Developing a Talent Retention Strategy for Your Experienced Staff
by Matt, on 17 Dec 2019
More Questions than Answers
I was recently asked to advise a company on how they might go about ensuring their pool of talented and experienced employees would stick around for the long-haul and look back on it as an excellent career choice.
I met the leadership team over dinner for a couple of hours. I also spent some time with board members and with the private equity investor. My response to the talent retention question would be based on my broader business experience, colored by the unique issues and opinions picked up – rightly or wrongly – during those brief conversations.
After pondering the question, I decided it was impossible to give a prescriptive answer. Instead, I presented them with nine questions that I wanted to explore in greater detail before recommending strategic actions or pointing to the most important issue that they should tackle first.
In this edition of SPT, I’ll walk you through the nine questions that hopefully will help you attract, engage, and retain key staff at your business.
Above All Else, Purpose
Stakeholders align themselves with a business because of the cause it represents and pursues. This is as true for (most) investors as it is board members, employees, and customers.
For employees, the company’s purpose is the reason they get out of bed and come to work each day. Their day-to-day tasks will change, but they will discharge those duties in pursuit of the purpose because it inspires them.
The more powerful and more clearly articulated the purpose, the stronger its pull. Conversely, a lack of purpose – or a business that loses sight of its purpose – will lead to a diminished sense of belonging, less desire to go above-and-beyond, and eventually a talent retention problem.
This company needed to keep its key staff engaged and retain them in an increasingly competitive market, as well as attract, hire, and retain new talent as it expanded its business. In both cases, it should rely on a strong purpose statement.
So, my first question was: Why is your company in business?
For employees, this translates to: Why should I choose to work here?
I asked the investors, directors, and senior management this question directly. Their responses were pretty consistent: it’s a good question, but not one I can readily answer.
This didn’t come as a surprise because I’ve encountered very few businesses – especially early-stage ventures – that have taken the time to debate and hash out a purpose statement. Like the mission statements that were so fashionable a decade or more ago, defining the company’s purpose sounds like an exercise in futility that will only result in some pithy statement posted on the lobby wall.
My belief is firmly to the contrary. Without a purpose statement, the entire business is run based on what each individual thinks the purpose might be, rather than a common understanding of exactly what the leadership team has decided it should be.
Agreeing a purpose statement and putting it to work when making decisions, hiring staff, and attracting customers is far from a futile exercise. It’s a critical step in laying the foundations of a sustainable and successful business.
Much has been written about effective purpose statements; for example, by Simon Sinek. I like this definition of a purpose statement: A sentence that clearly expresses your unique contribution and impact. In this definition, the contribution is “the primary action that you take towards making your impact”, while impact should capture “the difference you want to make in the world.”
Think about your business. Can you articulate your unique contribution and the impact that you will make? If you don’t have one already, try crafting a purpose statement around those concepts.
With The Purpose in Mind, A Shared Vision
Since the purpose statement is deliberately open-ended (else it would expire upon reaching some target point), a vision statement is needed to help stakeholders understand what the business aims to achieve within a certain period of time.
I personally think the sweet spot for vision statements is a three-year horizon. Any less than that leaves too little time in which to achieve something meaningful. Much longer, and the future state may seem too ambitious, too susceptible to the changing business environment (e.g. there’s bound to be another downturn before then), or simply too far into the future to be relevant in the stakeholder’s personal frame of reference.
Many founders and senior leaders have a vision of what the business will accomplish. Unfortunately, it stays in their head where no one can see it, challenge it, contribute to it, or refer back to it when making key business decisions. I specifically recommend developing a shared vision.
This is unquestionably something that should be developed by the team for the team. So, the second question that you should spend several hours discussing with your team is: What is our 3-year vision?
I would discuss this with your colleagues both individually and as a group, to hear their ideas, synthesize a vision statement, and test it until you reach consensus and a common understanding.
This reflects my belief that employees at every level in the organization perform better if they feel their ideas and concerns are being heard – even if they aren’t always acted upon. While timely decision making is vital, so is taking an appropriate amount of time to gather and process input from a cross-section of interested stakeholders.
I don’t subscribe to management-by-committee (having seen first-hand its negative consequences while working for a multinational corporation), but nor do I believe in autocratic decision making. I describe myself as an inclusive leader, and I encourage leaders within other organizations to adopt a similar approach. Listening to everyone’s opinions becomes especially important when dealing with a lot of very smart, experienced professionals.
