Culture and compensation will most certainly contribute, but the opportunity to perform and to excel is key!

Challenges in workforce critically affect the rewards / compensation composition and expenses, as well as aligning of human resource management with the organization performance.

http://www.ijbhtnet.com/journals/Vol_2_No_1_January_2012/24.pdf

How can you lead people who know their worth, are organizationally savvy, ignore corporate hierarchy, expect instant access, are well connected, have a low boredom threshold, and most likely will not thank you? To retain star performers, human resources divisions must shift the focus of what they do, e.g., measuring cost per hire, or the impact of initiatives on skills and attitudes, to the quality of the talent decisions they support. Above all, since first-level managers (not to excuse top- and middle-level managers) are primordial to engagement, a new type of leader, one that neither lacks self-confidence nor imagination, must emerge. He or she will (i) know how to discover and learn, and manage and inspire discovery and learning in others; (ii) grasp how to identify and validate ideas, and transform them into opportunities; and (iii) nourish and trigger the imagination of individuals in teams, and translate the results into innovations that benefit organizations and society at large. Leading Top Talent in  the Workplace, available at https://www.researchgate.net/publication/266477077_Leading_Top_Talent_in_the_Workplace, elucidates these matters. There is also Managing Knowledge Workers, available at https://www.researchgate.net/publication/266478125_Managing_Knowledge_Workers, and A Primer on Talent Management, available at https://www.researchgate.net/publication/254583127_A_Primer_on_Talent_Management.

Article Leading Top Talent in the Workplace

Article Managing Knowledge Workers

Article A Primer on Talent Management

 In my opinion there are many reasons why an employee stays in or leaves an organization, including culture or compensation can contribute to this!

Context, the work environment, colleagues, the boss or family reasons are just a few interacting and / or resonate, influencing those two factors, named above. It depends much on the personality of the employee, on his motivation, also needs and expectations.

Hmmm ... while there are a host of reasons why people stay or leave organizations certainly compensation and culture are two of the important ones. Herzberg would of course lean toward culture as the dominant determinant for those choosing to stay.

From my standpoint, having been a hiring authority for much of my career, I would rather have a person who "fit within the culture" and "had a passion for the mission" than a person who was merely seeking to be "highly compensated." Given a non-religious application of the terms, I would prefer "missionaries" over "mercenaries" ... I believe that "missionaries" would stay and make positive contributions while "mercenaries" would become self-centered "careerists" willing to work for any organization regardless of its mission or his/her passion for the work being done as long as the organization was the "highest bidder" for his/her services.

In short, who would even care if those who are only concerned with money stayed?

I know everyone assumes compensation is always important  however it has been my personal experience compensation without a great work environment doesn't usually hold up. Unless personal needs require them to stay or they are close to retirement, people often leave for better environments despite pay.  I work in an environment now that the pay is good, but not amazing, however the intellectual challenges, the environment and most importantly the autonomy in each of our positions retain employees.  In other words, if you are someone on the outside looking to fill one of our positions, you almost always have to wait for someone to retire or move away!  If you want a prime example of getting it right, just look at Zappos,  they really figured out what keeps people.  They understand the corporate culture so much that in training they offer you $2,000.00 to walk away if you don't feel the environment there fits them.  I want you to consider the fact that you are offered two grand to just walk away for a position at a call center.  That's easy money!  Yet most people don't take it because they believe in their culture so much!  What does that tell you?

Great question! I was thinking about my response by considering which of the two if absent would cause a person to leave an organization sooner. For example, I have seen people with low compensation stay longer in a culture they loved and I have seen people with high compensation stay in a culture they loathed. But it is safe to say low compensation plus poor culture equals employee gone. This would tip the scale in my mind that high culture would retain the high performer longer. The question then becomes organizations that do not compensate properly but have great cultures are living on borrowed time.

Star performers can be retained by providing them right culture because as per two factor theory of motivation;hygiene factors are required to prevent dissatisfaction but motivators are required to keep them motivated.Similarly,pay is primary factor but culture matters the most.

As per the several research done on retention policy effectiveness, it emerges that a combination of good culture (based on the popular culture of the majority people of an organization) and good compensation is the major factor in retaining the star performers. Leaderships which believe in efficacy of any one factor independent of other often find results disappointing,

In my opinion, It is the HR practices which develop a culture in an organisation and is more helpful in retaining employees as compared to compensation.

Very thoughtful but realistic problem...my experience says catch ambition of your star performer....ie. personal feelings, self respect, freedom to perform and obviously award with recognition...ultimetly develops a culture.

Thank you.

In my world view, I shall always put premium on culture over compensation as long as there is not a great variation in the compensation in the comparable sector.If the culture is good people don't mind getting a few bucks less than their competitors. Before shifting to academics, having worked in one of the India's largest software company, I still have very fond memories of the culture of that organization. A few years back one of the ex employees of the company put a question on the linkedin alumni site of the company, asking a very simple question,that how many of them would like to come back to the company. It was overwhelming to see that a significantly large number of its ex employees gave a positive response, giving employee friendly and empowering culture as the major factor. This in spite of the fact that this organization is a little lower in compensation than its competitors in the same domain.

Satish Kalra 

Can some cite recent research that compensation is key to retention?

