Managing Expectations: How To Retain Talent And Survive The Current Instability In The Markets
Written by J. Crawley on Sunday, 09 October 2016
Somebody once said, it may have been Jack Welch, 'There are three kinds of people in the world; those who make things happen; those who watch things happen; and those who wonder what happened.'
I know that most of you reading this today belong to the first category. People who make things happen. Today I am going to say a few words about the current state of the Talent Marketplace, particularly as it relates to Professional Services firms. I am going to give you my thoughts on how you make sure you retain existing quality staff and recruit the best new staff in the coming months and years.
My name is James Crawley, and I am a Co-Founder of JCM Advisors Ltd, a Global Talent Advisory consultancy based in London and I have nearly 20 years' experience in management consultancy recruitment and personnel issues.
I would like to make the theme of my talk - 'Managing Expectations'. Because, in the recruitment business, like many other human activities, people misunderstand each other's needs and priorities. When this happens, valuable relationships can break down. My purpose this morning is to help you to keep fulfilling the expectations of your present employees and your would-be employees.
So I'll begin by managing your expectations. I am going to speak for about 10 minutes this morning. Focussing on retaining staff - I will be discussing the five key factors in keeping your employees happy.
In subsequent keynotes I will be giving you some ideas on how you recruit good people and the disadvantages of old-style ways of recruiting.
Today, I am basing my opinions on our experience of interviewing hundreds of consultancy professionals over the years. And my discussions with clients both large and small.
I am giving you a summary of views from Partners, Directors, Senior Managers and more junior staff.
Retaining Good Staff
I spotted a quotation from Tim Melville Ross, a former Director General of the Institute Of Directors. He said, 'Over the years I have learnt that there are two types of people - 'radiators' and 'drains'. Radiators give of themselves with enthusiasm to any project, whereas drains consume energy with negativity and moaning. Surround yourself with the former and you will succeed.'
I want to begin by explaining how to retain good staff - in other words, life's 'radiators'. This is always difficult in a fluctuating market, any with the Global political instability currently boy do we have a fluctuating market. But like any situation, it can be an opportunity as well as a problem.
A fluctuating market can allow a company to shed some of its 'drains'. But you need to use your 'radiators' to maintain a positive image of your organisation.
In the past few months, we have seen up to 30% headcount reductions in some industries such as Steel, Mining, Financial Services whereas in services sectors and Professional Services companies both large and small we have seen a 30% increase. We have also seen a significant increase in the number of quality staff who feel that their company has lost its way. Other top staff may feel that because of the changes, it is an appropriate time to look for a new position.
Now why is retention of valuable staff actually so important?
Well, stating the obvious:
- There are significant replacement costs - somewhere in the region of 150% of the original staff member.
- There is often a reduction in morale and therefore productivity of remaining staff. This can be infectious.
- You may lose clients. Particularly when partners and directors move on.
- here can be the loss of particular key skills or knowledge.
- Then there is the work which the others leave behind. The extra workload has to be distributed and this may cause dissatisfaction and resentment.
These are but a few of the factors to consider. Perhaps a more important list, is what makes people move on in the first place. If we can address these issues, then we won't have to deal with the consequences.
In my opinion, the reasons why individuals move on can be summed up under five headings.
They are remuneration, a perception of poor business leadership, undervaluing the contribution of employees, lack of opportunities for personal development and what I call 'lifestyle' issues.
How much money you are paying seems an obvious factor in retaining high calibre staff. But strangely, in research, it was by no means the most important factor quoted to us.
If you are paying below the market value for professionals, then you will probably lose them eventually to a higher bidder. But the pay packet is not always the key factor.
In today's more flexible working environment, employees aren't necessarily motivated by immediate reward. They can be attracted to medium or long term schemes which are higher risk but provide a greater reward eventually. I am talking here of bonuses related to personal as opposed to group performance, and ownership schemes - these can be especially significant in smaller organisations.
Companies that link their remuneration schemes with a combination of both personal and team performances traditionally enjoy greater loyalty from good staff.
Bonuses in these organisations can be a multiple of base salary without affecting the bottom line, because it is directly linked to revenue generation, and those staff that do not perform do not receive a bonus.
