In Minor's League: Oct. 2000

QUESTION: My managers constantly complain about their compensation but I can’t afford to pay them more. What can I do?

ANSWER: As the labor market continues to tighten, this dilemma becomes more common. Employers are struggling to find creative ways to keep their employees intact.

To get to the root of the problem, you must determine whether your compensation and benefits program is comparable with what your competitors are offering. My first action would be to secure a compensation and benefits report from your state or national trade association to find out if you are in line with your peers. Secondly, you have to research what other industries that could attract your staff are paying their key managers.

My goal was to compensate managers at or slightly better than the market after factoring in their experience and education. If you provide managers with a satisfying work environment, paying them more than the industry average should be sufficient to retain them.

You should also note, however, that extensive research indicates that compensation is not always the most important criteria in retaining employees. For example, managers who show employees appreciation on a regular basis often retain employees better than those who pay well. Providing incentives based on some type of previously agreed-upon performance criteria is another effective retention tool. This is often a means of getting your staff to a compensation level they can live with while encouraging them to improve their efforts. If the company succeeds, the managers succeed. Having a manager’s "at-risk pay" to be as much as 20 percent of his or her overall compensation is not unreasonable.

Another retention strategy to closely consider is promoting from within. There is a lot to be said about the value of promoting staff who grew up in an organization even if their resumes are not as impressive as resumes sent in from outside the company. You will always have more trouble keeping superstars with glowing resumes than loyal long-term employees. Even if you sacrifice some immediate competency by promoting from within, the net effect will still positively benefit the company because of the loyalty and effort these long-term employees will provide. Give me someone whose heart is in the right place and I will take that over brainpower any day.

Lastly, you might want to consider some type of equity sharing program. Again, research supports the fact that employees who own even a small portion of their companies are more loyal and productive. There are many equity sharing plans that can work, including stock purchase programs, bonus awards and option plans, employee stock ownership programs and phantom stock purchase plans.

Clearly, retention of management is critical in today’s business environment. In fact, developing strategies to keep key people may be the most important strategic decision owners can make to ensure the long-term health of their landscape businesses.