Communicate, Communicate, Communicate
Purpose and vision statements are only helpful if they are widely and regularly communicated, and if their relevance and use is demonstrated by senior leaders.
This leads to my third question: How is your purpose and vision being shared within your company?
I once worked with a company where the Founder and CEO clearly had a vision in his head but was entirely unable – or, I suspect, unwilling – to commit it to paper. This left the rest of his leadership team and everyone below them to speculate on what the business was trying to become.
Decisions about product development, brand promises, and strategic partnerships were made in a state of blindness, and the company paid a steep price. Acquired businesses weren’t integrated effectively. Product development and roll out were erratic and disjointed.
These weren’t necessarily symptoms of bad judgement or poor execution; they were primarily the consequence of misaligned but well-intentioned actions that lacked a unifying vision.
Everyone in the company – from investor to salesperson to technician – should be able to recite the company purpose, paraphrase the vision, and explain how their role contributes to achieving the company’s goals. That golden thread should unite the staff and inspire them to come to work every day. And, this can only be achieved if the purpose and vision are regularly and effectively shared and discussed.
Equally important, but not as relevant to this discussion, is external communication. Investors, partners, and customers can also be inspired, engaged, and retained by effectively messaging the company’s purpose and goals.
Will solid purpose and vision statements necessarily engage and lock in all of your talented staff? Probably not. In fact, I’d be surprised if it did. You should want to attract and retain a team that is inspired by the purpose and buys into the vision, not construct a purpose or vision that fits the assembled talent.
Keeping everyone happy would result in some sort of lowest-common-denominator purpose, unlikely to genuinely inspire the majority and even less likely to produce an industry-leading business. If a few people decide to leave the company at this point, I’d view that as a great result for both sides.
Cascading Objectives, Autonomy, and Accountability
Proceeding along the time continuum from open-ended (purpose) and mid-range (vision) brings us to the need for shorter-term strategy and objectives. Your company needs to decide what it is going to accomplish in the next few months, how it plans to do that, and who is going to do what.
This is where individual contributions meet the overarching business objective.
An organization should be able to link every individual’s objectives and each team or department’s objectives to the higher-level objectives being set for the organization as a whole.
These necessarily stem from a corporate strategy, which can then be broken down into its component parts and re-articulated at an increasing level of granularity for successive levels – and ultimately individuals – within the organization.
Hence, question number four: How do each person’s responsibilities contribute to your overall strategy?
Being able to answer this question effectively will play a key role in facilitating talent attraction and retention by making clear what is expected of each individual and how it contributes to the overall success (and purpose) of the organization.
I believe in giving staff a significant amount of freedom to choose how, when, and where to do their job. Work environments that demand punch-clock style office presence and strict adherence to templates and workflows are perhaps great for efficiently delivering high volumes of cookie-cutter project work, but they don’t suit agile teams made up of idiosyncratic, talented individuals.
Nevertheless, autonomy comes with a Siamese twin, accountability. To maintain the right to operate without excessive company oversight and interference, employees must deliver the levels of performance demanded of them.
My fifth question is: Does your business value autonomy and accountability?
Assuming my previous point about cascading objectives has been followed, team members should be abundantly clear what their goals are and why meeting those goals is important to the organization. I’ll come to performance management in a moment but holding people accountable for their performance, rewarding excellence, and correcting under-performance are all key features of an effective workplace culture.
Question six is: What motivates your key employees to perform and to stick around for the long haul?
Importantly, what are their individual motivators?
The highest level of self-determined motivation, intrinsic motivation, has been broken down (by various authors) into three parts: knowledge, accomplishment, and stimulation.
Knowledge refers to learning new skills. Accomplishment refers to achieving a level of mastery and reaching a particular goal. Stimulation refers to physically experiencing a specific activity – being part of completing the task. These motivators will apply in varying degrees to each employee.
For talented and experienced staff, keeping them motivated and engaged will require establishing a culture and processes that routinely seek to understand and incorporate their motivators.
Each person will prioritize the three motivation buckets differently. Some will place a greater emphasis on continuous education and the opportunity to learn new skills. Others will be focused on furthering and applying their mastery of a particular skill or subject. Still others will be motivated the most by being part of a team that manages and delivers a specific goal.
The specific skills, subjects, and goals are less important than the overriding culture and process that recognizes what motivates each individual and sets out to fuel those motivations while harnessing them as effectively as possible in pursuit of corporate objectives.
