If retaining talent is not high on your list of concerns in 2010, then it should be.
I have seen way too many executives and hiring managers think that with the down economy and high unemployment rate there’s no need to worry about employee retention. This line of thinking will lead you down a slippery slope, especially as the economy begins to recover.
The U.S. Labor Department recently reported that the unemployment rate dropped to 10 percent in November and December from 10.2 percent in October. Momentum to pass a new spending package for jobs may offer a fresh view of whether the 15.4 million unemployed people in the United States will start to land the jobs they have so desperately been seeking.
As the nation’s job outlook slowly improves, a 2009 Monster.com study of 1,600 workers reveals how the recession affects employee loyalty. Forty-three percent of those surveyed indicated some or significant decrease in loyalty toward their employers. This is a sign that employees may leave their current organizations. According to Monster.com, employers may be experiencing the “early warning signs of the pain to come” should they fail to manage talent effectively during the current recession. As workplace trends from the Society of Human Resource Management (SHRM) indicate, no aspect of the economy looks more precarious than the job market.
Two Sides to the Issue
Now is a difficult time for businesses, with the economically driven burn of layoffs and downsizing along with the need to retain the most talented. Most team leaders are unaware of the total disruptive and financial impact the loss of a valued team member can cause. A key team member may be considering leaving three to six months before actually resigning. In the meantime, the employee’s productivity and morale often decline. Some employers may have had to lay off employees and discover that they let go of too many. In this case, productivity and customer service also decline.
Cases in Point
One technical organization in California’s Silicon Valley estimates that when just one team member leaves, it costs the company an average of $95,000. Consider a national sales organization that must make up for millions of dollars in lost revenue due to losing a talented rep.
In health care, retaining talent is paramount. Over the next five years, hospital boards and senior executives face new and different workforce challenges, resulting in dramatic shifts in technology, demographics and economics. These organizations will need to allocate more resources to retain existing employees. The alternative is spending more on recruiting costs to replace employees who have already developed highly valued skills.
Facing an aging workforce, a skill labor shortage and changing demographics, the Blue Cross and Blue Shield Association, a national federation of 39 independent Blue Cross and Blue Shield insurance companies, began offering a variety of training and professional development opportunities to older workers to extend their engagement. The goal was retain the most skilled and valuable workers and to better equip them to supervise a changing workforce. The result is that many employees now plan to work for the association well past their retirement years.
Washington, D.C., is a marketplace ripe with talent but one drawing on the same talent pool, offering a variety of high-paying public- and private-sector jobs. George Mason University recreated its culture to retain its talented by appealing to workers of all ages, to keep the educational institution’s employee satisfaction high and turnover low. Among the strategies implemented were knowledge transfer programs to help with on-boarding employees.
A Time for Creative Culture
According to Sylvia Ann Hewlett, author, economist and founder of the Center for Work-Life Policy in New York City, in a tough economy, business leaders have greater opportunities to attract, retain, support and engage top talent.
Aside from a huge paycheck, leadership can improve employee satisfaction through flexible work arrangements and re-creation of pride and purpose through volunteerism. However, the most important reason talented people love their jobs, Hewlett said, is because of career development and important assignments that expand their skills and networks.
Retention Strategies Tailored to Your Organization
The factors influencing your talent retention may be similar to those at other organizations, but you must tailor your retention program to your organization and industry. The keys to this are creating retention strategies and ensuring that your leaders are responsible for tracking turnover. Companies must continue to invest in leaders; their skills can directly affect the bottom line and employee retention.
Can your organization’s leaders identify the visible and hidden costs of losing its top talent, including productivity, missed deadlines, waning morale and poor customer service?
Make retaining top talent a priority this year. Don’t wait to find out if you are facing a serious staffing shortage when the economy recovers. Develop strategies now to improve your organization’s ability to retain its most important asset: top talent.
If you need some help, we can teach your leaders how to:
- Understand the scope, severity and cost of attrition
- Determine the risk of attrition for each team member
- Identify which retention factors motivate each team member
- Increase each team member’s engagement and commitment