Twenty years ago, who would have predicted we would see such a thing in business as a “director of employee experience?” Well, believe it or not, we're seeing it now! General Electric, L’Oreal and Cisco have all created such a position. More companies are expected to follow. So, what is going on? What is driving this heightened attention to employee “courting?” And what does this trend foretell for your business?
Well, retaining top talent in a highly competitive labor market has become the major priority for most employers. That’s what’s going on. Here is how Dan Schawbel explained it in his Fortune Magazine commentary at the end of last year.
In a new study by Future Workplace and Kronos, we found that 87% of employers said that improving retention is a critical priority for their organization. In addition, the U.S. unemployment rate has been reduced to 4.6% and employee salaries are projected to grow by 3% in 2017, according to WorldatWork. As the economy continues to improve and employees have more job options, companies will have to provide additional compensation, expand benefits, and improve their employee experience.
In our client work at VisionLink, we are seeing this employee retention emphasis as well. Many of the inquiry calls we receive are triggered by a CEO or business owner losing a key person—or group of people. Often, they didn’t see it coming and are now scrambling to make sure it doesn’t happen with the next wave of key players on their teams.
The 4-Part Retention Formula
In our work with these and other companies facing an employee retention crisis, we preach a four-part formula for stemming the tide of attrition. Here is what it includes.
1. Vision and Purpose. Employees will leave if they are not compelled by where your business is headed and the role you see for them. And if you don’t communicate about it—frequently and effectively—there won’t be any reason for them to be compelled by your company’s future. Conversely, if they feel aligned with the purpose the company is serving, and they consider themselves essential to its fulfillment, they will stay and fully engage. Top performers are looking for a unique opportunity. They want to marry their capabilities with the resources of a company and watch magic be made. They may believe you have a good product and will do "well enough" as a result. But if you haven't been able to show them where they fit in the future of the company, they won't be compelled by your story—and they won’t stay. They want to know in what ways their talents are needed to bring the future company to reality; why they will be an integral part of what happens. They want their role to have strategic purpose and not be encumbered by duties that can be better administered by others; they want their whole focus to be on driving the future business. (By the way, this is also true of the key producers you want to attract to your company.) If you want your key people to stay, help them see the strategic purpose of their role in the future of your business.
2. The Work Experience. Premier talent has an intuitive sense about what kind of culture is needed to achieve both the company’s ambitions and their own. As a result, key people know when the culture isn't quite right. High performers are catalysts—people who can make things happen; will make things happen. Such individuals have great confidence in their ability to excel but they need the right kind of people around them. They want to work in the sweet spot of their unique abilities and know that the team of people that surrounds them is doing likewise. They are concerned when they don’t see this because they recognize it is the combined efforts of individuals working together in unique teams that fuels success. People of talent know that individual success is impossible without a culture of confidence where the right synergies can be formed, nurtured and magnified. If you want to retain your best people, make sure they are working within the scope of their unique abilities and are surrounded by a unique team.
3. Resources. Great employees want to be given the tools they need to succeed. Quality people are ambitious by nature and are constantly seeking personal and professional growth. They are investing their hearts and minds in the success of the enterprise that employs them. Consequently, they want to know that as a result of the resources they are exposed to—people, products, capital, etc.—they will get better at what they do. They recognize that if their capabilities increase, both they and the business will succeed. They recognize that as their unique ability is strengthened, they are in a better position to create value for the company. That’s a double win. If you want your best people to stay, make sure they have the resources they need to perform well.
4. Partnership. The best people want to be treated like a business partner and not just an employee. Individuals with unique talent are looking for an equally unique value proposition. They aren't looking for a compensation "package." They want something that codifies the nature of the financial partnership they have with you. They want to know how they will participate in the value they help create. They view the company as an opportunity to accumulate wealth and feel it's a fair expectation that if they make a significant contribution to business growth, there should be pay mechanism that rewards that result. They especially expect there to be some kind of long-term value sharing plan that helps define this kind of financial partnership. If your premier talent doesn’t feel like it has a partnership relationship with you, those people will leave.
In the article referenced earlier, Schawbel makes this point about the compensation component of your value proposition.
The one consistent truth across every type of worker, regardless of age, gender, ethnicity, or geography, is that compensation is king for both recruiting and retention. If you don’t pay employees fairly, they will leave—and no perk will change their mind. A new poll by 60 Minutes and Vanity Fair found that the best way to keep an employee motivated is money, and 35% of respondents said it was the most important thing they look for in a new job. Employees can review websites such as PayScale.com and Salary.com to see the average pay for different professions in various industries. They can also speak to their peers or current employees to compare and contrast their pay, and leverage it in a negotiation with their employer.
I would just add that when it comes to pay, it less about how much you pay and more about how you pay (what form the compensation takes). Start by formulating a pay philosophy statement. Then make sure you focus on the right balance between guaranteed and variable compensation and between short and long-term value sharing (incentives). Then communicate, communicate, communicate what the value proposition is and the philosophy behind it.
All business leaders would do well to understand and accept that as great (they think) their company is, there are others out there who may be just a little bit greater—or at least better at convincing people they are. Employee retention issues are going to remain with us for the foreseeable future. The talent wars are just getting started and only those with the best “armor” can win. Hopefully, the four-fold formula just discussed will help you feel a bit better “armed.”