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Engage, retain, regain…that is the question…or is it the answer…?

No organization wants to lose its best performers. Yet not all top performers pose the same risk should they leave. Retaining employees effectively involves understanding the risk each potential leaver represents, and addressing them individually. Here are some ways to do that:

Prioritize. During his tenure as CEO of General Electric, Jack Welch popularized the practice of forced-ranking, where employees were rated as “1”, “2”, or “3” players, with the 1’s being rewarded with bonuses and the 3’s being terminated. While this performance management technique remains controversial, the idea of prioritizing potential leavers remains salient among some HR directors. Yet prioritizing simply by level of performance is a subjective and unreliable way to determine which employees most deserve attention. Potential leavers should be prioritized according to the total risk the employee’s leaving presents: cost to replace, mission criticality of the role, reduced short-term productivity, and organization performance impact. Such a profile presents a holistic view of the employee’s value to the organization, using more objective, quantitative information.

Understand long-term vs short-term incentives. People come to work every day for more reasons than to earn a paycheck. While HR professionals understand this well, they tend to treat employee dissatisfaction as something that can be addressed with cash. The research consensus indicates this is a short-term fix, and one that might be effective perhaps only once or twice, in cases of adequate performance but temporary dissatisfaction. Employees desiring to remain with an organization need longer-term payoffs: recognition, respect, opportunities to develop their careers, engaging coworkers, and challenging assignments. Most have little cost impact, but require conscientious effort by HR professionals to carry them out.

Engagement is a good but not perfect measure. Some employees in highly competitive industries leave simply as a part of job market churn. Others, particularly those with specialized skills, are concerned that the volatile job market might present career impediments, so it is safer to move to another job and diversify skills rather than remain in the same job and risk being laid off, then underemployed later. Both may be highly engaged but nevertheless intend to leave the organization. HR professionals should use engagement measures cautiously, and not as single indicator of an employee’s likelihood of leaving.

Understand who can do the most damage. Not all employees who leave the company represent the same potential negative impact. Many talented employees might choose to become contractors or consultants, perhaps to achieve greater work-life balance or to enjoy more autonomy. Such leavers represent a lower risk to the company, especially those who become contracting partners or join the company’s ecosystem. According to a 2012 Strategic Management Journal article, those who can do the most damage are the entrepreneurs–those who are likely to start their own companies or join startup in direct competition with the company they left. In many cases, they have spotted a gap in the market, yet leave in frustration that their former company failed to take their ideas for addressing this gap seriously.

Would love to hear your insight and experience on how you identify the risk each potential leaver represents.

Also feel free to listen to the recorded webinar, Retention Readiness: Strategies for Keeping and Developing Your Top Performers where Dr. Robin Lissak and Jeff Schwartz, Senior Partners at Deloitte Consulting discuss a wide range of strategies and practices to attract and retain top talent.

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  • I have worked with organizations with 10s of thousands of employees - but whenever there is a need for staffing critical projects, the person with the right skills can never be found. At the same time, people I know personally as highly skilled leave the organisation on a regular basis, and more importantly they are let go. This has been always something hard to understand. Most organizations probably do not analyse their workforce in these terms at all. Clearly there is a need to. In what way can a SAP driven Talent Management Solution help to provide data for such analysis?

    Thought provoking article.

    Thanks you.

    • Hi T. K.:

      Thanks for your interest, and your question – I had actually started thinking the same thing when I wrote it. While I am not sure I have a comprehensive way of addressing your question, I do have some thoughts that should be useful – and would love to hear yours as well:

      1. While we may not encourage forced ranking, we acknowledge that in many large organizations it is often the path of least resistance, creating the least bureaucratic overhead, and providing a structure for the majority of managers who just don’t feel comfortable with some of the tasks. In this all-to-common case, providing ranking shuts down what could be very useful communication between managers and their reports. Yet there is some validity in the sort of ranking which can be done in performance appraisals (where you “rate” your employees and they can be compared with their peers via calibration) as well as the talent review process. The talent review process actually provides the type of guidance and development opportunities that make up what we all recognize as good talent management. While we have software solutions for both the talent review and performance management, it is the manager and the employee who will have to take the time to think critically and objectively to determine an employee’s real value to the organization and the next steps in ensuring they actively try and keep them. Software ought to provide the first word in making this happen, not the last word. And HR ought to provide enough space to make it happen.

      2. Regarding incentives, the compensation solution obviously helps where people are driven by monetary incentives, for example sales persons and those in “pay-for-performance” roles. There is also the benefit solution where companies can include child daycare, a day off to plant a tree on Earth Day, etc. (If these are Section 125 benefits that require enrollment and pre-tax and/or post-tax contributions, they can be tracked on IT0377. Otherwise, they can be treated as additional or recurring payments/deductions on IT0014 or IT0015.). But these days, people want to stay with an organization they believe reflects their values. Therefore HR should be teaming up with management to create a culture that employees enthusiastically want to take part in. This is a hot topic now in academic research, the idea of organizational citizenship, where fairness, recognition, collaboration, and feeling of belonging are all major ingredients that make employees want to commit to something beyond a paycheck. So we can see that creating a collaborative work environment with solutions such as Jam – or our performance management solution where people can leave “kudos” for various projects  – facilitates recognizing the contributions of one another is a highly feasible way, so as to drive more incentive to stay. Whatever the case, it’s always wise when implementing your “project” to track the impact.

      3. Regarding engagement – I would recommend using your analytics as the foundation for “figuring it out”.  The reason I say that is that employee engagement by itself is usually not a direct input of business performance, but it is a direct input to a lot of other things that do drive business performance. And that’s why we use analytics, to figure out the latter. It might not always give you the answer but it can give you a good indication so you can make a better answer. For example, you can run analytics of people who have left, find the similarities in the profiles and then target these groups. You can also look at implementing a program - like job rotation - and track to see its impact.

      4. Now let’s talk about the entrepreneurs, those who are often your top talent, and also your biggest threat should they leave. This can go back to some of the benefits an organization can offer, giving them some of the goodies that appeal to entrepreneurially minded people, such as allowing people to work virtually so they can better balance the work-life (entrepreneurs like to make money, but they really like to be #1 and call their own shots). Like the others, you can use the software to track various programs you put into place and see what impact it has on the workforce, maybe even run some natural experiments. In addition, you can do a quick analysis of someone’s participation in social networking. This can be a good indication of your more entrepreneurial employees who are more likely to leave and get out on their own, since they are likely to have a very strong professional network and can draw on tremendous social capital should they need to. At this point I don’t know of any “analytic report” that offers this but I am aware of a lot of good academic studies that have found sound methods. But more immediately, consider that those who are most active on Jam or other social networks your company supports also tend to be the more entrepreneurial people who are just as likely to go out on their own, or lead your next breakthrough product, depending whether you can show them a better time than they can make on their own.

      And be sure to check out these very sobering numbers about the likelihood of your talented young managers leaving. Again, money is one motivation, but not the only one. HR could really make an impact if it would step up and handle this one.

      Well I’ve sure talked your ear off here. Thank you for your patience. I would love to continue our conversation if anything here struck you.