In a recent piece for ERE.net, Dr. John Sullivan examines one of the tactics used to encourage employee loyalty: retention bonuses. Sullivan argues that this method, which gives special rewards to workers, is a bad idea in the long run because it doesn't create real loyalty among employees or give them sufficient reason to stay in most cases.
Looking at the practice of retention bonuses more closely, Dr. Sullivan asserts that they can even cause employees who would have otherwise stayed to leave their position. This is because the workers in question could misinterpret the offer as an insult or "an act of desperation" that makes them wonder why such a bonus is even necessary.
He adds that some businesses are tempted to use retention bonuses as a substitute for actual change. Rather than listen to feedback and improve the company, they give out rewards to frustrated employees.
What are some better alternatives to keep workers interested? Writing for Entrepreneur, CEO Charlie Hararay stresses the importance of praise and compliments. Though they are less tangible than financial rewards, they ultimately carry as much weight if they come from a sincere place.
"Look for ways to compliment your employees," he writes. "Tell them how much you appreciate them and how valuable they are to the company. Send them a quick email or voice message, thanking them for their efforts on a particular project or meeting. Words can build bridges that money can't take down."
This doesn't mean your CEO can't give bonuses or offer special incentives for projects, as Hararay says these are also powerful motivators. But these things should be connected to the joy of the work experience, not a substitute for it. Executive recruitment professionals can look for signs that a CEO candidate knows how to keep employees engaged and loyal.
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