How Important Is Pay to Find and Keep Employees?

We’re often asked how important pay is to find and keep employees in your company. What we find is that you must pay your employees fairly based on market conditions, but you can never win if you compete based on money alone.

We think an excellent and very public example is going on in the National Hockey League (NHL). Mats Sundin is the most coveted free agent on the hockey market. He was offered $10 million per year in salary by the Vancouver Canucks, which would make him the highest paid player in the NHL, even though his production isn’t the highest and he’s already 37 years old and is in the twilight of his career.

Now if pay was the most important factor, Sundin would have jumped for the pay cheque immediately upon receiving the offer on July 1. However, we’re now at September 9, and he is nowhere near close to making a decision as to which team he wants to play for, or whether he wants to play hockey at all next year.

Another example of this is Marian Hossa, another highly coveted free agent. Instead of taking the big dollars from Pittsburgh or Edmonton, he instead chose to take less money and shorter term and signed with Detroit. Why? Because he thought it gave him the best chance to win the Stanley Cup, the ultimate prize in professional hockey.

And of course, there’s the case of the Sedin twins with the Vancouver Canucks. They’re going into the final year of their contract, and are looking to sign an extension. Their agent has publicly stated that if the Canucks hadn’t fired GM Dave Nonis, then the Sedins would likely have already signed an extension. Now, there is much uncertainty as to whether they will sign a contract extension, and if so, whether they’ll take the “hometown discount” and sign for less than the market will bear.

The bottom line for attracting and retaining employees? As we’ve said many times before in previous articles, you have to pay fairly, but you don’t have to pay at the top of the market. Focus on creating and maintaining the environment where employees want to stay working with you. Money alone isn’t enough.