…is upon us and it’s time to consider retention, as well as the cost – where does HR stand and what should we do? Charlie Waters offers this advice.
In the turmoil of the past three years, financial markets chaos has made employees more cautious and therefore less likely to leave their current employer.
Bonus and salary review season in 2009 appeared to return towards the previous trend in employee / employer mobility
You’ve heard this all before. So what is the…
It is well documented that 2010 was not as good a year overall as 2009 for the financial markets. However, as the second consecutive year of growth (FTSE now above 6,000) many employees will be feeling more confident about their employment prospects.
One acid test to consider is the size of the bonus pots allotted by the various institutions. With varying degrees (allowing for social, economic and legislative factors) the bonus pots seem to be down by as much as 10-15% across the industry between 2009 and 2010.
It is easy to conclude that conditions are ideal for the type of candidate-driven market place not seen since early 2007.
So what can any organisation do to retain its key human capital? There are several principles to follow.
a. Decide who to retain
This sounds obvious, but in practice it can often be hard to assess who the genuine guardians of corporate performance are. Retaining everyone is never an option for a single strategy. Why you are retaining individuals often drives the different strategies that are sensible to apply.
Most financial organisations pay their key profit earners well to keep them loyal. Often it will be the quieter performers on the fringes whose loss to the organisation can have broad reaching effects. Knowing who the critical players are in terms of retention can often provide a very different pool of employees to the list of top earners or fee billers.
b. Recognise your organisation’s push factors
Most companies focus on preventing resignations by trying to outdo what other “suitor” organisations have offered: overcoming the factors pulling the employee out of the door. This misses the bigger opportunities. Saratoga Institute Research suggests that circa 90% of employee focus while changing employers will be on the “discomfort” created within the current environment: the push factors. How many times have you seen an employee accept a counter offer and remain at their current company in the face of an external offer, only to resign again some 6-9 months later? Increases in money can never completely mask the fact that the work itself has to be rewarding to the employee.
Without confronting push factors such as:
- working conditions
- reporting lines / poor management
- boring work
- lack of progression
- lack of recognition
Organisations condemn themselves to simply counter offering and hoping.
c. Recruit, onboard, induct
Stage managing the recruitment and initial 3/6 months of any employee’s tenure is central to their ongoing success. In his book The First 90 Days, Michael Watkins talks about what happens when new employees do not engage well. Among the many potential solutions to this issue are some simple messages:
- Realistic recruitment processes (not “selling” inflated ideas about the role or organisation at interview);
- Plug the new employee straight into the performance management process – set goals and objectives for the probationary period, and manage them
- Actively manage during the new incumbent’s initial period, both challenging and praising where appropriate to set the tone.
d. Performance manage – measure and then demand it from your people managers
All research on the subject suggests that where employees can see a link between their delivery and their reward and recognition the working environment will become more productive, open, supportive and collaborative.
Specific techniques such as the: “Give and get back culture” covered in Leigh Branham’s book: Keeping the people who keep you in business, hints heavily at employer flexibility being a major key to employee retention.
Employers who manage performance powerfully, while retaining flexibility in how they deliver on objectives will always find that they hold on to key human assets better.
Finally: when a resignation occurs
Assuming that you want to retain the employee, you have to manage three time frames. They are:
- 1 week to change their mind;
- 48 hours to build momentum;
- 1 hour to set the wheels in motion.
Each employer must decide how they want to manage these, but communication and push factors must lead any counter offer that you produce. Simply stumping up cash will:
a. cost you more (danger money to the employee as the underlying push factors still exist); and
b. will not stop the employee leaving after an initial period anyway
Ultimately, no organisation can prevent all defections. However, being a place that people want to work really is about having a plan.
There will always be organisations whose only strategy is to reach for the cheque book when someone resigns. However, long term this strategy costs more.
Simply paying more in a vacuum to hold on to employees fails to address their reasons for leaving. In fact this often creates an environment where resignation becomes the only mechanism for a decent pay rise. This is never ideal, as employers have less control over what they are paying.
Retention strategy is always about holding on to key employees through creating an environment of high engagement. Do that and any competitor trying to lure away your talent will be starting at a disadvantage. Normally that means they will have to pay more for the employee to be interested to speak to them.
If you can get a reputation (an employment brand) for “sticking” talent, you start to win the war without even having to fight a battle. As 2011’s bonus and review period continues, that must be a comforting thought.