ examined how employeesí decisions about whether to voluntarily leave the organization were influenced by performance, pay growth, pay for performance, promotions, labor market conditions, and job satisfaction. In addition to the sample size (12,545 employees) and the period of time covered (3 years), what makes this study notable is that it examined the effects of the interaction of all the decision factors, rather than considering each one individually.

Compared to lower performers, the author found that higher performers:

  • Are more likely to stay when there is a clear connection between performance and rewards.
  • Require greater rewards to experience the same degree of satisfaction as lower performers.
  • Put more emphasis on high pay growth than on job satisfaction when deciding whether to leave the organization.
  • Are more likely to leave voluntarily when the unemployment rate is relatively high.

This last point is noteworthy: higher performers were found to leave voluntarily even when the relevant unemployment rate was relatively high. In other words, internal factors such as pay growth are more salient to high performers than external labor market conditions. The good news for employers is that these internal factors are somewhat controllable.

Based on the studyís findings, here are five practical implications for retaining high performers:

  1. Provide performance-based rewards; they donít have to be limited to pay.
  2. Ensure that the ratio of high performersí inputs to outcomes is equal to, or greater, than the ratio for lower performers.
  3. Customize rewards so they are consistent with performance. For example, pay growth influences high performers more than low performers.
  4. Monitor pay growth: higher performers who are satisfied with their jobs but experience low pay growth are susceptible to unsolicited offers of employment.
  5. Focus on retaining higher performers even in poor economic times, as they are likely to find alternative opportunities even when unemployment is high.

¹ Nyberg, A. (2010). Retaining your high performers: Moderators of the performance-job satisfaction-voluntary turnover relationship. Journal of Applied Psychology.

Pat Lynch, Ph.D., is President of Business Alignment Strategies, Inc., a consulting firm that helps clients optimize business results by aligning people, programs, and processes with organizational goals. Pat can show you how to apply relevant research findings in practical ways to create immediate results in your organization. Contact us today to see how we can help you make a difference!

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