Should CEOs give their star performers rewards or risk losing them?

The question what is fair pay is a tough one, especially in the case of star performers working for organizations going through rapid changes. Those talented employees who exceed all others in the level of dedication, energy and performance are bound to be harder to satisfy as they are tempted constantly to upgrade their compensation by accepting lucrative packages offered by competitors. Hence, most organizations ‘give up’ and try to hold on to their top employees by creating all sorts of elaborate treatments- golden handcuffs, stock options, deferred compensation agreements etc.
Well, does Amazon risk losing market share by not willing paying a premium over the industry average? Is Goldman Sachs’ excessive pay its ultimate competitive advantage in the midst of an insane working environment of the Investment Banking world? Companies ask themselves constantly whether they have to pay their shining stars much more than others. Can pay enhance loyalty and mitigate the risk of losing key people? When is too much, too much? Is having a reputation of a tight wallet will scare them away?
I claim that retaining high caliber employees has little to do with pay; otherwise it would be impossible for any risky start-up to retain their rising meteors while facing the gorillas of their industries with their unlimited financial resources. So what can we do?
My first advice to the boss primarily lies in the way he or she communicates and not necessarily in how big are the paychecks. Performance and productivity increases when employees blindly trust their employers, so management should openly discuss the state of the company with employees and do non-stop internal PR on how they could learn and grow within the firm more than anywhere else. Not everything in life is money (after all) and if you can make your employees dream and feel that they are a crucial part of a bigger thing, you even might not have to pay that much. Regardless of the compensation, I argue that people would be inclined to work for Google for its crazy culture, GE and Blackstone for their immaculate brand, and even Twitter for its magic and strong momentum. Won’t you?
My second advice is don’t assume you know the career paths your employees desire. Hence, work with them to create a plan that will encourage their personal development as it fits into company goals. The optimal result should be having employees with a vested interest in how the company is doing in the long run (otherwise it’s the investment banker’s story) and feel that they are receiving the fairest reward possible.
To summarize, if you are founder of a start-up and you sense that you have a young Steve Jobs or a Jack Welch, know that there’s someone lurking to steal them since human capital is the true differentiator between losers and winners in the business environment. Hopefully, money is not the only way to be attractive. Good Luck!