Talent: corporate gold dust
It is axiomatic that retaining the best employees is a key ingredient that makes for the best businesses. Yet talent retention has only been the theme of books, conferences and executive development programs for the past ten or so years. In times past, when labour was plentiful and the world less globalized, nobody talked of talent retention. Now it keeps executives awake at night.
If the talent drain has not cast its shadow over your business yet, it will. Deloitte and Touche predicted that the available workforce would shrink by 15% between 2005 and 2008 thus making the retention of star employees ever more critical. Forewarned by numerous similar studies of this impending corporate apocalypse; many companies spent the dieing days of the last century frenetically implementing a raft of talent retention strategies – to little effect.
The consulting firm Kepner-Tregoe surveyed 1,290 managers and reported at the dawn of the new century that two-thirds of those surveyed said retention was getting worse at their organisations despite a concerted effort to retain people. This is supported by a 2001 study by the Centre for Organisational Research in the US which found the average turnover rate in companies to be 23% per annum with almost a quarter of surveyed companies having annual turnover rates of between 30 and 50%.
In 2000 the Hudson Institute conducted a survey which uncovered the terrible truth most companies had long suspected and feared: most employees clocked off years ago but were still on the payroll. Hudson surveyed 2,000 employees and found one-third were ‘high risk’ uncommitted and planned to quit their jobs within two years. A further 39% were classified as ‘trapped’ meaning they were uncommitted to their jobs but planned to stick around anyway. Just 24% were found to be committed to their current station and planned to remain so for the next couple of years. The truth is; real ‘committed talent’ is getting as rare as hen’s teeth in some industries with most others balancing precariously at the cliff’s edge. Retaining your top talent should be one of your top three business-wide priorities for 2008.
Why talent retention strategies have failed
It is not just that many companies have not got serious about talent retention (although many have not. Has your business conducted a talent audit? Have you implemented a talent retention plan?) but that their retention strategies have been misdirected. It does not matter how many studies chorus the finding that employees are not really driven by money, companies still seem think that money is the base motivator. At best, monetary incentives might induce a spark of temporary performance improvement or renewed enthusiasm for a disliked job but nothing that sustains. The problem with money as a motivator, incentive or inducement is three fold: people soon spend it; people soon forget they got it; people soon want more of it. The best advice I heard about money is ‘pay people fairly then stop talking about money.’
It is the focus on money which has caused the failure of many talent retention strategies. Ironically, Deloitte and Touche, whose talent retention strategies did not focus on giving people more money, saved an estimated US$81 million for the company through talent retention.
So what do people want if, as the Hay Group’s monumental 2000 survey of 500,000 employees in 300 organisations found, money does not retain people? The answer is not a revelation; survey after survey essentially arrives at the same conclusions. McKinsey and Company’s evocatively titled survey “War for Talent” found money was hardly rated at all as a critical factor for joining or remaining at a place of work by mid and senior managers. They found instead that self fulfillment not avarice is what motivates people’s vocational choices:
There are three important subliminal messages being sent to organisations by these survey findings. These three tenets of staff retention are universal and go to the core of what it takes to keep good people:
The data tells us what makes people stay with an employer but it is also strongly suggestive of what makes people leave an employer.
I think this survey’s findings are instructive. They tell us where to best spend our retention dollars (you do have an allocated budget for talent retention, don’t you?). Instead of spending retention dollars in a kind of cash give-away scheme, we should be investing them to improve the business environment. In other words, to retain people we need to focus less on them and more on external factors that impact on them: work conditions, other people and organisational identity.
There are some extremely important challenges to face down if your business is serious about keeping its top talent. The first is developing managers and leaders that 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 an overstaying relative: Learning and development opportunities must be innovative and linked clearly to career progression; work-life balance initiatives must be developed in consultation with employees; empowerment must be empowerment and not more delegation; jobs must be sculpted and employees offered performance coaching not performance management. Our third challenge is to make corporate values really mean something to people and to build a business on ethics not political expediency. We must be consistently delivering on our 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 will be increasingly tough to keep great people. Employers must get single minded about putting in place a strategic and integrated plan that reflects the realities of the research: spend the money on 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 sits on the Editorial Advisory Board of the International Journal of Corporate Governance and peer reviewer with the International Journal of Corporate Communications. Paul’s own work continues to be widely published in major business magazines and scholarly journals and he is the principal contributor to the 2006 book Retaining Your Top Talent which is selling internationally. Paul’s work is highly distinguished by having won three prestigious Emerald Literati awards in the UK for excellence in published research.
Paul is a sought after presenter on the international conference circuit. He has spoken at the International Staffing, Retention and Recruitment Summit in Kuala Lumpur where he was also asked to facilitate the Master Class workshop which was attended by senior HR executives from across the world. Other recent speaking engagements include HR06 in Sydney; Australia’s premier HR conference, Local Government Managers Australia National Congress in Perth where Paul again also ran a workshop, the NSW Wholesale and Retail Training Council Annual Conference in Sydney, NSW Local Government Managers Annual Conference at Port Macquarie and The Local Government Association of Queensland Annual HR Conference at Brisbane where Paul was the keynote speaker. Paul spoke at the Capability Development and Skill Pool Management conference in Sydney for the infrastructure, engineering and utilities sector and recently returned from Singapore where he addressed the Asian Shared Services and Outsourcing in HR annual conference. Paul will soon feature again in Singapore as guest of the Singapore Human Resource Institute for their 2007 conference and has future invitations to speak in Canada, Israel and Egypt.
Paul has consulted, trained and coached widely in Australia and overseas. He has coached executives in Japan with corporations including Panasonic, Toyota and Komatsu and has consulted several of Australia’s top 10 listed companies. Paul will soon run two intensive programs for the oil and gas majors in Malaysia and Dubai on leading-edge talent retention and succession planning strategies. Paul designed these innovative and tailored programs. Paul has also advised many CEOs and senior executives on HR strategy in Australia and New Zealand. In the public sector Paul has completed major projects in leadership, management development, risk management and general staff development training for numerous state and Commonwealth departments. 83 local government councils across Australia and New Zealand have benefited from Paul’s services.
Dr. Davis has advised government ministers in five current governments regarding strategic HR issues pertinent to their portfolios and he authored a report which was referenced by a NSW MP to an independent inquiry commissioned by industry. Paul will meet with senior ministers in the Government of British Columbia, Canada, this coming May.
Paul is acknowledged as the creator of the Public Profit-Chain, an OD model specifically for public sector organisations and now published internationally. Paul developed the Cogitative Self-Discipline Coaching Model – a revolution in managing employee performance – which has won widespread international critical acclaim.
Paul holds a Certificate IV in Assessment and Workplace Training, a Diploma in Business from the Australian Institute of Management, a Bachelor of Arts with a double major in Political Science and Modern History, a Post Graduate Diploma in Education, Post Graduate Certificate in VET, a research Master’s Degree (with high distinction) which examined organisational culture in franchise business systems and a PhD in HR/OD relating to the attitudes and experiences of CEOs. He is a graduate of the universities of New England, Charles Sturt and Deakin.
Could Paul be of value to your organization too? You can find out by contacting him directly: 0422 990 704
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