There are many affordable and highly-developed software (and now SaaS) tools available for managing staff development and performance. Hopefully your company has chosen to employ one of those tools, and to inculcate the importance of staff development and motivation in leaders at all levels, rewarding behaviors that drive high levels of staff motivation.
Question seven: Does your company have a comprehensive performance management system in place?
With each individual’s skills, motivators, objectives, and goals (things for which they will be held accountable) understood and on record, performance management becomes a continuous process of discussion, analysis, course correction, and recognition.
I have been part of many different performance management systems. These ranged from the traditional annual performance review and rating-based bonus to a “365” system that relied on regular but informal discussions between supervisor and subordinate to measure and adjust performance on a near-real-time basis. None of them were perfect.
What mattered most to me – as an employee and as a leader – was that the employee got a chance to express his/her views and wishes, and the company evaluated the employee’s performance objectively (i.e. fairly, relative to the employee’s peers) and gave clear feedback on what needed to happen next.
Experienced and talented employees expect clarity on: their role and responsibilities, how their performance will be evaluated, how any short-term performance-based incentives will be calculated, their access to learning opportunities, their potential career path within the company, and any prerequisites for making it to the next level.
All these details should be addressed within whichever performance management system the company adopts.
Spot, Short-term, and Long-term Incentives
Incentive schemes leave a bad taste in many people’s mouth because they appear to be unfair. In reality, they are mostly poorly designed, unevenly applied, and excessively competitive.
I have found that a combination of incentive schemes works best, depending on the nature of the employee’s work and the types of behavior the company is trying to incentivize.
Spot rewards – that is, discretionary recognition for exceptional individual performance – are a great way to show employees that the company notices and appreciates their contribution. Because they aren’t tied to some pre-determined performance indicator, spot rewards generally come as a nice surprise to the recipient. They can also be handed out up and down the organization, creating a greater sense of community.
Short-term incentives, such as commissions and performance-based bonuses, are a necessary component of the performance management system. It can’t be all stick (punishing under-performance) and no carrot (rewarding excellence). Employees often lose faith in their short-term incentive programs because they have been tied to overly ambitious financial forecasts that have been repeatedly missed.
Although all incentive programs need to be tied to overall company performance, a careful approach needs to be taken to ensure employees contributing excellent performance aren’t left empty-handed because their peers haven’t delivered.
Finally – and most importantly for the talented and experienced staff we are discussing here – long-term incentives play a significant role in securing employees’ commitment to the business.
I’ve seen various combinations of equity, stock options, phantom stock, and employee stock purchase schemes work effectively in this capacity. The keys to their success are that they are fairly distributed, limited to staff who understand and appreciate the instruments being used, and sufficiently generous to create the desired lock-in effect.
Uneven allocation (often the result of over-zealous negotiating tactics when hiring), offering stock-based incentives too far down the organization, and spreading a limited option pool among too many people such that each person received an insufficiently compelling grant are all issues I’ve encountered and would not want to repeat.
And so, the final two questions that I encourage you to explore and address are: What performance-based incentives does your company offer?
And: What long-term incentive plans does your company have in place?
If your business is built upon solid foundations, it should have no difficulty attracting and retaining talented and experienced staff. In this discussion I’ve highlighted nine questions that I recommend you answer effectively in order to ensure talent retention:
1. What is your company’s purpose?
Agree a clear purpose statement that captures your unique contribution and impact.
2. What is your 3-year vision?
Develop a shared vision to describe the company’s mid-term goals.
3. How is the purpose and vision being shared with staff?
Communicate the purpose and vision throughout the organization, as well as externally, and accept that a few staff may choose to leave once the purpose and vision are understood.
4. How does each person’s responsibilities contribute to the overall strategy?
Establish cascading objectives, from corporate strategy down to individual goals.
5. Does your company value autonomy and accountability?
Afford individuals significant autonomy but hold them accountable for performance
6. What are each individual’s motivators?
Establish a culture and processes that recognize an individual’s motivators and aspirations.
7. Do you have a comprehensive performance management system?
Implement a system that supports individual development and progression, performance appraisal, and succession planning.
8. What performance-based incentives do you offer?
Establish a scheme that rewards excellence.
9. What long-term incentives do you offer?
Establish a balanced, focused, and generous long-term incentive scheme to lock in key staff.
From establishing clearly what the business is trying to do, to aligning individual roles with both employee expectations and company objectives, talented and experienced staff can be readily attracted and retained.
None of these recommendations should be particularly difficult to implement or achieve. However, conscious effort and a significant amount of leadership and staff time must be invested to get them right.