The idea of a job for life has faded into history. People are changing jobs and careers much more often than before. Digitisation has created disruptive business models, introduced new ways of working (think of digital nomads) and dispersed workforces. Companies are increasingly encountering new external pressures impacting employee retention and here is another one: a new Korn Ferry research reveals that by 2030 there simply won’t be enough talent to go around. Skills shortages will hit organisations, the economy and societies in ways it never did before.
The Korn Ferry research forecasts that by 2030, labour skills shortage in Asia Pacific will reach 47 million. This will create a competitive candidate market, top talent will be holding the cards, and employee retention will become all the more important. You will need to keep your talent from flighting to help prevent the emergence of further skills shortage.
Five factors that drive employees to stay
To keep high value employees from leaving in search of better opportunities, companies must address engagement and enablement challenges. A previous Korn Ferry study of more than 5.5 million employees worldwide sought to identify what makes for a committed workforce. The research compared the views of ‘stayers’ (workers committed to their companies for more than two years) with those of ‘leavers’ (workers intending to leave within the next two years).
The analysis identified five factors that impact employee retention:
- Confidence in the organisation and leadership
Employees need to feel they work for an organisation that is heading in a positive direction. This requires leaders to communicate company strategy clearly, consistently, regularly and with authority.
- Room for growth
Most people want to reach their potential at work. Employees want to know that there are opportunities to learn, grow and progress. If not, many will begin to wonder if their future lies elsewhere.
- A fair exchange
Employees need to feel valued if they are to deliver more with less in difficult times. Tapping into employees’ discretionary effort demands a fair balance between the contributions they make and the rewards they receive.
- An environment for success
Engaging employees is not enough. To sustain commitment, companies also need to enable them to perform at their best. This means placing the right people in the right roles, creating efficient work processes, enabling collaboration and providing a supportive working environment.
- Authority and influence
Engaged workers want to contribute positively to their organisations and help them to perform better. Firms need to provide staff with the basic authority to allow them to do their jobs and influence how work is done.
Steps to address these factors in your organisation
The five retention factors add up to an essential roadmap for organisations looking to optimise retention. Set out below are practical steps to address these fundamentals in your organisation.
Clarity breeds confidence. Staff cannot be expected to have confidence in a strategy they don’t understand. Neither will they trust leaders who fail to explain what needs to be done.
Communicate your goals. Set out your vision, strategy and objectives and clarify the reasoning behind them. Make it crystal clear where the company is headed, why, and what needs to be done to get there.
Then ensure that this is clearly communicated across the organisation. Explain where each employee fits within the bigger picture, and how their role will contribute to the overall objective. Ensure the message is consistent as it is communicated down the organisation. Middle managers have a crucial role to play: their behaviour has a major influence on how workers perceive their firms.
Once everybody is clear on the objectives, the next job is to instil confidence that the organisation can achieve them. Encourage leaders to ‘live the vision’ and senior managers to embody your strategic direction in everything they do: their behaviours, decisions, leadership style and communication.
Equip leaders with the ability to create a positive climate. The working environment has a huge effect on the confidence of the workforce in their organisation – and can impact the bottom line by up to 30 per cent. Help leaders understand their leadership style, the impact it is having and how to adapt it to different situations and team members. Leadership style can account for as much as 70 per cent of the variation between good and bad working climates.
Reward the right behaviours. Recognise employee achievements, attitudes and behaviours that will take the firm in the right direction.
To help employees reach their potential you need to promote a development culture. Make training an ongoing process rather than an event that happens only at certain intervals during an employee’s career. Employees realize that they must take responsibility for their own careers, but they expect their companies to provide opportunities to do so. Make clear where development opportunities lie within the organisation. Ensure that staff understand:
- The organisational structure;
- The roles open to them;
- The competencies needed to perform each role.
To achieve this, you first need to understand these roles and competencies, based on detailed job measurement and evaluation.
The message from your workforce is, provide us with the support we need to do a good job and the influence to improve things. You need to enable staff to do their jobs. Give employees the decision-making authority they need to perform their roles without constant need for approval.
Establish clear and efficient work processes to make routine tasks as quick and easy as possible. Keep these under constant review and ensure that they evolve with the needs of the business.
Employees demand to be reasonably compensated for the work they do. But there is more to fair reward than the right salary and bonus. Make sure your packages are competitive with the market. That may sound obvious, but do you know what ‘competitive’ looks like? Who are you competing with – at a local, national, sector and global level? Market benchmarking is essential to getting pay right.
Be transparent. Help employees to understand your reward structures and policies, the reasons for them, how they relate to business objectives and how this impacts their own package.
You also need to communicate the full extent of the packages you pay. Staff tend consider only their salary and bonus when considering whether they are fairly rewarded and often neglect less tangible rewards.
Mitigating the impact of the talent crunch requires that businesses put employee retention in the spotlight and address their engagement and enablement challenges. As the candidate market become more competitive, organisations that create an environment where employees are motivated and equipped to perform at their best will secure the commitment of their people and build a competitive advantage that will be hard to match.