Why it is important to have a formal strategy for retaining talented people

Top tips by international consultancy DDI


It’s axiomatic that high-fliers move on. A benchmarking
study by DDI shows that almost one-third of employees surveyed expects to leave
for another job within the next year. Dissatisfied employees will ‘vote with
their feet’.


Those who feel neutral or dissatisfied about their jobs are
more than twice as likely to leave an organisation as their colleagues.


1. Staff turnover is a major issue and set to increase

On average, organisations expect staff turnover to increase.
Turnover is much more common for frontline and non-managerial workers. It is
predicted that an increasingly competitive labour market will make finding
qualified candidates more difficult in the future. Organisations that
understand retention and its causes will experience a competitive edge. Every
time a position becomes vacant, an organisation becomes less capable of meeting
its goals.


2. Cost of replacement

The cost of replacing an employee ranges from 29 to 46 per
cent of the person’s salary. In the US, staff turnover costs the average firm
more than $27m (£17m) each year. This figure includes the cost of advertising,
travel, interviewing time (spent by managers), lost productivity and other
associated expenses. On average, the cost of replacing a manager is three times
that of replacing a non-manager.


3. Young employees are more likely to move on

Young people are less likely to spend their entire careers
with one organisation than their predecessors. With the implementation of new
technologies, certain positions have become difficult to fill. Some candidates
can choose from the best offers from a number of organisations.


4. A business priority

The study showed that retention is a top business priority
for more than one-third of the respondent organisations. Nevertheless, almost
half, 49 per cent, have no formal strategy for addressing retention. Many do
not consider it a top priority. This approach might backfire later when the
labour market tightens and filling positions becomes difficult.


5. Primary drivers of retention

While pay and benefits do matter, employees are more
concerned with the level of fulfilment they get from their jobs. They also feel
that working with an understanding supervisor or manager in a co-operative
environment is important.  Organisations
should focus on making sure that the people they hire are a good match for the
job and the work culture.


6. Failing to understand the causes of retention

Although HR professionals recognise some of the most
important retention drives, they miss these factors more often than they
understand. They are especially likely to ignore the importance of a
co-operative and trusting work environment. They also fail to see how much
employees value the meaning of the work they do. HR professionals need to make
sure they understand the retention drivers in their company before they take


7. The importance of gathering information

HR professionals greatly value the information gathered from
internal studies of retention and exit interviews. Before action can be taken,
however, they must look beyond the surface of the often scarce and tactfully
presented data gleaned from an exit interview to develop an understanding of
why employees leave.


8. Successful interventions

Most HR professionals (98 per cent) are dissatisfied with
their current retention efforts. It is important to improve organisational
systems, such as training and development and the selection system, and to
develop openness of communication between managers and employees.


9. The bottom line

Voluntary turnover rates are almost twice as high for
non-management positions (19.3 per cent) as for management positions (10.3 per
cent). This is crucial, since, when retention is above average, customer
satisfaction, productivity and profitability also tend to be above average.


10. Implications

Organisations that understand employee retention and its
causes will ultimately have a competitive edge. However, HR professionals might
not be using the best approach to introducing changes that will improve
retention. In fact, the consensus is that turnover in organisations will
increase. To avoid the damage and costs of increased staff turnover,
organisations need to act now to improve their retention efforts.



Comments are closed.