Talent Retention – Now A Big Issue
Talent retention is an effort by the business to maintain a working environment which supports current staff in remaining with the company. Many employee retention policies are aimed at addressing the various needs of employees to enhance their job satisfaction and reduce the substantial costs involved in hiring and training new staff.
Why an issue?
– Cost of hiring a new person (advertising, interviewing, screening, hiring).
– Cost of on boarding a new person (training, management time).
– Lost productivity (a new person may take 1-2 years to reach the productivity of an existing person).
– Lost engagement (other employees who see high turnover disengage and lose productivity).
– Customer service and errors (new employees take longer and are often less adept at solving problems). In healthcare this may result in much higher error rates, illness, and other very expensive costs (which are not seen by HR).
– Training cost (over 2-3 years you likely invest 10-20% of an employee’s salary or more in training, that is gone).
– Cultural impact (whenever someone leaves others take time to ask “why?”).
And we know that high-performing companies have loyal employees. we can’t quote statistics on this topic, but it’s well understood that high-performing companies serve their employees just as well as they serve their customers. One of the most important studies on this was done by Harvard many years ago and it proves that only by making your employees happy you can ultimately make your customers happy.
And most importantly of all, we have to remember that people are what we call an “appreciating asset.” The longer we stay with an organization the more productive we get – we learn the systems, we learn the products, and we learn how to work together.
With the cost to recruit and train new employees growing year after year many companies are working on creative ways to increase employee retention to keep their most talent workers.
How we can fix it ?
Typically the model involves a whole variety of factors, and these factors take on different weights depending on the age, demographic, and role of the employee. So your goal is not to simply do one thing, but to understand your own company’s “retention drivers” by role.
Some of the interesting things to consider:
– Compensation plays a role, but not as much as you may think. All the experience we have shows that for mid-performing people compensation is a “hygiene” factor – too little money will definitely create high churn, but over compensating people won’t make up for a poor work environment. Of course in sales and other highly competitive positions compensation is critically important, but it is by no means the only driver.
– Job fit is critically important. For years companies have talked about the “employee value proposition.” In reality there is a “job value proposition.” Are you attracting the “right people” for each job? Some jobs are particularly demanding (ie. consulting roles where travel is intense). If you honestly explain these roles and their positives and negatives you will attract people that “fit.” If you over-sell the job you’ll suffer high turnover.
– Career opportunities matter. Today most companies are going through a “crew shift” as boomer generation employees retire and millenials and young people enter management and high value positions. Younger folks are motivated by growth, career opportunity, and meaning. Our research several years ago showed that while young people want the same types of benefits and work-life balance as older people, they are particularly focused on fun, collaboration, and the ability to be with others they enjoy. So the prospect of a “career” is more than just advancement (which was the way I was raised).
– The work environment matters. We’ve done lots of research over the years on recognition, engagement, leadership, and management. It all shows clearly that people at work respond through Maslow’s Hierarchy of Needs. Once they are “safe” – ie. paid well, they look for more meaningful value at work. Is this work taking advantage of my skills? Do people appreciate me? Is the environment inclusive and diverse so that I feel that I fit? Does this company do work I feel proud of?
Ultimately the most successful and enduring organizations in business are those that have a common sense of mission, a deep respect for their employees (and customers of course), and put time, energy, and money into building a highly engaging environment. They carefully select the “right people” with lots of hard work, and once people join they take the time to make sure they have development opportunities to move up the value curve.
“Retention” may be no more than a symptom, but it’s something you should take seriously. In today’s heating economy and rapid shift in demographics, you’ll be competing for talent regardless of your industry.