The CEO's Guide To Top Performer Retention: Ensuring You Have The Right Talent To Execute & Grow Your Business
There is little doubt that recessions breed a "hunker down" mentality among employees. Layoffs, pay freezes and cuts, hour cuts and furloughs, and a dismal job market all contribute to low employee morale and engagement. Once productive environments can quickly become toxic, further deteriorating productivity.
To add insult to injury, as economic recovery takes hold and the job market improves (albeit very slowly), your top performers are lining up at the doors for their next opportunities. Indeed, various studies indicate that 45-50% of all top performers are actively looking for new jobs, a percentage that is significantly higher than for low or middle performers.
To a typical company, the potential economic impact caused by a mass exodus of high performers is incalculable. How can CEOs expect to weather the economic storms, let alone grow your businesses, when your A-list employees are disengaged and flying toward the exits?
Various studies indicate that 45-50% of all top performers are actively looking for new jobs
Fortunately, there are steps you can take today to forestall the exodus of your top talent as economic recovery proceeds and the job market improves. This CEO guide provides three key tips for leveraging proven talent management principles, practices, and technologies to retain your top performers.
1. Provide Career Advancement Opportunities
Unsurprisingly, 84% of HR and business leaders believe that providing career advancement opportunities to top performing employees is the most impactful way to retain them. Yet only 43% of organizations have put in place a systematic process for employee development, which indicates a rather serious disconnect. After all, if leaders believe that providing career advancement opportunities is a key retention mechanism, why are they not doing more to institutionalize the process?
Action Item: Bridge Employee Development and Succession Planning
Employees are clearly more engaged and motivated when they are empowered with some level of control over their careers and future paths. While HR and business leaders should not be in the business of building development plans for every employee as there are always a good number of employees who will not embrace the activity it can be argued that it HR's job is to provide the appropriate tools to empower employees to take control over their own careers.
By bridging employee development and succession planning, employees can more easily develop themselves for future roles of interest, and nominees who are not ready for advancement can be assigned detailed development plans that guide them to improve the competencies and skills required for new job positions. Learning paths and specific courses can be established for employees to facilitate their career growth. By providing the proper tools to employees, CEOs can take a more active role in reducing high performer flight while promoting growth and engagement.
Check out Softscape's latest 2010 State of Global People Management
report for an update on key issues and trends in the HR marketplace
2. Improve Engagement To Drive Productivity
Business leaders are more frequently recognizing the importance of an engaged workforce and its potential to drive business performance and impact the bottom line. Engaged employees are people that are highly motivated and vested in the success of their organizations and are willing to make an extra, discretionary effort in their daily work.
Extensive research over the past decade reveals that an engaged workforce impacts business performance, and ultimately, shareholder value. Put simply, companies with higher percentages of engaged employees perform better than their industry peers. These companies have:
Better financial performance
Higher employee retention
Increased customer satisfaction
For more information about engagement best practices, read Softscape's Improving Employee Engagement to Drive Business Performance
Equally interesting, financial analysts have taken notice. For instance, an equities report focused on a large international bank cited that employee engagement scores are highly correlated with shareholder returns. Further, the report highlighted that the engagement score difference between the bank and its nearest competitor is costing the bank approximately 26 Million USD additional profits per year. As a result, the financial analyst downgraded the bank's stock
Action Item: Integrate Your HR and Talent Processes, Systems, and Data
Organizations that have fully integrated their disparate talent processes, systems, and data performance, succession, compensation, learning, recruiting, etc. outperform those organizations that have not integrated by 41% across twelve key business metrics. Two of these metrics improving internal talent mobility and decreasing voluntary turnover are directly related to top performer retention. A talent mobility strategy in particular enables CEOs to more effectively acquire, align, develop, engage, and retain high performing and potential talent by implementing a consistent, repeatable, and global process for talent rotation.
For more information on HR integration best practices, read Softscape's whitepaper on the Top Five HR Process Integrations That Drive Business Value
Learn more about Talent Mobility by reading The Definitive Guide to Talent Mobility
3. Build A Performance-Oriented Culture
Programs that align employees' compensation merit increases, bonuses, long-term incentives to their performance have proven to be very effective in driving actual performance. Often called pay-for-performance (P4P), the concept is to build a culture of top performers by aligning goals, performance, and rewards across an entire organization. Motivating, rewarding, and retaining top performers is a key business objective for any company that seeks to successfully maintain or exceed growth expectations.
Action Item: Enable merit-based pay-for-performance via integrated technology
Best-in-class organizations focus on a performance-driven rewards system that compensates individual contributors directly proportionate to what they achieve and what they contribute to the bottom-line. The challenge lies in effectively aligning employee goals with organizational objectives, automating performance management processes, and linking them with complex compensation policies or time-based incentive plans at an enterprise level.
P4P and merit-based pay programs especially those that relate to executives have received renewed interest lately due to emerging legislative and regulatory compliance pressures stemming from the global financial system crisis. Yet less than half of organizations worldwide have made significant technology investments to automate and improve P4P processes. Clearly, there is an opportunity to both adopt the virtues of a merit-based culture while at the same time working toward becoming compliant as new regulations are put into effect. The latter issue will be particularly important for publically-traded companies.
With a well-designed pay-for-performance system, employees at all levels of the organization more clearly understand what they need to do to support overall company objectives. The workforce becomes more accountable which is increasingly important these days and can see the impact of their contributions.
For more information on best practices in compensation management, read Softscape's HR Field Guide: 5 Tips to Effective Compensation Planning
To summarize, visionary CEOs can take active steps to promote top performer retention by:1. Providing Career Advancement Opportunities2. Improving Engagement To Drive Productivity3. Building A Performance-Oriented CultureA cohesive HR and talent management infrastructure is a key requirement that must not be overlooked. Effective execution comes down to integration of disparate processes, systems, and data. And as our research clearly indicates, integration provides numerous direct business benefits, least of which is to retain your top performers so that you can effectively execute your strategy and grow your business. The CEO's Guide To Top Performer Retention: Ensuring You Have The Right Talent To Execute & Grow Your BusinessBy: Steve Bonadio
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The CEO's Guide To Top Performer Retention: Ensuring You Have The Right Talent To Execute & Grow Your Business Rawalpindi