Two recent events reminded me of how difficult it is for a business to retain key employees, reports Forbes. First, while addressing a group of small business owners about retention strategies, one of the owners jumped up and declared to the audience “you know what the unemployment rate for talent is? It’s zero!” Like many employers, he’s finding it increasingly difficult to locate people to fill key positions, and even harder to keep them.
The second event was a discussion I had with one of my graduate students. She lamented that even though she liked her current employer, she planned to leave because she wanted to pursue her “true career interests”. The problem was she wasn’t sure what those interests were. What caught me was deciding to leave her job was no more difficult than deciding to change hair styles.
Retention ideas that don’t work.
If it’s tough to recruit key talent, it’s even more difficult retaining who you have. Compounding the challenge is that retention techniques have changed. What used to be a sure-fire way to hold onto the good ones can now be counter-productive. If you depend on the following solutions for keeping talent, you can watch your top performers rush to the exits.
Salary Sure, money talks, but in this low unemployment market, it doesn’t talk as loud. Particularly with small businesses, too much may be going on with benefits and company culture to think that talent can be retained simply by writing a bigger check. Pay may not be the problem, and a pay raise not the solution.
Stock Particularly during the tech market boom, issuing stock options and restrictive stock satiated the ambitions of even the most aggressive go-getter. The hard drivers envisioned the payday that comes with a funding round or buy-out. But now too much water is under the bridge. The Great Recession, a global slow-down, and the inevitable gravity effect on stock prices have taken the bloom off the stock option rose. Employers have found it costs money to create and maintain stock plans, and employees have learned that under-water stock options don’t buy BMWs.
Playing the guilt card This is not meant as an indictment of millennials. It’s just a fact that, particularly with younger employees, glorifying the company history and demanding loyalty won’t work. Ambitious workers don’t care about the past; they’re looking to the future. Key talent wants a hand in pressing the accelerator and steering the wheel. They’re not looking out the rear view mirror. It’s counter-productive to invoke the past and use it as a way to insist on future loyalty. “What are you doing for me now?” trumps “how was I treated in the past?”
Making it impossible to leave Some employers try to retain talent by using lock and key techniques. Some encourage reckless borrowing so that the employee can’t afford to leave a secure paycheck. Others use long vesting schedules and contractual tie-downs on employment agreements. I once asked a hospital director how he planned to retain some top physicians he had recruited from independent clinics. His response was “I use very long non-compete agreements.” Talented employees have learned through business schools, seminars and school-of-life experiences to avoid these traps.
The bottom line is that many tried-and-true retention techniques no longer cut it with top talent – especially with unemployment so low. Time to look at new ideas like incentive-based deferred compensation, an executive bonus that builds up tax deferred and pays out tax free … and more.
