Several years ago a Society for Human Resources Management (SHRM) showed that HR executives believed that “retaining and rewarding the best employees” was going to be the top issue they faced during the next 10 years. Although there is always a market for top talent, many employees were reluctant to leave for new opportunities during the recession. Although retention was on the mind of many leaders it was not a top priority. It appears that situation is changing rapidly.
Last week, federal reports were issued that showed both increased job and wage growth in the US. During the last few years, one of the key knocks on the economic improvement has been stagnant wage growth. Although it may be premature to quantify, it finally appears wage growth is improving and this combination of increased job opportunity and higher wages may lead to higher turnover. Employees leave companies for many reasons beyond compensation, but an increase in salary always helps to lure someone to accept a new employment offer.
I recently had lunch with an executive who told me they had just had the resignation of a very strong salesperson who was leaving for another job opportunity. Due to the success this employee had with his company they were surprised he had left. This particular company has been proactive in talent management by conducting an annual talent review, but the primary focus has been on succession. Unfortunately, they didn’t really focus on one of the most vital aspects of talent management, the retention risk of top talent.
As the job market continues to improve, it is important for organizations to review who they identify as top talent (star performer, critical role, etc.). Each company can also develop a list of issues they believe may cause turnover. Once identified, an assessment can then determine the turnover risk level for these employees and what can be done to lower the risk. Although compensation is a key issue, often there many other items that cause someone to leave. The most critical factor for employee retention is to understand what is important to each employee. Managers learn this important information by having actual discussions with employees during performance reviews or other conversations. It is imperative that it be done, so individual action plans can be developed that may aid in retaining key employees. Some examples include increased job responsibility and becoming a mentor for other employees. Often these changes lead to improved individual and therefore company performance.
Although you can never eliminate turnover, a focused effort on employee retention can reduce it and allow the company to be less surprised by an unexpected resignation