Talent Retention Goes Global
People are not your most valuable asset, said Jim Collins, the RIGHT people are!
Finding and keeping good people is a global issue. But traditionally, most countries have lagged behind the United States in devoting attention to the issue and solving the inherent problems. Other countries have shown some indications of concern, but are months or years behind the United States in the seriousness of their approach.
Now, that gap is closing.
The concern for employee recruitment and retention is rapidly gaining increased interest around the world. Many employers in Canada, for instance, have admitted that they have a problem, with expressions similar to those of their counterparts in the US. Roger and Joyce Herman, Fellows of the Workforce Stability Institute, have spoken throughout Brazil to community-based and industry-based audiences in Curitiba and San Paulo, as well as company-based audiences in San Paulo and Rio de Janerio. And now, there is interesting news from, of all places, home.
India, with its huge population, would not usually be one of the first countries you might think about when considering employee retention problems. Yet, business leaders are increasingly concerned about retaining qualified workers. Faced with a continuing shortage of trained personnel, the Indian mutual fund industry, for example, is beginning to use employee stock option programs to attract and hold desired employees. In addition to the four mutual funds that have announced plans to institute a stock ownership program, six more mutual funds in India are currently looking at Employee Stock Option Plans (ESOPs) as part of their overall human resource management process, according to a report in The Economic Times (September 4, 2007).
Prudential ICICI AMC recently granted its employees--with a minimum service period--an ESOP package with retroactivity from calendar year 2008. The ESOP package, which has a vesting period of three years, is contingent upon the asset management company achieving business plan goals. As well, the valuation of the options is based on a pre-set formula. "The idea of the ESOP program is to align the individual and corporate goals," said Ajay Srinivasan, who is now Regional Director for Mutual Funds for Prudential Corporation Asia.
At Templeton Asset Management (India), employees are part of a global ESOP program, which gives them stock in the NYSE-listed Franklin Resources. "This multi-option ESOP program is designed to retain our best talent by enhancing their feeling of ownership of the global entity, and is particularly important to us at a time when the industry as a whole is facing an attrition problem," CEO Rajiv Vij said. Templeton's ESOP has a maximum vesting period of three years, and is designed to bring about greater global participation and synergy building. "People are the key asset for us," said Vij.
Where We're Headed?
Watch for continuing heightened global interest in retention in the coming months. Note that the time period is months, not years. This shift is happening now. Concern is intensifying. Fellows Roger and Joyce Herman were invited to speak at a major human resources conference in England in March 2008, specifically because corporate leaders saw that they are on the threshold of the retention problem in the United Kingdom and Western Europe. And Joyce Gioia spoke at a strategic human resources conference in Japan in November 2008, addressing this rapidly emerging issue for countries in the Asian rim and beyond. Other conferences were held in Singapore and Hong Kong.
We've known for a long time that businesses in the United States have had to deal with a vise-gripped labor market. Now we know they're not the only ones. Keep an eye out to see how this will affect organizations large and small, local and multinational in the coming months. You can be sure we will, too.
What Is Talent Retention?
Retaining talented employees is one of the topmost priorities of employers today. The cost of employee turnover is from 40 to 100 percent of an employee's annual salary, when we consider productivity, recruiting costs, reduced efficiency in transition and time. Worker shortages continue to escalate. Each and every day, good employees quit their employers for better jobs.
The challenge is not only to attract the best talent but also to retain them. Rising opportunities for career development, lifestyle decisions, job changing, unbalanced work life, poor mentoring and stress are some factors which influence an individual's decision to continue or quit.
Talent: Natural ability or skill, such skills and abilities that are useful for the organization.
Retention: Hold back.
Why we are searching out for retention?
Company Reputation: Maintaining company reputation is an effective way to attract the talented. With talented employees, an organization has a chance to improve its goodwill and reputation.
Productivity: A talented employee is self-motivated and self-driven towards the work. He acts as a motivator to other employees. That increases total productivity of the organization.
What makes an employee quit?
Lack of training programs: Organizations should plan training programs that help to improve employee competencies in keeping with current trends.
Ineffective Mentoring: Another reason for leaving is the lack of effective mentoring policies. Employees get demotivated without proper mentoring.
Lack of Challenging Atmosphere: Employers must provide a challenging environment that brings out the best in the employees. A challenging atmosphere brings out employee skills and enables employees to prove their worth.
Lack of Autonomy: Centralization of authority leaves employees unconvinced about what they are doing. Empowering employees with responsible positions allows them work productively in their own manner.
Lack of work-place relationships: Unhealthy working relationships cause disputes between employees.
Unattractive compensation: Compensation plays an important role in motivating employees.
Improve company image: Projecting a better image of your company attracts and retains skilled employees. The talent you hire, the pay packages you hand out and the work environment all contribute to your corporate image, as perceived by the employee.
Conduct exit interviews:Conduct exit interviews and identity reasons for turnover. Use this information to plan a good retention strategy.
Concentrate on Development: Adopt policies and technologies that result in employee development. Empower employees and build a long-term relationship with them.
Prerequisites for Retention:
- Properly-designed induction programs
- A good working environment
- Training programs
- Suitable compensation packages
- Reward strategies
Loss of human assets, lower productivity and lower performance levels are the negative results of high turnover. The management must have a good retention strategy to utilize their human assets to the maximum. Creative Human Asset Retention Strategies have to be emphasized. Opportunity to grow and learn at work is emerging as a primary determinant of attracting and retaining employees. Compensation is not the main factor that keeps employees in their current jobs or attracts them to a new one. The only "Intangible Asset" found to predict the future financial performance of a firm, is the firm's retention rate for key employees.
Case Study on Talent Retention:
A manufacturer and distributor of optical and analytical instruments sold nationally and internationally.
The company reorganized part of its business, requiring two IT managers with strengths in different areas to now work together cooperatively. A conflict and poor working relationship between them hindered internal operations and customer service. The company did not want to lose the expertise of either person or incur high replacement costs.
The solution had to address both retention and a conflict resolution issue. In addition, management required that we assess the likelihood of success within a limited amount of time before approving the project.
- Estimated potential turnover costs, the savings to the company of retaining both specialists, and the likelihood of success.
- Met with both individuals separately to defuse the situation and provide individual coaching.
- Facilitated discussions to resolve the situation and draft a working agreement which both signed detailing how they'd work in the future.
- Presented changes which were approved by management.
Both IT specialists have remained with the company and communicate cooperatively where their joint expertise is needed; internal and external customers receive the services they need.