While the current recession may not quite be over, there’s a new ‘R’ word on everyone’s lips at the moment and that’s retention.
When the recovery does finally get underway, organisations who have the right retention strategy today will be the ones who have the right skills in place for tomorrow. But in a recession, many companies forget the argument that good people = good performance.
Founder Bill Gates once remarked that if you took away its top 20 people, Microsoft, one of the most successful, influential and radically innovative organisations of its generation, would become an ‘unimportant company’.
When managers fail to take talent seriously, they:
Weaken the bottom line
The Institute of Employment Studies recently devised an index around a bundle of 12 key people practices and found that firms which improved these practices increased their index score by 10%. They could also expect to see a rise in gross profits per employee of between £1,000 - £1,500 a year. Piecemeal introduction of single practices, however, had little effect on business success.
Spend their time continually shopping
Or poaching other people’s talent! Apart from expense, the ‘hire rather than nurture’
strategy, means teams are often left rudderless while positions remain vacant. Hardworking staff, forced to take up slack consequently pay less attention to their own jobs and become de-motivated. It also means that valuable and often scarce management time is diverted away from business.
Cannot plant or grow
A good example of this is a London-based real estate finance and development firm which was gearing up for a major reconstruction job in Berlin, worth £500m in revenues over two years as well as the opportunity to get in on the ground floor of other projects in the region. When the executive committee reviewed the list of people who might be ready to take on the assignment, the CEO noticed that the same names appeared as the only candidates for other critical projects. The firm’s growth strategy hinged on a few, key projects but no one had groomed the people to lead them.
But how do you identify that talent?
Who should be classed as ‘talented’ is a tricky issue. For years, ‘talent’ has described only a relatively small group of high-potential individuals in organisations. The rationale:
* Investing in ‘A’ players has bigger payback: Estimated top performers produce at least 100-150% more than average performers in similar jobs and the top 20% are twice as likely as average to improve productivity, sales; so it makes sense to give this group special attention.
* It’s a strategy with a strong clarity of purpose: because numbers are smaller, the population is well defined. Therefore organisations know exactly who they need to retain, who they need to develop and for what sort of position.
But the problem with this exclusive approach is that it:
* Can seem elitist: and stir up resentment
* Alienates dependable ‘B’ players: i.e. the capable steady performers who form the backbone of any organisation.
* Undermines social capital and performance: Research shows that top talent is more effective when it operates in vibrant internal networks with a diverse range of employees. Performance suffers when social networks are absent or withdrawn as inclusiveness is compromised. Strong networks also play a role in the retention of Generation Y who value community and relationships at work more than the achievement-focused Baby Boomers.
So what’s the best advice?
* Recognise talent and provide opportunities for development at all levels: because all talent is valuable in a knowledge economy especially when demographic shifts threaten to curtail an already limited supply.
* Create different talent pools: so that clarity of purpose is not lost and development is tailored to meet the specific needs of different, valued groups such as people with leadership potential.