Widespread recession-driven redundancies mean that employers now have a level of choice in filling key positions that they haven’t seen in a long while. However, with the fortunes of the UK economy predicted to improve next year, complacency would be ill-advised. HR professionals and managers need to be mindful of the risks of losing their best talent once the smoke clears, and put in place solid strategies for keeping them on board.
According to Matthew Parker from HR software developer StepStone, on average, the top 10% of staff make 80% of the difference to an organisation. Staff turnover at this high level once the economy starts to improve could offset some of the gains of a recovery. But understanding who these key people are is harder than it sounds. It’s not necessarily the most senior staff that companies should be focused on, rather the real ‘keepers’ – those people whose departure would cause the most pain.
Parker says that there has been a fundamental change of approach in the use of technology by HR professionals in the past 12 months, explaining that “we’re moving to the concept of HR analytics as opposed to HR reporting”. “We’re seeing a significant increase in companies analysing their workforce to identify the best talent,” he adds.
StepStone’s web-based software is designed to help improve understanding of issues such as how to recruit for competitive advantage, and how to keep your employees from defecting to your competitors. And after suffering a series of high-level defections from its ranks, internet giant Google recently developed an application to help it predict when staff might be thinking about moving on.
Taking this to its logical – some might say frightening – conclusion, there may come a time where employers could conceivably know when someone might be about to leave before they do. There is certainly little doubt that technology is increasingly informing how companies recruit and retain talent.
And judging by a recent Economist Intelligence Unit (EIU) survey, many organisations need all the help they can get. The EIU surveyed almost 500 senior executives from organisations across the globe, reporting that a third (37%) of respondents believe that their organisation’s talent management strategy is becoming significantly more important given the current economic climate. However, nearly two-thirds (63%) of respondents said that they don’t really know what their talent management strategy is.
“Every single annual report has a statement about the importance of hiring and retention, but there’s very little backing that up.” says StepStone’s Parker. That may be about to change, with nearly half (47%) of respondents to the EIU survey reporting that their organisation will improve training and development in the next 12 months to retain employees.
Naturally the current economic crisis is placing pressure, especially on public companies, to curb employee bonuses and other benefits.
The Financial Services Authority (FSA) recently released new guidelines designed to temper executive bonuses, especially in the City. However, there is little evidence of many companies taking heed. Law firm Pinsent Masons LLP recently surveyed around 200 businesses in the city, reporting that almost 80% felt that the new FSA guidelines were not relevant to them.
Even though the labour market is awash with qualified professionals, many companies maintain that there’s still a dearth of really good candidates, and that they still need to offer the most generous inducements to get them. More than half the respondents to the EUI survey cited difficulties in finding good candidates, despite the fact that most employers are seeing higher numbers of applications for positions and, in many cases, a higher proportion of ‘over-qualified’ candidates. StepStone’s Parker says since October last year, applications to the UK public sector have increased by around 50%.
“The problem clients have is that the market is awash with candidates, yet the type of people most companies are looking for is still very rare,” says Roger Philby, director and founder of recruitment consultancy Chemistry.
When it comes to retention, companies have to strike a difficult balance at the moment. Naturally they want to hold on to their best staff, but they need to do so without placing – or appearing to place – undue pressure on the balance sheet. Indeed, around 75% of respondents to the Pinsent Masons survey said that they have taken measures to simultaneously reduce costs while retaining staff.
Keeping a lid on bonuses is one way of controlling costs, but employers are loathe to meddle with existing bonus structures, lest they be charged with breach of contract. Yet, according to Pinsent Masons partner Tom Flanagan, they should still be trying to think outside the box. He says companies are now increasingly undertaking risk analysis to determine the tipping points with regard to staff disagreements.
Flanagan explains, for instance, that most employees would be reluctant to either leave or rock the boat with legal action in response to minor adjustments to their bonus or other incentive schemes. “We’re advocating more inventive thinking, so that you can retain staff but not later have to play catch-up once the turn around begins,” he says.
Some safe and simple options include rolling over employee bonuses into the following financial year. And while not as important a concern as they used to be, company cars are expected to make a comeback when market conditions improve. According to Nigel Trotman, fleet manager for Lex Autolease (formerly Lloyds TSB Autolease), an improvement in market conditions could well see a pick-up in corporate fleet activity as companies compete for top performers.
Employers must also be mindful of environmental concerns in relation to recruitment and retention, especially with regard to Generation Y employees for whom corporate social responsibility is a high priority. “Many younger managers expect an environmental aspect to their car policy,” says Trotman.
Other retention options include offering staff reduced working weeks for the same pay. Some firms have even experimented with sending workers on sabbaticals, both to keep them happy, and potentially to acquire new skills.
Chemistry’s Philby says that in most instances, the best talent within a given organisation is unlikely to make a decision to stay or leave based on money. “Talented people don’t stay for more money – they stay to broaden their portfolio of skills,” he argues.
Madalyn Brooks, HR director at product manufacturer Proctor & Gamble, says that training and development are often among the first things to suffer when times get tough, but that forward-looking organisations understand the importance of remaining focused on the task.
“In tough times, it is all too easy to concentrate only on the business and forget about your people” she says. “We have always been focused on the long-term growth of our employees, but now more than ever it is important to invest in the personal development of staff.”
Wendy Mansell, HR director for UK & Ireland at Amazon, agrees. She is focusing on retaining staff by keeping them engaged and loyal to the business in the long-term so that when the economic upturn comes, they are less likely to leave for rival businesses.
“We have not changed the HR strategy, but we are focused even more on retaining talent. We need to ensure when the market improves, people still want to stay with us,” she says.
Top tips on recruiting and retaining your best talent
Identify who your ‘keepers’ are
Understand contractual agreements and the tipping points
Investigate new technologies that might assist your retention efforts
Understand how your staff behave
Know what your competitors are offering.