Talent Retention Strategy Pays

by Paul Davis

If the talent drain has not cast its shadow over your business yet, it likely will. Big four international consulting group, Deloitte's, has predicted the available workforce will shrink by 15% before 2008. Equipped with this information, and other similar studies, many companies are rushing to implement retention initiatives. Not surprisingly, without practical strategies in place, there's been little effect.

Another international consulting group, Kepner-Tregoe, found among 1,290 managers surveyed, over two thirds revealed retention had actually worsened despite a concerted effort to retain people. In the US the average turnover rate in companies is now 23% per annum. Worse still, almost a quarter of these companies have a turnover rate between 30% and 50%.

Futurist think-tank, the Hudson Institute, uncovered an even more distasteful truth - most employees had clocked off years ago, but were still on the payroll.

Of over 2,000 employees surveyed: 33% were "High Risk", uncommitted and planned to quit within 2 years; 39% were "Trapped", uncommitted to the job but planned to stick around anyway; and just 24% were "Committed", and planned to remain so for at least 2 years.

The truth is 'committed talent' is becoming more elusive. Retaining your best people may well need to be one of the top three business priorities for 2008.

Why Have Talent Retention Initiatives Failed?

Many companies have still not got serious about talent retention. Has your company conducted a talent audit? What has your company done to implement a talent retention plan? Many have made an attempt but their strategy has been misdirected.

Despite a raft of studies showing that employees are not primarily driven by money, many companies still base their strategy on the basis that money is the motivator. At best, monetary incentives can produce temporary performance improvement and renewed enthusiasm. However, it is not sustained.

The problem with basing a retention strategy around money is threefold: people soon spend it; people soon forget they got it; and people soon want more. The best advice I've heard about money as an incentive is "pay people fairly, and then stop talking about money". It is this focus on money that has caused the failure of many talent retention strategies.

So what do people want? Global human resources consultants, Hay Group, conducted a mammoth survey of over 500,000 people in 300 organisations to find money does not motivate people. No surprises on what does motivate. Survey after survey essentially arrives at the same conclusions - money is not a critical factor for joining or remaining at a place of work, it is self-fulfilment that drives our choice of work, and workplace.

The Management Consulting firm, McKinsey & Company, found that mid and senior managers rated the following as "critical" factors:

Where to now?

There are three important messages being sent to organisations through these findings. These three basic tenets of talent retention are universal and go to the very core of what it takes to keep good people:

1. People do not resign from organisations - they resign from bosses
2. People expect to be treated as people - not company property
3. People value values being valued

While this data clearly tells us what makes people stay with their employer, it also suggests what makes people leave their employer.

The data is instructive and illustrates where best to spend the retention budget. What does your company budget for retention? Instead of spending funds on cash giveaway schemes, invest the retention budget on improving the business environment. To retain people more effectively, focus less on spending on them and more on the external factors that impact on them: work conditions; other people and organisational identity.

These are some important challenges to face down if your business is serious about keeping its top talent.

The first is to develop managers and leaders who are progressive, self-aware and possess high level interpersonal skills. Great managers are worth far more to people than token bonuses or paltry pay rises. Great managers retain people because they inspire people.

The second challenge is to value employees as people. Treat them with the respect afforded an invited guest rather than as a relative who has overstayed their welcome. Provide them with learning and development opportunities that are innovative and clearly linked to career progression. Initiate work-life balance in consultation with your employees. Empowerment must be empowerment, not just more delegation. Offer employees performance coaching, not performance management.

The third challenge is to make corporate values really mean something to people and live these values by building the business on ethics, not political expediency. Businesses that want to succeed consistently deliver on implicit and explicit promises to employees.

Talented employees have clear expectations of their employer and firm ideas about what is required to achieve their career ambitions. As talent becomes more elusive it becomes increasingly tougher to keep great people. Employers need get single minded about putting in place an integrated talent retention strategy that reflects the realities of the research - spend the money on the talent, rather than give it to them.

Dr. Paul Davis is internationally recognised as a thought leader in strategic HR and its contribution to organisational development

Paul can be contacted through The Training Link on 1300 88 44 33