Accenture did a study a while back on staff retention but from what I see the same results apply today. They talked to over 500 senior executives across a range of global industries. In the report, the author Tony Clancy, made an interesting point 'money buys only time, not loyalty. A company that competes for talent strictly on cash is vulnerable to the next big offer. This game of escalating salaries is like an arms race: expensive and, ultimately, difficult - if not impossible - to win'.
So to solve this problem we must look beyond the cold hard cash.
'Perceived lack of direction from the organisation' is a common complaint about businesses. In these turbulent times, businesses are looking to minimise costs and drive up revenues. It can be difficult for staff to appreciate where their organisation is going. They are trying to work out what the long-term prospects are for them.
Good internal communications are vital. Some firms do this extremely well other firms don't. During a merger, acquisition or a redundancy round, news needs to filter through organisations effectively. It can happen through management meetings or other communication tools such as 'town halls' or e-mail. If a regular flow of information is not provided, then unofficial sources will take over. Rumours will spread that unsettle the remaining staff. They will also filter out into the marketplace damaging the organisation's reputation with clients and other parties.
Who is going to buy advice from an organisation that is perceived to have its own massive internal problems? Without naming names, the recent past has seen a number of consolidations in the market place. Some of which have been handled with a great deal more care than others.
Many American self-help books will stress the importance of making people feel important. It is a profound human craving. And it is not about money. If you don�t value your employees, they may well start looking for another job.
I was speaking to a director the other day, who had seen his Partner once in six months. He had had no performance reviews in a year. He had spoken with his Partner on two other occasions in that period. As it happens, the director was extremely successful in his field. It was probably why the Partner left him alone - he was not a 'problem child'.
Unfortunately, the Director did not see it that way - he felt as if he was being taken advantage of. Senior management didn't appreciate him. He felt he was not being challenged or developed as a professional. He ended up moving to another organisation for less money. The position his new employer offered him was more challenging than the role he previously had.
The moral of the story is that don't assume that people are happy because they are doing a good job. If you don't notice they are doing a good job, then someone else will. And you will be left with a problem.
Individuals who work in Professional Services are smart people. They want to be challenged, and to grow professionally. Strangely enough, the most important factor that we have found leads to staff satisfaction, is personal development
I mentioned the Accenture study earlier. Executives at two thirds of the companies studied said professional development of their existing employees will become significantly more important.
More than half said training and development was one of their main initiatives to improve performance. The reality, however, was that just one quarter of the companies reported making any changes in their growth and development plans.
When I compare the answers that Accenture received from industry and compare them to the answers that we received from the consultancies, they sound familiar.
It is another frightening failure in the 'management of expectations'.
It is no good discovering what people want, and then not delivering it.
Training is very often not tailored to specific needs. Employees need to get a certain amount of core training, but they also require a long-term strategy. That long-term strategy needs to be controlled by managers at a local level. It needs to ensure that employees feel that their expectations are being met, and their views are listened to.
Training should have a purpose. It should be regularly reviewed for both its effectiveness and value to both the organisation and the employee. Nothing demonstrates an organisation's commitment to an individual more, than providing them with a set of goals and the tools they will require to achieve those goals. 'Money spent on the brain is never spent in vain', is how one professional put it.
There are retention factors that are specific to The Professional Services Industry
Every year a large number of extremely good consultants leave organisations because of 'lifestyle' issues. Larger firms are traditionally the worst for this. They often treat consultants like numbers and shift them at very short notice to the back of beyond to staff up a project.
Consultants have to be flexible in their working habits. It is a core part of their industry. What we have seen however is that firms that adopt a more proactive approach are attracting and retaining more quality staff. Most firms already allow the majority of employees to work from home some of the time. Progressive firms are taking account of personal circumstances. They allow part time / flexi hours for those with families. They set limits on the amount of time an employee can be based away from their home office. These factors need not add much to the bottom line. It can however make the difference between being an employer and an employer of choice.
Of course this all becomes a little academic if you can't attract the staff in the first place a topic I will cover in another keynote.
This whole keynote can be summarised as follows:
- Invest time in staff who are outperforming as much as those underperforming.
- Respect individual lifestyle choices and make it work in your organisation. This will promote diversity and you will end up with a more rounded satisfied workforce.
- Don't try and 'buy' your way out of trouble, if you are having to pay over market rates to attract and retain staff look for the more fundamental issue in your business