Resource Drivers and Levers

“A small but growing number of companies are grading -- and paying -- top managers on their ability to hang on to employees.

“Car retailer Penske Automotive Group Inc. tied 8% of Chief Executive Roger Penske's 2007 bonus to holding employee turnover below 31%, according to a March proxy statement. Mr. Penske earned his $240,000 reward. The company, which owns 300 dealerships world-wide, posted 30.8% attrition in 2007, down from 31.2% a year earlier and more than 80% in 1999 when Penske Corp. acquired a controlling stake.

“Other companies that recently factored employee retention into executive-pay plans include Pep Boys and Extreme Networks Inc.

“A study by management consultancy Hay Group suggests that the practice is gaining popularity. In the 2007 survey of 182 organizations, 8.2% of respondents said they use turnover as a performance measure in executive-incentive plans, more than three times the 2.3% who responded similarly in 2005.

“‘It is a recognition, on the one hand, of people as a driver of business success,’ says Hay Group consultant Mark Royal…

“The attention to turnover is part of a broader trend of employers focusing on talent management, as well as financial metrics, in evaluating company leaders.

“In the 2007 Hay Group survey, 55% of respondents said they incorporate ‘employee performance’ criteria into executive-bonus plans, more than double the 23% who said so in 2005. Such criteria included turnover, workplace diversity and employee satisfaction.”

(“Theory & Practice: In Some Offices, Keeping Workers Earns a Bonus; More Firms Like Penske Tie Top Managers' Pay To Employee Retention.” Cari Tuna. Wall Street Journal: June 30, 2008. pg. B.6)

DO WE UNDERSTAND our appropriate metrics? Do we know what resources are critical for us to survive, grow, thrive and adapt?

Do we understand the drivers of those metrics, and the levers that move them?

What moves your people?