This article originally appeared in the May 2015 issue of Smart Business Philadelphia.
Companies looking to hire top talent need to position themselves as attractive organizations to work for — and be creative with their compensation packages. It's not like it was five years ago when employers controlled the marketplace. Most ‘A’ players today have multiple opportunities and are spending as much time evaluating a company from a due diligence perspective as the company interviewing them.
What are some of the first steps a company should take to attract ‘A’ players?
If a company is seeking a new or expanded position, it should create a roadmap that clearly defines the requirements and goals of the position so the executive team is on the same page with what the company is looking to attract.
It’s also important to share this plan with the board of directors and trusted advisers — your attorney, banker, accountant and insurance provider. This should be done before going to market. As the organization conducts internal talks with its advisers, it creates an expanded view of people who might fit the criteria.
Once the job specifications are determined and all involved are thinking the same way, the organization should aggressively seek the right people. If the company has done the leg work in the beginning, it is already ahead of the game. As ‘A’ players go through the interview process, they will immediately see a desirable company that has its act together.
What questions should ‘A’ players ask?
Executives should seek companies that have a good ethical leadership team, whose members are all on the same page, and that want to add an executive to take them to the next level. To identify whether a company meets these criteria, executives should ask some pointed questions: What is the leadership team like? Do they get along? Are they rowing in the right direction? Are there articulated strategies on where they want to go? How can I have an impact?
The impact question is critical because there are many talented executives in the marketplace that are not being utilized as effectively as they could be. Perhaps a business owner is trying to stay away from risk. That effort to keep the status quo may lead to an environment in which ‘A’ players feel their contributions make no impact, and they may seek other opportunities in the marketplace.
Are there new trends in compensation packages?
Organizations are focused on total compensation plans and are designing incentive plans that are highly creative.
During the interview process, the best candidates will disclose their total compensation from previous companies, confirm their interest in the position and describe how they can have an impact in this new role.
If a company finds a candidate it likes, it should be willing to go above market levels to hire that candidate. Compensation is not everything, but it is a big part of it. An ‘A’ player will ask for a base salary that is fair for all parties but if he or she is helping drive value, the individual will also expect to participate in that value creation in some capacity.
What other incentives may help draw top talent?
Organizations want to make an attractive offer and want to share the risk with executives. Sharing equity is something that can make owners nervous. One alternative to direct equity interest is a phantom stock plan.
This is a long-term plan that grants an employee the right to receive future compensation in line with the increase in the company’s equity value, but only upon the achievement of specific objectives. Deferred compensation plans like these can be highly effective retention tools. ●
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