A few years ago at the height of the mining boom, most people in the Recruitment and HR Consulting industry were banging on about there being a ‘War for Talent’, a phrase coined by consulting firm McKinsey in 1997. We were all, of course, referring to the drastic shortage of skilled, relevant ‘talent’ in the market. Although we aren’t anywhere near the heady heights and employment demands of those days, and despite the recent poor labour data that has come out recently, there is an increasing demand for not only attracting the right staff but also looking at better ways to retain staff.
Retention strategies have become more topical over the past few years as there is more and more compelling data on the cost of a poor retention strategy. There is proven data that the cost of replacing staff can vary from 1x to 5x salary. So whichever way you look at it – the cost of not getting it right is expensive!
I believe there are three key areas that are proven to make a difference.
Step One – Create an effective retention strategy
It sounds obvious but if you don’t have a system and a plan to retain your staff, you are already behind the eight ball. Recruiting the right staff is the first step, but if you can’t keep them you are wasting your time. Many organisations are still complacent about their retention rates and it’s giving them a false sense of security.
Over the past few years, job security has often been the main reason that has stopped people moving, as opposed to an employer’s proactive retention strategy. If predictions are true and we are entering a labour market where there is a higher demand for staff, job security will no longer be a factor and therefore it will be vital to have a considered, proactive strategy to retain staff. As Rudi Giuliani so eloquently put it ‘Hope is not a strategy’ either!
Step Two – Recognise effort and reward performance
People who dug deep when employers asked them to over the past few years are now looking for reciprocated loyalty by formally recognising effort through reward. And you can guarantee that if the elephant in the room is not discussed, they will be looking for new opportunities that offer rewards recognition for their contribution.
Over the past six months, within our Executive Search division, we’ve noticed a significant increase in the number of executives willing to engage in initial conversations about potential new opportunities. We have also noticed that the number of people being counter offered has skyrocketed. This is a classic sign of a business that has had a poor or non-existent retention strategy. By the way, a counter-offer is not part of your retention strategy!
If you think of your retention strategy as a suit of armour for an employee, then you realise that you cannot even allow a small chink in that armour, particularly if we are about to go into a period of increased demand for talented staff.
If people have done their job and earned more than expected, your reward scheme should reflect this success. Employers also need to recognise that sometimes to attract the best you need to pay a competitive salary as well as provide the right environment and a challenging role.
Step Three – R-E-S-P-E-C-T
Treat people as you would like to be treated – courtesy and respect are old values that never go out of fashion. How you treat people directly affects your standing in the market place; your employee value proposition and your shareholder value. Remember people leave managers, not companies.
In the current employment market, getting your retention strategy right will help you be a step ahead of the game.
Richard Dunks – Executive Consultant