The number-one issue troubling business leaders today is the increasing difficulty of recruiting, motivating, and retaining the best talent. There is a talent shortage at every level, in every industry. The talent wars are back on and more heated than ever.
Hiring managers report—at every level, in every industry, in organizations small, mid-sized, and large-scale alike—that hiring, managing, and retaining top talent is more difficult today than at any time in recent memory.
Make no mistake, the talent wars are affecting organizations of every shape and size:
- Average durations of employment are decreasing
- Voluntary unplanned turnover rates are increasing
- Departure demand (those employed but seeking other employment) is increasing
- Open-position rates and time-to-hire rates are increasing
- Early voluntary departure of new hires is increasing
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Supply and Demand
The rising demand for qualified workers promises to outpace supply in nearly every field for the foreseeable future. For jobs that require technical training and certification, whether through a professional degree or apprenticeship to a skilled tradesperson, the pipeline is not keeping up with market needs. For those service jobs that do not require training and certification, there are shortages of candidates with the soft skills necessary for optimum performance.
By 2020, individuals born in 1990 and later will comprise greater than 28 percent of the North American workforce, with similar figures for Western Europe and Japan and even higher percentages in parts of South America, Africa, and Asia. On the other end of the age spectrum, organizations with significant “age bubbles” in their workforce will feel the greatest effects as the oldest, most experienced employees retire. Those retirees take with them the skill, knowledge, wisdom, institutional memory, and relationships developed during their tenures. Organizations with a large contingent of young workers will face the challenges of an increasingly transactional free-agent workforce. The most valuable young employees will not hesitate to request greater flexibility in their working arrangements, and they expect to be rewarded appropriately for the exemplary work they do.
High-talent young employees are not the only ones who have become more demanding. Today, employees of all ages are much less likely to buy into or be motivated by promises of long-term rewards. After years of increasingly fast-paced change and uncertainty, employers can no longer guarantee long-term rewards for their employees.
Most employees try to get what they can from their employers one day at a time. People are embracing the transactional free-agent mindset because they have no other choice.
But this also means that employees have more negotiating power: if employees no longer expect to pay their dues for years on end, then employers have to do more to retain them in the short term. The transactional free-agent mindset can appear high-maintenance, but it is actually the result of increased power to ask for more. The most valuable employees are the ones who will reap the most benefits in terms of flexible working arrangements and other rewards. This leaves business leaders asking how they can possibly square their business needs with widespread expectations for greater flexibility in work conditions and career paths.
The challenges are clear.
So, what can do you do about it? There are two options: enter a bidding war for talent or build a winning culture. Our research shows that bidding wars don’t work. At the highest level, the goal must be to build a winning culture.
Corporate cultures are either cultures “by design” or cultures “by default.” Winning cultures are intentionally built, with a clear and compelling mission, reliable communication alignment, strong and supportive leadership, collaborative high-performance teams, real accountability, flexibility, and recognition for high performers.
Turn Every Manager into a Chief Retention Officer
Most employees want a manager who will work with them to help them meet their wants and needs. Yet sometimes managers feel indignant about this. Remember, in today’s work environment, the employer-employee relationship is transactional. People are coming to work to earn. Part of your job is to help them earn. And that is the key to retention. You have to turn the reasons people leave into reasons they will stay and work harder.
Turn the Reasons People Might Leave into Reasons They Work Even Harder
Do not wait until employees start thinking about leaving to ask, “Is there anything we can do to keep you?” Ask on the first day of employment and keep asking every single day. Does that mean you should do everything for everybody? No. Should you cater to their every whim? No. But employees need to know that somebody understands what they want and need, somebody cares, and somebody is going to work with them to help them earn more of it. The key is not to give employees false hope or make false promises. When employees express needs and wants that are totally unrealistic, you should let them know. The next step, however, is to help them see what is realistic.
It is especially important to be mindful of how managers handle requests from employees for special accommodation. If an employee asks to leave early one afternoon to visit their grandmother in the hospital, does it really make sense to turn that employee down? It may make some complications for you in the short-term, but in the long-term that employee will remember and value your effort to accommodate them.
Now consider if an employee asks to work a special schedule, perhaps with the flexibility to work from home, or to work odd hours. Does it make sense to turn them down? If that person is very good at their job, and difficult to replace, consider what the long-term benefits of letting them work that schedule could be. The long-term cost of not granting that request could be losing that great employee to your competition.
Start talking with your valued employees about retention on day one, and keep talking about it. If you are talking with them about how to meet their needs and wants on an ongoing basis, they are much more likely to be open with you at those key points when they are trying to decide whether to leave or stay. If you are willing to work with them, you can be flexible and generous. That is how you make them want to stay and work harder, at least for a little while longer.
Do Even More for Your Most Valuable Talent
Some employees are more valuable than others—to their managers, to their team, and to the organization. Valuable employees usually know their value, and they want valuable rewards to go along with their valuable performance. It follows that the more valuable the employee in question, the greater your retention efforts should be.
Providing more generous rewards and work conditions in order to reward and retain high performers is a growing workplace trend. What we have learned in our research is that providing differential rewards only works when managers do the hard work of shining that bright light of scrutiny on every single employee. Every single employee needs to understand how and why they are earning the rewards they earn, and what they need to do in order to earn more. That means defining expectations every step of the way and tying concrete rewards directly to the fulfillment of those expectations.
When your employees deliver on their commitments for you, you deliver on promised rewards for them. If they fail to meet commitments, you have to call them on that failure immediately and withhold the reward. When every person is managed this way, your employees are much less likely to wonder why another person is receiving special rewards. They all know that someone who is receiving some special reward must have earned it fair and square.
Avoid the mistake of thinking that some of your employees are so talented, skilled, and motivated that they do not really need the attention of managers. The better they are, the more attention they want: the superstars want managers who know exactly who they are, help them succeed, and keep close track of their success.
If you really want to retain your very best superstars long enough to grow and develop them, someone has to make concerted efforts to surround them with teaching-style managers, advisers, organizational supporters, and maybe even mentors. The question every leader and manager should ask is: What roles can I play in this process?
Note: This article was excerpted from the author’s recent white paper, “Winning the Talent Wars: Build a Culture of Attraction, High Performance, and Retention.”