If you are like most executives in most firms, you frequently find yourself scrambling to retain talent, or worse, fail to retain your key top talent. In conversations with leading executives we see that there is often much more attention placed on attracting talent than there is on retaining the talent already in-house, at least until prompted by outside forces, when it may be too late.
The literature is replete with evidence regarding the financial, social, networking, and leadership costs associated with losing top talent; yet, retaining top talent rarely receives the same level of organisational commitment as does identifying, selecting, and recruiting new talent. If the cost of losing someone is exorbitant (and the higher the quality of the employee and the higher the organisational position, the more expensive it is to find a replacement), then why don’t more firms emphasise retention?
The answer seems to fall into a two different bins. First, many firms believe that it will be too costly to proactively try to retain employees. Second, many firms simply assume that all is well, until it is not. This is a common managerial trait that arises both from expecting things to remain consistent and a reluctance to pursue issues that could be unpleasant or challenging. However, whatever the reason, failing to proactively work to retain your most important talent can leave you vulnerable to unexpected and undesirable events.
Five mechanisms for proactively retaining talent
1. Know your people
When we work closely with people, we begin to assume that we know them well. However, the emotional intensity that our employee feel regarding issues such as rewards, pressure to perform, relationships with coworkers and supervisors, interest in the daily work, concerns about the organisation’s mission, etc. is something that most of us are prone to underestimate. This leaves managers vulnerable to surprises, and these surprises can be costly. Managers can work to minimise the threat of these unpleasant surprises by frequently checking-in with key employees, and poignantly addressing the critical issues that are of concern for the employee, not just the issues that appear to be of concern for the employer – once a year is not nearly enough.
2. Understand the market
Systematic investigation examining comparable market pay is common in most, particularly large, organisations. However, as it concerns key employees, such pay comparisons are merely a first step. We need to consider all of the possible career opportunities that might be attractive for such performers, regardless of job or industry. We need to think much more creatively about where we might lose our top talent – as a bonus, this can also help us think creatively about where we might search to attract talent.
3. Proactively provide opportunities
Research shows that competitive salaries and promotions are critical for retaining high performers, and moreso than lower performers. However, such salaries are only one piece of the puzzle. Higher performers frequently crave growth opportunities, meaningful challenges, and to know that there efforts are making a difference. They also demand and deserve that a higher percentage of their time is spent on meaningful work than on beurocratic requirments. We can do much to make our environment desireable by striving to keep our key employees working on meaningful activities that excite them and minimising routine or less important work – this is also good for the bottom line. If you are waiting for your employees to tell you when they want new challenges, your talent strategy is based on hoping that your people will be more forthcoming than you, and that is a strategy that is unlikely to be sustainably successful.
4. It is ok to disproportionately focus on your stars
Proactively working to retain your key talent is ok. Managers often spend disproportionate amounts of time with employees that cause problems, demand attention or otherwise need more help. Simultaneously, our best talent often performs without the need for as much intervention. If we succumb to the natural pull of the needy at the expense of the stars, we are wasting energy and effort in areas that will have suboptimal return.
5. Pay early, pay less
Organisations are understandably reluctant to provide pay increases before employees demand them. However, understanding the costs of losing key performers, and recognizing that these people are in higher demand and more mobile than anyone else should propel us make to proactively reward our best talent. While it may seem like an unnecessary short-term expense, failing to invest will mean much greater costs in time, effort, knowledge, and finances later.
The good news
We can retain our key talent. We have the ability to proactively engage our key employees to address potential concerns before they reach a serious threat. The time, energy, and finances invested now will minimise later costs and stress. With each key retention, we should think of the angst and effort saved from not having to start a new search. Thus, retentions should be celebrated like new hires; the disruption avoided makes retention even more valuable than new hires. If your company claims that talent is key to strategic differentiation, then anything less than aggressively striving to retain your key talent undermines your strategic potential.