The economics of staff retention - Part ThreePosted on 01/09/22
I started this mini-series of articles to draw attention to levels of staff turnover in the local financial services sector and the costs and risks faced by the worst affected businesses. Even now, more than two years after the first COVID lockdown, it feels like a ticking time bomb for those businesses which will potentially explode at some point in the future when breaches, omissions and/or errors come to light…
But if the costs and risks are so high, the obvious question is how to reduce the risk for the future; how not to be caught in the next post pandemic staff merry-go-round (and for post pandemic you can read inflationary price and wage spiral…).
The obvious answers are Culture and Communication. If you can build a great culture and communicate effectively with staff at all levels then your team are unlikely to want to leave and, just as importantly, you will hear about any strains or disappointments while there is still time to act on them. But this requires a commitment to a medium/long-term strategy. Here are five actions you can take in the meantime to mitigate the risk.
Five specific actions to help retain talent in your organisation
Identify the staff members who are critical to your business and not simply by reference to their role, skills, or client relationships. Just as important are the people who 'glue' the team together through their social and soft skills, those that are at the centre of everything and set the temperature in the business. And never say that no one is indispensable – it may ultimately be true, but you can miss out on a lot of opportunities and incur a lot of risk and cost while you prove it!
Proactively reward those key employees with salaries in the top quartile of whichever survey or research you rely on. It is much harder and more expensive to “talk them down from the ledge” once they have been approached by the competition and if you fail to keep them you will have to pay more for less in terms of a replacement. So, make it easy for them to say no.
Hire and train the next generation of talent before you need it. It is surprising that businesses do not hire talent whenever they find it but instead wait until they have a vacancy. This must be a false economy and an opportunity cost in a tight employment market. In the meantime, use the 'excess' skills to grow faster, change quicker or deliver better service to your clients…
Make sure you have a clear and simple long-term incentive plan that can make a material difference to staff members. Many staff only save through bonuses so if they can see what is expected from them and how, when, and how much they can benefit then they are much less likely to walk away. Of course, the devil is in the detail and schemes often turn out to be too opaque, complex, or poorly communicated to drive the right behaviours but if you get it right it is a powerful incentive.
Make sure everyone knows and understands the Purpose of your business – why does it exist and who are its key stakeholders? A shared purpose and a sense of partnership are powerful incentives for staff to deliver their goals and to stay on board to the end of the journey. This seems to be especially true for Millennials so if you want to attract and keep them you need a clear and compelling message that isn’t simply about salary and benefits.
So that really is the last part of the series! Perhaps I can sum it in three headlines:
- Don’t just accept high staff turnover as a fact of life – it is too expensive and damaging for that…
- Understand the risks that come with the loss of key staff and plan to mitigate those risks…
- And act now to lock in key staff and skills – remembering that it’s not all about the money!
"If you can build a great culture and communicate effectively with staff at all levels then your team are unlikely to want to leave and, just as importantly, you will hear about any strains or disappointments while there is still time to act on them. " - Mark Hucker