HRM Issue – The Challenge of Talent Retention & Hefty Pay Packages

HRM Issue – The Challenge of Talent Retention & Hefty Pay Packages

The recent displeasure expressed by infosys founder NR Narayana Murthy over proposed pay hike for Chief Operating Officer has yet again brought to the forefront the issue of “Talent Retention & Role of Hefty Pay Packages.” While company claims that such a measure is essential for us to retain key talent and align the long-term interests of our leadership team with that of our shareholders, let us decode the whole issue from HRM angle in detail:

What is talent management? How does it differ from traditional HR?

Talent Management is defined as a set of integrated organizational HR processes designed to attract, develop, motivate, and retain productive, engaged employees.

Talent management differs from previous HR processes for hiring, training, and retaining employees. HR is more administrative-focused, dealing with pay, vacation days, benefits, and complaints, while talent management is almost singularly-focused on helping and improving the top talent in the organization. Talent management is often strategically aligned with overall business goals while HR is more tactical and deals with the day-to-day management of people.

What are the different ways of Talent retention?

The best approach for Talent Retention is to first identify which employees need to retained and for how long. Once this is done, following approaches can be used to retain those employees:

Training. Training employees reinforces their sense of value. Through training, employees are able to achieve goals in a better way by developing a solid understanding of their job requirements.

Mentoring. With a mentoring program, an organization pairs someone more experienced in a discipline with someone less experienced in a similar area, with the goal to develop specific competencies, provide performance feedback, and design an individualized career development plan. It is an effective way of talent retention.

Instill a positive culture. A company that creates the right culture which focuses on values like honesty, excellence, attitude, respect, and teamwork will have an advantage when it comes to attracting and keeping good employees.

Use communication to build credibility. An effective communication strategy conveys to employees that the employer is really listening and responds to employee input.

Show appreciation via compensation and benefits. Offering things like competitive salaries, profit sharing, bonus programs, pension and health plans, paid time off, and other job related perquisites sends a powerful message to employees about their importance at the organization.

Provide growth opportunities. An organization should provide workshops, software, or other tools to help employees increase their understanding of themselves and what they want from their careers. Employees are more likely to stay engaged in their jobs and committed to an organization that makes investments in them and their career development.

Lower stress from overworking and create work/life balance. This could be in the form of offering nontraditional work schedules (such as a compressed work week, telecommuting, and flextime) or extra holidays.

What are challenges in talent retention?

In the current scenario, a major challenge for an organization is to retain its valuable and talented employees. The management can control the problem of employees quitting the organization to a great extent but can’t put a complete full stop to it.

Let us understand the challenges to employee retention:

  • Monetary dissatisfaction is one of the major reasons for an employee to look for a change.
  • In the current scenario, where there is no dearth of opportunities, stopping people to look for a change is a big challenge.
  • Some individuals have a tendency to get bored in a short span of time.
  • Unrealistic expectations from the job also lead to employees looking for a change.
  • A yet another challenge is Employee Poaching. It is the act of hiring the best talents of competitive firms. It is done to get the trained, experienced and most talented employees of competitive firms.
  • The challenge of employee retention is further aggravated in case of Start ups due to lack of sufficient resources for retaining talent.

How far is payment of hefty pay packages essential in talent retention?

The most popular retention mechanism today is compensation. Most companies try to lock in their most valuable employees with “golden handcuffs”—pay packages weighted heavily toward unvested options or other forms of deferred compensation. The problem with pay-based incentives is that they’re easy for outsiders to match. Recruiters routinely buy out golden handcuffs with signing bonuses—“golden hellos.”

Nevertheless, compensation can help shape who leaves and when. The compensation strategy differentiates the organization on the job market and builds the attractiveness of the company for the top talents.

Even the best managers in the world are not able to keep highly motivated teams, when the compensation strategy is not in line with the job market.

However, Pay Packages are not the only tool in retaining the best talent. Employees need to feel valued and appreciated, be given feedback, provided with growth opportunities, be given work-life balance options, and have trust and confidence in their leaders. All of these retention strategies are beneficial when an employer wants to keep employees within an organization and keep costs of turnover low.



  1. Also, if we can relate this to other topic s in the syllabus: motivation, leadership nd perception, organisational behaviour: perception of inequity, unfairness by the top leadership of the organisation can erode trust and faith of employees who has got a hike of just 6-7 per mentioned by Narayan Murphy

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