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Resources
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The ROI of Human Capital: Measuring the Economic Value of Employee Performance
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"I believe the real difference between success and failure in a corporation can be very often traced to the question of how well the organization brings out the great energies and talents of its people." Thomas J. Watson, Jr.
The recent economic crisis has left many talented people looking for work and many others concerned about their own job security. Those individuals that survived their company's layoffs are looking for opportunities elsewhere due to now working longer hours, taking on additional responsibilities and feeling increased pressure to produce. While many leaders may assume that most of their employees are thankful to have a job, this assumption may not necessarily be true. Despite the economic conditions, turnover is still a problem for organizations.
Employee turnover can be a significant cost for any organization but often a cost not adequately tracked by company leadership. Regardless of whether costs are allocated for search firms, separation agreements, or loss of productivity and revenue, employee turnover can significantly impact an organization's ability to meet future strategic goals. For the average company, turnover can amount to 12% of pre-tax income. On the high side, companies with significant turnover can expect costs to be nearly 40% of their earnings. More broadly, companies that perform toward the bottom of their industry tend to have twice the amount of turnover than top performing companies (Saratoga Institute, 2006).
With the economy stabilizing and business leaders feeling more confident about the future, now is the time to focus on people within the organization and determine if the right talent is onboard to meet future business demands. Leaders may be inclined to focus more on business strategy than their people but now more than ever a focus on developing a Talent Retention Environment™, a business culture that fosters individual and team commitment, growth, performance and productivity, is critical. |
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What Does a Talent Retention Environment™ Look Like? |
- Senior management is invested and actively involved in developing and motivating their people
- Performance feedback is provided on a consistent and frequent basis, not just during employee reviews
- Opportunities for advancement are known to employees
- Employees are able to articulate company strategy and their role in meeting business objectives
- Employees believe their work and role is valued and important to the success of the organization
- Employees are engaged and satisfied with their roles
- Employees express trust and confidence in the organization's key leaders
- Compensation and benefits are viewed by employees as competitive and equitable for the role
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Warning Signs That You May Have Retention Problems
- High turnover of key employees and among those in senior management positions
- Complacency among highly regarded and talented employees
- Dysfunction within and between departments and project teams
- Increased stress among employees
- Absenteeism and tardiness
- Limited opportunities for high potential employees to advance
- Lack of investment in training and leadership development
- Leaders display a lack of interest or understanding of why employees leave the organization
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What You Can Do To Create a
Talent
Retention Environment™
- Ensure the right people are hired for the right role. Senior team members collaborate to identify both technical and interpersonal leadership attributes that ensure effective execution of business strategies. The key goal-ensure there is a good fit between the individual, the role and the organization.
- Partner with other key leaders to track turnover within own functional area and identify quantifiable metrics to ascertain impact on business results.
- Senior leaders should be aware of what is occurring in the organization and have understanding how challenging times impact both the teams' productivity and their commitment to the organization.
- Create a system for identifying high potentials and give them consistent opportunities to engage in stretch assignments and participate in training and development opportunities.
- Ensure people work at proficient levels of execution and are recognized for their contributions. Communicate clear expectations and maintain accountability. Managers and other key leaders should consistently model these expectations and reward desired behaviors.
- Conduct employee satisfaction surveys and pay attention to organizational strengths and potential problems that surface in survey results. Understand the true reasons why certain results are being reported by employees.
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| All great companies experience ups and downs in their business. Those that survive and continue to thrive learn to adapt to their challenges and fully leverage the talents of their people. Those that follow the status quo concerning people development experience further problems with the business and subsequently fail to realize expected results, both in the short-term and long-term. To realize success in today's economy means companies must not only develop the right business strategies but also develop the right people strategies to ensure success. Keeping employees engaged and motivated is the key to a successful, highly productive workforce and the means to developing a Talent Retention Environment™. | |
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