How loyal are your employees

Preston C Bottger & Jean-Louis Barsoux

Understanding the keys to retaining talent

Organisations?or, more accurately, their senior executives?can lose talented employees for a variety of reasons. People who feel poorly managed, unrecognised, under-utilised or frustrated can be lost to the competition. Others may grow tired and simply lose their edge, or their interest in the work.

Leaders who want to retain their talented, experienced staff need to take a number of steps. First, they need to let people know they are valued. Then they have to be able to spell out the advantages of the current situation or company over other opportunities, which means knowing what matters most to the talented individual in question. Finally, leaders have to understand and address the real reasons that people resign, or they will find themselves repeating their mistakes.

Value your people

Individuals whose performance is critical to the business should know just how highly they are valued. The most straightforward way of doing this is by informing them explicitly of their importance, which can cause difficulties for those not categorised this way, but does offer the merit of clarity.

We know of one very large multinational in which the deal is made explicit. Managers and specialists are asked if they would like to join the high potential group and told that, in return, they must commit to doing a number of tasks that go beyond normal expectations. Those who fail to meet these additional requirements are dropped from the group but their career within the company is not jeopardised; they can apply to rejoin later.

But the decisive factors in demonstrating a person?s value go beyond words of assurance. Talented people of the type that a company wishes to retain have two primary desires: first that their capabilities are fully utilised in doing critical work, and second that they have bosses who show them how to extend their capabilities so they can take even more responsibility. This is a major component of the boss?s job.

Selling the deal

It is the leader?s job to articulate the employee value proposition: what does working for this company and, more specifically, a particular CXO, offer the person, compared to other executives or companies? The answer will depend on the talent category to which the individual belongs?there is no one-size-fits-all answer?but should be seen as part of a negotiation, which means that leaders also need to understand what their competitors offer. Many highly talented people are well aware of their worth and are capable of negotiating for themselves in strong terms. But some talented people, notably specialists in technical areas, find it difficult and even distasteful to bargain for conditions that suit them better. So, instead of opening a negotiation, they simply leave for a new position in another company.

Voluntary turnover is a very special challenge for companies and raises several questions. The availability of a suitable replacement is the first issue.

The other questions go deeper: Did you see this coming? Has the leader, as a nurturer of talent, put in the effort to coach the person, to pre-empt unexpected silent departures? It is up to the leader to establish what matters most to those whom they can?t afford to lose, and provide it. Money is an essential part of the package but it is sometimes overrated as a retention factor. If people are dissatisfied with the job, money alone might not keep them in place for an extended period. This is where soft benefits can provide compelling hooks. These could include extra responsibility, renegotiating the terms of the employee?s work-life balance or redesigning the job, for example.

Beware of burnout

Not all talented people are lost to competitors; sometimes they simply run out of steam. Here, we use the term burnout to mean that they grow bored, lose interest, lose their energy and enthusiasm for the job, and lose the drive to improve and to innovate. Burnout can happen to anyone but the cause is likely to vary. Those on the fast track to a senior leadership role might find that it stems from frenzied rotation through developmental assignments that provide no sense of completion. While specialists might run out of challenges within their domain, for mid-level executives, who might well be survivors of several rounds of restructuring and fast-passing bosses, the strain might come from the sense that their handling of extreme pressure is not recognised by more senior executives.

Confronting such situations requires leaders to consider two approaches: intervention and prevention. When a leader considers what it will take to get someone back on track, the challenge is to find and propose a fresh role that better corresponds to their personal abilities, desires and priorities. This can be effective but there is no guarantee that it will be?meaning this is a risky move. Clearly, for some individuals, it will be either too late or too costly to explore that investment.

Learn from exits

Finally, whenever a talented person leaves the organisation the company should investigate. As one consultant observed: ?If a $2,000 desktop computer disappears from an employee?s desk, I guarantee there?ll be an investigation, a whole to-do. But if a $150,000 executive with all kinds of client relationships gets poached by a competitor, there is no investigation.? It is easy to attribute defection to the person?s ambition or pursuit of money. After all, people rarely leave for less money. But the reality is that it takes a lot of dissatisfaction with several job and job-related factors before people choose to disrupt the status quo of their lives. Leaders who make mistaken attributions will probably repeat the same errors.

This is an edited extract from Leading in the Top Team, edited by Preston Bottger and Jean-Louis Barsoux, published by Cambridge University Press. Preston Bottger is Professor of Leadership at IMD, Switzerland. Jean-Louis Barsoux is a senior research fellow at IMD