Our consulting experience is that "involvement" is key to retaining the best employees (not necessarily "stars" which do not always fit in).

I would certainly agree that culture is seemed crucial in ensuring staff loyalty and their performance.  For instance, Herzberg 2 factor motivational study indicated that salary has less impact as compared to management or supervisor relationship.  In a similar vein, several studies argued that excellence culture actually leads to high employee perfomance and longevity in service in that organization.

Namaskar sir. Congrats for picking up such an interesting and relevant topic for discussion. Being involved in the HR area for long time in Nepalese corporate sector and in HR-academics in the recent years, I believe conducive 'culture' is more crucial for retaining the star performers. Great going, sir! It's great

If they only stay for the money they are probably not worth the money...unless you are in the investment banking sector. You cannot buy affective commitment - and stars in my view are those employees that contribute over and above.

I think if you are comparing culture and compensation, culture may count more...

Culture is also a motivation factor for thousands of volunteers who do not get a penny at all. 

It depends what is meant by a "star" and what if a team is all "stars"?. Stars are often motivated by what they can achieve in a context- culture is part of that, but so are history, structure, personalities, psychodynamics, power, control, politics, resources, strategy and vision.Complex people often need complex responses to their needs, as in a more restricted way Denise Rousseau argued in her I-Deals work. There's also the downside of narcissism too. Mark De Rond's work (The Last Amateurs and an AMJ article) with the Cambridge University rowing club (they won) shows how highly gifted competitors may work in conditions of NO remuneration, and how the "balance" of the team may require a better performer to be left out(see also Sir Alex Ferguson's Manchester United ). 

Also fear of change

While both culture and compensation factors are very important, I would say culture is the more important factor in retaining an employee. 

I would like to add another perspective. Given the right culture, the star employee has confidence, s/he and the organisation will grow to the right compensation levels in time  as well.

short answer: YES. (Both or either can be a factor).

Now, for fun, turn the question upside down: Why do star performers leave organizations? Ten case studies show....  (you can do the study, or anybody could). Why Steve Jobs left Apple (when fired?) Why Carly Fiorina Left HP? Why Marissa Meyer left Google?  Why did I leave my previous university when I was flying high? (angry over an equity/fairness issue, not really compensation (very good) nor culture... ANYHOW, keep it up, interesting topic! John

I think we are all forgetting to ask the real question here, "How are we defining a Star Performer?" Better yet, is that really the question we should we be asking? I would even argue the validity of this statement, "Star performers are essential for maintaining organizational competitive advantage." According to whom?

Factors that lead to any employee deciding to stay or leave an organization are agnostic of whether you designate them "star" performers or "average" performers. 

Why are we still having discussions about just retaining "high potentials", "star performers", etc., when the research being conducted about motivation is not parsed out that way?

Compensation matters only so much, period. Whether or not culture matters will vary from person to person and culture to culture. It will also matter how we choose to define culture. Citing specific examples of theories applied to the problem is not the answer either. This question must be approached "wholistically" and use a systems thinking approach if we are ever to come to an answer that is at all useful and actionable.

I agree with Michael, we have a cultural bias for individual performance but the biggest organisational gains come from team performance. http://tinyurl.com/zz22yrp

Empirical  evidences and different literature on the subject suggests that Compensation, reward and recognition play a key role in employee’s motivation which leads to employee’s retention in the organization. Research suggests that, employee commitment and retention is greater in organizations where people are highly valued. Beyond this, it is important that the culture of the organization be consistent with its overall business strategy and with the values of those employees it must attract and retain in order to be successful. Research also suggests that in spite of several compensation plan, a good "person-organization fit" is essential for the employees retention

I am studying organizational culture (OC) myself, and so the answer I think would be organizational culture mainly. I agree that compensation plays an important role but not as important as the role of OC. If there is not culture of trust for example, it would be impossible to stay at the organizational. People seek to work on environment where they can be trusted and be happy.

As per my views and after reading the above views, I can conclude that culture is more important than compensation as it is a very essential to retain people in long run.All will agree that in initial phases of career compensation in very important but after that its culture which sustains people. Though, we  cannot deny other facts also like personality, psychodynamics and other parameter's and defining the concept. Moreover, compensation is not a problem these days and people are getting almost similar scales in comparable industry but no one can deny money can  bound for some time and  culture for long. And providing good compensation at par while maintaining equity is part of culture.Compensation can not be a substitute for culture as both are having their own importance.So,many articles are appearing on this topic. I am attaching a link for your reference.

https://blog.reflektive.com/category/company-culture/

http://www.forbes.com/sites/joshbersin/2015/03/13/culture-why-its-the-hottest-topic-in-business-today/#3c7f5634b6e2

Outstanding firms are consistently able to identify, attract, and retain star performers; to get stars committed to their firm’s strategy; to manage stars across geographic distance, business lines, and generations; to govern and lead so that both the organization and its stars prosper and feel rewarded. These capabilities are what give great firms their competitive advantage.

http://www.aligningthestars.com/aligningthestars/book_excerpts.asp

Greetings:

A very important question and I think it is necessary to give the creative employee incentives in kind and encouragement, which is an important part in creating creativity, as I understand the question

Culture gives the right soil to your plants, but compensation does provide the sunshine!