Pay them before someone else does

What losing a key person really costs: replacement, missed opportunities and others following. Paul Donkers on rewarding contribution before a resignation forces you to.

A salary band tells you what a role costs. It does not tell you what losing a particular person would cost.

Pay them before someone else does: the hunter, the purchaser and the CFO — and the three costs of losing them: replacement, lost opportunity and the people who follow.

Key takeaways

Market-based pay is a sensible starting point. It becomes an expensive mistake when it stops you seeing an exceptional contribution.
Losing a key person creates three bills: replacement, lost opportunity and the people who may follow. The easiest one to measure is not necessarily the largest.
For the people you would fight to keep, ask what you are doing now. Do not wait for a resignation to discover room in the budget.

What I still see

Something has improved. Most companies I work with now think much harder about reward than they did ten years ago. They look at scarcity. They look at the market for a role. They ask what a specific capability is really worth to them.

But not everyone does.

I still see companies that approach the personnel question in one dimension only. How cheap can we be? Every vacancy becomes a price negotiation. Every review round becomes an exercise in holding the line.

I understand the reflex. People sit on the cost side of the P&L. Costs get managed downwards. And there is constant pressure to deliver results. I get it.

Paying fairly and competitively is a sensible basis for your payroll. Paying more without a reason is not a strategy. But neither is paying as little as you can get away with.

The problem starts when the same logic gets applied to everyone.

Including the people whose contribution is unusually difficult to replace. They may sit comfortably inside your salary bands and still be underpaid for what they bring to your business.

Some of them are also very attractive to someone else.

Three people I have worked with

The hunter

Sales teams need people who grow existing relationships and people who open doors that were firmly closed. Both matter. They are not interchangeable.

The rarest hunter can develop a lead and carry it all the way. Through the silence, the committees, the two years of nothing. Until it becomes a large contract that keeps renewing. A rainmaker.

In thirty years I have worked with a handful of them. It has been a pleasure every time.

People who can do this often work out that they could do it for themselves. If you have a couple on your payroll, be really good to them. And make sure your reward system recognises the business they actually build, not just the next quarter's signature.

The purchaser

Often undervalued, for a reason that has nothing to do with results.

Not always the most talkative person in the room. Not always the most visible. That gets read as low impact, and it can hide how effective they really are.

In a company that buys at scale, someone who improves the big supply contracts, protects quality and makes the savings stick can add more to your margin than the people who out-talk them in meetings.

I have seen this many times. I have also seen those same people receive the smallest increase on the list.

The CFO who sees it coming

Closing the books reliably is essential. But some CFOs make a contribution that is much harder to put into a performance review.

They see the major risks early. They challenge the assumptions behind a deal. They work with the business to stop an escalation that could otherwise have cost you the year.

The difficulty is that this work often leaves no obvious trace. You never see the crisis that did not happen. So the contribution is easy to overlook. And easy to underprice.

These people do not simply do more of the same work. They change what the business can achieve — or what it avoids losing.

Pay structures bring discipline and fairness. Keep them. But a title and a grade cannot capture every difference in contribution. If you never look beyond them, the gap can grow quietly for years.

Then a competitor makes an offer. And the gap closes in a single conversation. Just not with you.

The three bills

Replacement. The visible one. Search fees, recruitment time, onboarding and the months before the successor is effective. You will see some of this in your accounts. The rest is absorbed by an already busy team.
Lost opportunity. The contract that does not renew on the same terms. The savings that do not repeat. The risk nobody spots because the person who used to spot it has gone. This can be the largest bill. It does not arrive as an invoice.
The people who follow. When someone respected leaves by choice, everybody watches. Especially the people with options. They may not resign that week. But they become more willing to take a call. A later departure is not always unrelated to the first.

You will not calculate all three precisely. That is not a reason to count only the search fee.

The saving is in this year's salary budget. The cost may be in next year's business.

Selective is not the same as arbitrary

Let me be clear. Giving everyone more without understanding why is a different mistake. It raises your fixed costs without necessarily addressing the problem.

But this is not an argument for favourites either. The loudest person, the best negotiator and the person most willing to threaten resignation are not automatically your biggest contributors.

Look for evidence. Results, judgment, scarce capability and the effect someone has on the people around them. Exceptional individual output does not excuse damage to the team. And check whether equally valuable, less visible colleagues have been overlooked.

In business, I have learned: money is not a motivator. But it definitely is a demotivator when people feel undervalued. Beware the unintended consequences of saving on pay. A bonus cannot fix poor leadership or broken promises.

Use the keeper test before you need it

Netflix's keeper test asks leaders to consider whether they would fight to keep someone who was leaving for a similar job elsewhere. For this discussion, I would focus on the people for whom the answer is an immediate yes.

Then add a second question.

If I would fight to keep this person tomorrow, what am I doing about it today?

You probably already know several of the names. Nothing forces you to act now. Their resignation will.

By then you are negotiating under pressure. And pay may no longer be the only issue. A counter-offer cannot undo months of feeling taken for granted.

This month

Write a short list of the people whose departure would materially damage the business. The number should fit your company, not a quota. Be able to explain each name. Check what the outside market would pay them today, alongside their actual contribution and fairness to comparable colleagues. Do not stop at the official band. Talk to them about what would make staying worthwhile. Pay, scope, development and the freedom to do good work all belong in that conversation. Where a real gap exists, agree a concrete response with your CFO and CHRO. Consider the loss you are trying to prevent, not only the increase you are being asked to approve.

And do not make the business permanently dependent on a handful of people. Develop others. Share knowledge. Build successors. You can value someone properly and reduce dependence on them at the same time.

Be disciplined about costs. Be equally disciplined about what creates value.

If your best people were offered fifteen percent more tomorrow, how many would talk to you before accepting?

Over to you.