It is both the best of times and the worst of times to lead a business these days. If you’re a CEO, president or enterprise owner, you see limitless possibilities for company growth (best of times) but you’re underperforming (worst of times). You have a great product (best of times) but not all the talent you need to fully leverage your business model (worst of times). You have great ideas for innovation (best of times) but shareholders are asking you to cut costs (worst of times). And just as you’re about to launch a market initiative that could literally double your revenue (best of times) the person leading that project walks in and tells you he’s leaving (worst of times).
In this “best of” and “worst of” environment, finding and keeping great people has never been more important—or as competitive. As a result, once you’ve secured premier talent, the last thing you can afford to do is lose those employees. However, if your organization is like most, you are at risk of losing your key performers. Here are the four primary reasons your best people may be considering leaving and why a focus on greater employee engagement is so critical:
1. The Future. They are not compelled by where your business is headed and the role you see for them. 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 your key people are not seeing themselves in the future of your business or seeing strategic purpose in their roles, they will leave.
2. The Workplace. They sense the culture isn't quite right. True key performers are catalysts; people who can make things happen; will make things happen. Such individuals have great confidence in their ability to do that 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 your best people are not working within the scope of their unique abilities, and feel surrounded by a unique team, they will leave.
3. The Resources. They aren’t 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 can get better at what they do. 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. Everyone wins. If the resources to improve aren’t available to them, they will leave.
4. The Relationship. They feel like they’re being treated like an employee and not a business partner. How so? Uniquely talented people are looking for a uniquely constructed value proposition. They aren't looking for a compensation "package." They want something that codifies the nature of the financial partnership they will 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.
Why Employee Retention is Getting Harder
In the late 1990s, Steven Hankin of McKinsey coined the phrase “the war for talent.” The intent of that label was to warn businesses that a talent shortage was imminent and that if companies didn't engineer a focused effort for recruiting, retaining, and developing key employees they would be vulnerable. Well, as the late Yogi Berra famously observed: “It’s déjà vu all over again.”
Four years ago, McKinsey predicted that by 2020 “there will be as much as an 18 million worker shortfall in the world's richest countries. They'll be producing too few of the workers businesses really need, and too many with only high school or vocational training.” That’s less than four years from now. It appears the worker shortfall on the horizon is about to produce yet another war for talent. Therefore, what? What does this mean for your business and what should you be doing as a result?
At a minimum you should be more carefully assessing the roles you have defined for each of your key people. You’ll also want to identify the skill categories that will need to be filled going forward and what capability “gaps” exist. The competitive environment of the future will require that people in key positions in an organization work in roles that maximize their unique abilities and relieve them of responsibilities that impede their capacity to have a more meaningful and strategic impact. Duties and responsibilities that are not within the key skill set of these individuals should be outsourced or filled by another contributor whose distinct proficiencies match that need. In a 2013 HBR article, authors Martin Dewhurst, Bryan Hancock and Diana Ellsworth explained this new emphasis:
In today’s knowledge economy, competitive advantage is increasingly coming from the particular, hard-to-duplicate know-how of a company’s most skilled people: talented (and highly paid) engineers, salespeople, scientists, and other professionals. The problem is that across the private, public, and social sectors there aren’t enough knowledge workers to go around. And the situation promises to get worse: Recent research by the McKinsey Global Institute suggests that by 2020 the worldwide shortage of highly skilled, college-educated workers could reach 38 million to 40 million, or 13% of demand.
In response, some firms are taking steps to expand the talent pool—for example, by investing in apprenticeships and other training programs. But a number of companies are going further: they are redefining the jobs of their experts, transferring some of their tasks to lower-skill people inside or outside their organizations, and outsourcing work that requires scarce skills but is not strategically important.
Such moves aren’t new, of course. Firms have long been carving off repeatable, transactional work—such as call center services, payroll, or IT support—and either shifting it to lower-cost locations or outsourcing it. What is new is that companies are now doing this with knowledge-based jobs that are core to the business. (“Redesigning Knowledge Work,” HBR, January-February 2013, Martin Dewhurst, Bryan Hancock and Diana Ellsworth, 59-64)
So what should we conclude from these talent trends? First, companies that wish to gain or maintain a competitive advantage will need to attract and retain catalysts—individuals who can create within an organization that which disrupters will capture if they don’t. Second, those individuals will need to be able to spend their time on those things that they are “great at”—things that fall within their unique abilities—and transfer to others the tasks requiring scarce skills that don’t impact strategy. This is particularly important since these people will likely be more highly compensated and the company needs them to be at full throttle in their area of highest effect. Third, those two factors are leading to a scarcity of talent in the marketplace—a dearth of knowledge workers who can have a meaningful impact on the trajectory of a business. Why? Because that is the talent everyone wants—and those people know it; they have leverage. Fourth, that scarcity creates high competition within the talent pool. As a result, companies need a robust and unique approach to their value proposition to win the talent wars—and thereby continue to compete in the marketplace.
A final note: Millennials. This is now the largest segment in the global workplace and the primary talent pool in which you will be competing. You will need a nuanced pay approach that reflects the frame of reference informing this group’s career choices. They won't be won over by a value proposition that reveals your company's monolithic view of who they are and what they value. You’ll be expected to appeal to each unique segment that makes up the millennial labor force. Those who spend the time to get this right will win many a battle for gifted talent.
In summary, employee attrition can either make this the best of times or the worst of times for your company. To ensure it’s the former you will need a proactive approach to developing your recruiting, retention and pay strategies. You really can’t afford to wait until the next employee walks in and tells you he’s leaving.
