Compensation is Not Enough to Attract & Retain Employees in 2022
Toronto FC fans are going nuts about Lorenzo Insigne signing to join the franchise. The Toronto Star reported “TFC may be willing to pay the 30-year-old playmaker a league-record amount of compensation: a 5 1/2-year deal that would guarantee him about $16 million Canadian per season, with the potential for more than $6.5 million in bonuses.”
Translating Insigne’s deal to employment law terms, he would be engaged for a fixed term[i] and receive record-high salary and incentives based not only on his commitment to stay for the duration of the fixed term but also meeting certain performance expectations. Money seems to be the main driver in the Insigne deal. Outside the sports world, we’ve also read about profit sharing, signing bonuses, and better health benefits being used to both lure new employees and retain old ones.
While monetary compensation is certainly attractive and persuasive, today, employees expect much more from their employers. What speaks louder than money? Four things that I think speak volumes for key recruits are:
a) tailored employment contracts;
b) direct, hands-on negotiation;
c) a respectful work environment; and
d) flexibility both in work location and in work performance.
Tailored Contract Terms
Unfortunately, many employers use template employment contracts without tailoring the contract so that it is appropriate for the position and individual whom they wish to hire. For example, if an employee is leaving other long time secure employment (with implicit common law termination entitlements) and joining a new employer, they are unlikely to agree to a contract which contains a termination clause limiting them to their Ontario Employment Standards Act minimum termination entitlements or minimum vacation entitlements. The employee is also unlikely to agree to restrictive covenants which curtail their re-employability if they are not bound by such covenants with the employer they are leaving.
So, a reasonable prospective employer that is paying attention to what is “right” in this circumstance would tailor the contract. For example, they would recognize that the employee is leaving other secure employment and enhance both the termination and vacation entitlements. They would also tailor the restrictive covenants so that they are extremely narrow and limit the employee to only what is necessary in order to protect the business. A reasonable contract which is not completely one-sided signals to the prospective employee that the company they are considering joining treats its employees fairly. So, shelve the off-the-shelf employment agreement going forward.
Direct, Hands-on Negotiating
Sometimes employers use recruiters to generate and qualify applicants and to present and negotiate the terms of employment. While this may be efficient for the employer allowing them to focus on other business-related issues during the recruitment process, it can lead to several potential legal risks, not the least of which is that a recruiter may make misrepresentations and overstatements to entice the employee to join the organization. If the candidate relies on those inducements to their detriment, there could be legal damages owing by the employer, which is bound by what its representative has said.
The use of a recruiter to negotiate an employment contract also deprives both the employer and the employee the ability to “get to know” one another during the negotiation process. This is a delicate time in the potential new relationship and when a third party is the go-between, it is a missed opportunity for employers to communicate with the candidate and build trust thereby setting the stage for a good employer/ employee relationship.
In the sporting world, most players are first spotted by a team’s scout whose job is to find talent and bring it to the team’s attention. But the scout doesn’t sign the player. A player, especially one who is looking to be valued on a new team, wants to meet with the General Manager or the Coach. In Insigne’s case, Italian sporting news has reported that TFC officials, including the Club’s President, flew to Rome to personally meet with both the winger and his agent to finalize the deal. That’s the personal touch missing when the recruiter does the heavy lifting for employers.
Respectful Workplaces
Any employer looking to attract top talent must ensure that the employee will find a “home” at the workplace. In the soccer world, this means providing Lorenzo Insigne with something his team in Napoli, Italy cannot – a haven, a place where he can walk the streets without being mobbed by fans, and a “Canadian” way of life. He can experience a life of courtesy, respect and kindness as compared to Napoli. In the words of a previous Toronto footballer, Sebastian Giovinco, who made the move from Italian soccer to the MLS in Toronto: “Toronto is a wonderful city in a beautiful country. There is a big Italian community and the freedom to go everywhere you want without being disturbed.”
In workplace terms, we often think of workplace “culture” as being one of the intangibles that make a workplace more than a place where employees earn their income. If you’ve ever heard the phrase “a house does not a home make”, then you will understand me when I say that not all workplaces are hospitable. Employers that ask questions and truly listen to the responses go on to develop meaningful and respectful workplace policies and action plans.
However, to truly make a workplace a home, employers must ensure that those policies don’t sit on a shelf collecting dust and that those action plans are implemented and completed. The upside of doing this is likely to be that the employer is publicly recognized as a desirable workplace and instead of having to recruit employees, it has an ample file of applicants from which to select. It will also likely avoid disgruntled employees filing lawsuits against them. On the other hand, a policy or action plan that is implemented in name only can result in additional damages in litigation cases since judges/ arbitrators have been known to penalize employers for not following their own rules and directives. Respectful workplace culture and clear, beneficial policies are a minimum requirement for talent acquisition in 2022.
Flexible Employers
With lockdowns imposed during the Covid-19 pandemic, many workplaces are required to develop workplace practices and strategies to respond to changing circumstances and expectations. This means flexibility both in HOW managers accommodate personal needs and flexibility in WHERE work is performed. Today, desirable workplaces employ managers who provide workers with greater latitude about the way they complete their work and accomplish goals. Such managers assess the needs of employees and provide feedback, guidance, and individual recognition to enhance performance. The key from a legal perspective is to ensure that this assessment process is documented every step of the way so that when rewards are granted for a job well done, any issues of favouritism or discrimination are avoided.
We’ve also seen during the Covid-19 Pandemic that workplace flexibility additionally means changes to regular work arrangements that promote work-life balance, as opposed to one-off accommodations for special circumstances. These work arrangements typically include flexible schedules outside of the traditional 9-to-5; telecommuting/work from home arrangements; and condensed schedules such as the 4-day work week.
Workplace flexibility should be documented in user-friendly policies which provide employees with an easy reference tool to understand the parameters and expectations of the company’s workforce. If flexibility is being granted for a specific need on a temporary basis, then individual contracts setting out the start, end, and conditions of the flexible work arrangements should be entered into. This way, both the employer and the employee have a clear understanding of the work conditions and the risk for legal action is considerably reduced.
For those of you who follow both the Serie A soccer and Major League Soccer, you know that Insigne remains under contract with Napoli and will play in Europe until the season ends in June. Flexibility to allow this (and avoid payment of a transfer fee to Napoli) would mean TFC signing Insigne to a pre-contact, providing him with the flexibility to work-out his existing playing commitments to his current employer and join the team three months after the MLS season starts. See? Flexibility works.
The Bottom Line
Employees today are looking for a work experience that is well rounded, that is, one that compensates them well and treats them respectfully from start to finish. Recognizing an employee’s unique requirements and providing flexibility as may be required in the situation is not a “nice to have” but a must have for the 2022 workplace. As employers build workplaces that meet or exceed those expectations, they must ensure that terms of employment are properly reflected in contracts, policies, and workplace practices that are both fair and clear. Take a tip from TFC’s playbook, and maybe you can snag a star player too.
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[i] An employment agreement that has a definitive start and end date
