IMD article questions traditional employee retention strategies

RETAINING TALENT
Are we missing the real battle?

One of the most discussed topics in HR conferences is how companies can win the “war for talent” that is roaring across the world. Recent surveys even indicate that the attraction and retention of talent (employees with superior endowment or ability) is the top concern for more than 60% of employers. Deloitte’s 2011 Unified HCM and Talent Technology Survey Report, for example, affirms that “nearly two-thirds of executives surveyed identified talent retention as one of their top-two business challenges.” In the business world, where holding onto your best people translates into competitive advantage and the related financial aftermath, this is certainly cause for concern.

And firms have tried it all! From offering various add-on internal services and fringe benefits such as an on-site gym, a restaurant or health insurance coverage to attractive variable pay schemes including access to company shares and talent pool concepts, which collectively and individually offer the very best to the “happy few.” These traditional retention strategies even sometimes go as far as applying the inclusive approach of looking for each employee’s potential and then adjusting the investment level to the projected impact for the firm.

Nevertheless, talented employees continue to leave companies, either to join competition or to set-up their own firms.

Caroline Miller, founder of “headtohead,” a leading executive search and public relations firm in Geneva confirms: “High potentials are those who still move, even in times of economic crisis. They are willing to accept a new challenge and to leave their comfort zone, if only we can make them dream again!”

So what’s going wrong with our current approaches?

The issue of “dreaming” is an important one when retaining talented employees. Of course, it is much easier to make people dream from the outside because, as we all know, the grass is always greener at the neighbor’s house. Making your people dream despite the fact that they know the company’s flaws may be a tough challenge, but it is possible. It requires firms to reach a certain stage of maturity where, beyond nicely declared mission-vision-values, the company’s DNA allows high potentials to realistically believe that their dreams are real possibilities. We can try to manage these promises by standing guard against some “dream killers”:

1. Poisonous people: 
In each and every organization, there are people whose behavior is poisoning the company’s DNA. They might, for example, be acting or asking others to act unethically or infringing systematically on the firm’s code of conduct. Ultimately this might require the courage to ask these misaligned people to leave, whatever their hierarchical level. Indeed, how can we expect the talented employee’s roots to be deep on poisoned fields?

2. Badly implemented change:
Every change that companies engage in, depending how it is performed, injects subliminal messages. For example large scale restructuring: employees will observe the way it is announced, and the way those who are made redundant or transferred are treated. When trust in leadership is destroyed, why should high achievers not behave as mercenaries?

3. Black marks on the company reputation: 
Recent years have seen an almost uninterrupted series of scandals in, for example, the oil, banking and financial sectors. Certainly preventing these from happening would be best, but once they do, denial and minimization is not a good idea in terms of communication. Impact goes beyond the firm’s image: how many employees had their association with a company turn from pride to shame in one second? Do they really want to remain after that?

4. Lack of on-going learning: 
When people stop learning, or wanting to learn, it is likely that they have abandoned their dreams. So completely cutting training budgets during difficult periods sends a terrible message. An indicator that Chief Learning Officers may want to use is measuring the percentage of employees who are actively involved in a training program at any given point in the year. How can companies turn dreams into reality without continuous learning in place?

Although the combination of all the above might well help in the retention of talent, there is no magic wand; these extras still might not be enough. Perhaps because what made them so talented in the first place is passion for excellence, and they will escape a claustrophobic environment as soon as something prevents them from growing.

There are also a myriad of reasons beyond a company’s control drawing talented employees to new pastures. Family incompatibility on an overseas assignment, for example, is an often-cited explanation for a talent’s departure from a company. In this case, countries have a significant responsibility because very often, retaining talented people means retaining their whole family. To this end, large firms will likely soon start putting much more direct pressure on politicians to require better infrastructure, more security, optimal education system etc. Attractive taxes are not enough to make a particular location attractive for an entire family.

In the end, if companies implement retention strategies and even go the extra mile by remaining watchful of the “dream killers” mentioned above, and yet they continue to lose their talented employees, we need to ask ourselves if talent retention is simply the wrong objective. After all, is the success of an organization related to one individual or to the micro-team it belongs to? To the Chairman alone or the Board? To the CEO or the CEO with the Board and the Executive Committee? The functional head alone or the management team? One talented inventor or the innovation team? Perhaps we should shift our energies away from talent retention and focus rather on a new framework: talent integration.

Talent integration implies that instead of overly pushing a talented employee’s individual performance or sheltering them in protected “high-potential” programs, they are encouraged to fully integrate with others therefore influencing the broader culture of the organization, inspiring colleagues in both mindset and in pursuit of excellence. Such a shift in approach means changes to the assessment at hiring time as well. New considerations might be:

1. Can he or she integrate the team? Would peers be ready to protect him or her, or provide free advice to avoid the person to fail?

2. Does he or she have the willingness to share knowledge and help others?

Hiring under this new framework and with the assumption that the best employees are likely to move on necessitates a steady pipeline of confirmed talents as well as high potentials. This approach is especially relevant in countries with more liberal employment laws, where taking the risks necessary for hiring high-potentials will be much easier for companies.

Ultimately, moving away from the idealistic objective of retaining all talented employees and re-directing efforts toward a more pragmatic approach of integration does not mean that retention policies are useless. Provided these policies don’t focus exclusively on the “happy few,” they remain critical. Companies need to be attractive in order to ensure the continuous hiring of an optimal mix between confirmed talents and early potentials. Beyond cost, mastering the pipeline stream has another advantage: when the so-called top or rising stars realize that they are replaceable, you completely avoid dealing with the “diva effect!”

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