Companies realize the importance of retaining their key talent. Retention is critical because it directly affects the company's bottom line performance measures, as well as perception of a supportive corporate culture. Talent is a company greatest asset, as it is critical to value creation. Hiring, developing, and retaining great talent has the greatest impact on the organization as top staff attracts others of a similar caliber. When great talent isn't promoted, these valuable people leave. The costs of the losing key talent have traditionally focused on the direct costs of hiring and training new staff. Recently, management has become increasingly concerned with the indirect costs such as the decline in morale and retention of the surrounding staff, the lost of knowledge of the company's practices and informal networks, acclimating customers and distributors to new staff, etc.
In addition to recruiting top talent, successful companies acknowledge that they have to go out of their way to motivate and retain their key employees. The major retention strategies used are:
- Competitive compensation though important, money is considered to be the least important of the five factors.
- Corporate culture an environment in which they feel proud to be identified with and which is supportive.
- Professional support adequate physical facilities, capable supervisors and training and positive interpersonal relationships with peers.
- Growth opportunities provides individualize career development.
- Human relations strategies a company focuses on employees.
The American Management Association study, conducted with Ernst & Young, reported in April 1999 that companies that offered employee training programs and "giving them a life" via flex time and sabbaticals were more effective retaining employees than cash payoffs. Approximately two-thirds (66%) of the companies expect shortages in skilled manpower to last through the year 2001. Retention is a "very serious" issue in nearly half (46%) of the companies represented at the conference and a "serious" one to an additional 28%, the survey found.
Companies report that they find educational and lifestyle incentives more effective than dollars and cents compensation for staff retention. Technical training, employability training and flexible work arrangements are perceived as most effective, significantly ahead of stock incentives and even pay for performance programs. The programs aimed at improving work skills and future career developments are particularly effective. Corporate leadership knows that it takes more than money to keep employees. Healthy companies are offering employee training programs and "giving them a life" by offering 'flex time,' which is more effective retention tools than cash payoffs. Studies show that when companies help employees balance their lives between job and family without penalizing their career development, people are less likely to leave for an increase in compensation. What is fascinating is that companies do not actually use the retention strategies they feel are most effective.
The most common retention programs are external conferences & seminars, managerial training, company support for degree programs, and pay for performance programs. Other retention strategies used include flexible work arrangements, interpersonal skills training, technical training, employee empowerment, and employability training.
The corporate culture which prioritizes the career development and balanced life issues for the individual shows growth on specific performance measures, such as profitability, market share, innovation, quality of product, sales growth, of a company. Recent findings indicate that a commonly supported corporate mission affects the greatest number of 'bottom line' performance indicators of a company. The second most important characteristic of a company to affect the profitability is the involvement of staff, which is accomplished by highly functioning teams, creativity, and capability development.
If breakthrough results are desired (not just incremental changes, but a whole new level of performance), the company's leadership will promote the company's strategic direction and vision by remaining involved in the process. The involvement and support from the highest levels of leadership promotes company loyalty and retention. The company becomes an employer of choice, as well as experiences
increasing corporate growth and profitability.