Staff retention is not as simple as a big payout

For us at FX Week, it ushers in the big-name moves that we look forward to writing about.

However, while bonuses are of course a key part of any remuneration package, in some ways their importance in retaining staff and maintaining loyalty is overstated. After all, once the carrot has been eaten, a year is a long time to wait for another.

The banks show no signs of abating the arms race to pay the biggest sums of money to the top performers. While it is essential that the best need to be remunerated for exceptional performance, the bonus is less and less becoming a means of doing so. Instead, high bonuses become standard, and where people think they have got less than their peers within an organisation or than the wider industry, they become disgruntled and look for a way out.

The time has come to bring these rewards back to what they were originally meant to be, payments for performance that genuinely exceeds expectations. The key to holding on to staff is to show them they are valued. This must be done through a standard salary package that rewards sound performance. Raising standard salaries would be a more honest way of remunerating staff than paying a bonus that is offered regardless of performance.

However, pay is just one element of a much bigger picture that organisations need to get right if they are to keep hold of their most important resource. A feeling that you are valued, that your opinion counts, that the decisions you make will make a difference are in some ways more important to job satisfaction than the size of your bonus. Prospects for promotion, development of skills and a pleasant working environment count far more to job satisfaction than a salary or bonus that is slightly bigger than the guy in your job at the shop next door.

A certain level of turnover is inevitable and healthy, but those that want to keep it at a minimum for the long term, not just until bonuses have been paid will need to ensure their business encourages the individual to develop in his or her own career. Those that focus blindly on delivering a bigger bonus than the bank down the road will find that most of their top talent will be moving on before you can say performance related pay.