Be nice and I’ll stay

John Ellen says appreciation is key to retaining staff. Picture / Mark Mitchell

When broadcaster Paul Holmes left his top-rating, high profile current affairs show at TVNZ to take up a similar spot on the much smaller Prime people didn't quite get it. Surely a top-rating show and pots of money is enough to keep any broadcaster smugly, satisfyingly employed?

Then, in an interview with a women's magazine, Holmes revealed that, irrespective of his show's success and the deal offered to him by Prime, he had felt rather unappreciated by TVNZ.

A pot of money wasn't sufficient appreciation then? Some employers will be surprised to learn it rarely is.

David, a corporate administrator, hasn't had a pay rise in three years. Instead, he is looking at ways to decrease his outgoings.

"It is getting a bit tight financially," he says. He isn't pushing for more money, because he loves his job and was initially under-qualified.

When a key employee left, David's employer was unable to find the same skills in the employment market, so decided to promote David, pay him less than his predecessor, and trust him to learn on the job instead.

Rather than find this daunting, David thrived. He was impressed by the trust his employer placed in him and was determined to perform. He was also thrilled with the personal and professional growth that resulted.

Within a short space of time, financial remuneration had become less important to him. And before the cost of living forces David to ask for more money, his performance is likely to result in him being promoted and placed in a higher pay bracket anyway.

David's employer seems to be getting a more loyal and motivated employee for less money - a happy reality employers are stumbling over by mistake rather than arriving at by design, say remuneration experts.

"While it's brilliant for the employee and for the economy, I don't think employers consciously set out to achieve those results. Instead, they follow the traditional low-risk method of trying to replace a departed employee with a person of the same skill,"says John Ellen, a principal for Mercer HR.

"They usually have to offer the incentive of more money. But in an increasingly tight employment market, employers may find the skills they seek aren't readily available. They promote someone from within and only then do they discover the benefits of employing people who feel challenged."

Mercer conducts a bi-annual survey into New Zealand remuneration trends and Ellen says the results of the November survey back up his anecdotal observations - employers are increasingly providing growth opportunities rather than increases in financial remuneration in response to a tight employment market.

Specifically, Mercer's survey of 160 organisations across public and private sectors found that average remuneration rose just 1.3 per cent between 2002 and this year, while salaries for people doing the same job over that period rose 5.9 per cent.

"Given that the economy is booming and unemployment is low, you would expect to see the price of people go up. You'd expect wages to be escalating. But this survey tells us wages are not escalating and it's a trend found in a couple of surveys. There is anecdotal evidence to suggest the trend is global," says Ellen.

Though more conservative public sector remuneration can drag down survey averages, Ellen says there is presently little difference in remuneration growth rates between public and private sectors - projected superannuation top-ups aside.

"A mid-level public servant is less likely to compete with people from the private sector and less likely to look for a private sector job. They are also more likely to be comfortable with the public service culture - an advantage for a public sector employer."

Ellen says employers have discovered the traps ever-increasing remuneration can create (lack of employee commitment, disloyalty, endless poaching and ridiculously high remunerations are examples) and financial remuneration will continue to take a back seat in the private sector as employers find other ways to retain talent and grow leaders.

"In the future, the talent shortage problem will worsen, especially with skilled 35-45 year-olds - by 2014 [based on current population trends] there will be 85,000 fewer people in that age group in the workforce. That's 85,000 fewer potential leaders."

He says new strategies include a change in attitude towards older workers - viewing them as mentors rather than has-beens and finding ways to keep them; looking hard at life balance perks, performance bonuses and employee-tailored rewards; and, in a business environment where organisations are in constant flux - recreating, consolidating, merging and acquiring to survive. Taking more care over change management is crucial.

As an example, 39 per cent of organisations responding to Mercer's survey identified managing organisational change as a key human resource issue.

Further, 60 per cent anticipate "some change" over the next 12 months, and 20 per cent "significant change".

"A lot of employers compromise on change management processes that work best for people to focus on getting the legal processes of change management right.

"This creates three common problems - the change is abandoned; the change is resisted; or the change happens, but the decision is made to revert again," says Ellen.

He says along with a focus on getting change management right and valuing older workers, employers are discovering the benefits of exposing middle managers to senior executives for informal mentoring and of action-based learning for developing leaders.

"If you put people into jobs in which they have to grow, you give them action learning by default," says Ellen.

He says people rarely leave or accept a position solely on the basis of financial remuneration and employers need to learn this.

"I have hired about 60 staff during my career and virtually every hire I have made has taken a pay cut to join the team. It's about selling the total employment value proposition."

But surely this reasoning can't apply to people who do labour-intensive, sometimes grungy jobs to keep food on the table? Isn't earning money the key reason fast food delivery people, rubbish collectors and road workers just get on with it?

Ellen says it isn't. He points to US studies into why people leave jobs and says exit triggers have been identified.

"Some are unrelated to the employment, for example, an employee who decides to quit work to raise a family, do their OE, or embark on full time study. But in [the biggest study] about 72 per cent of people identified the same trigger: 'the boss pissed me off'."

He says true indicators for whether people will stay at a job or leave it are not money, but whether they are treated with respect, how their mistakes are treated, and how they are valued on a day to day basis.

In knowledge-based jobs, these indicators are almost always why people stay or go. This might explain why Holmes walked. But how does Ellen explain results from the Mercer survey which reveal IT and accounting job families attract higher salaries compared with the more flat-line broad remuneration trends? If a stunning work environment is all it takes, why are IT and accounting employers still using money to attract talent?

Ellen says IT and accounting job families are unique.

"They are possibly the most transportable knowledge jobs and perceived by businesses as the most essential. IT workers have an extra advantage because of the fast progressive nature of IT - if they learn new software that's in demand, they are instantly more valuable."

No wonder conservative mums and dads advise their wannabe pop star or artist offspring to learn computers or accounting as well.