In the last several years, most leaders and HR professionals have had a razor-like focus on retaining their high performers. Leaders have created various strategies to hold onto their talent for as long as they can because they know high performers give the organization a competitive advantage. But is that what you should be focusing on? Would it be more effective if you focused on workplace planning or performance management strategies instead?
Retention strategy vs. workforce plan
Consider this scenario: An organization has many data points on its recruiting, engagement and retention activities. In our sample company, the average employee age in critical roles is 38, their average tenure is 2.6 years and the average performance for these key positions is above average. Do you invest in retention and engagement strategies to increase the tenure to an average of 3 years or do you strategically plan for the 2.6 years that you receive and staff accordingly?
I think that answer is very dependent on the amount you have to invest to retain those individuals versus the ROI that you will receive. I think creating retention programs that have a cookie cutter approach won't improve employee retention.
If we have historical data that allows the organization to predict when a person is leaving, then the best strategy becomes the one that has the highest ROI. If HR is considering a wellness program because that idea came up on the employee survey as a retention idea, the challenge becomes whether the ROI of the program is greater than the cost of developing a solid workforce plan.
The data challenge
According to the Human Capital Institute (HCI), out of nearly 400 organizations and professionals involved with strategic workforce planning at their organizations, 69 percent consider the function an "essential" or "high" priority at their organization, but less than half (44 percent) are actively engaged with it.
The primary reason organizations tend to lead with retention programs is because workforce planning is a very analytical, data intensive task. There can be many roadblocks to having a great workforce planning focus including access to data, HR skill set and organizational support.
Retention strategy vs. performance management strategy
Imagine you are planning your human capital strategy for the next fiscal year and five of your high performers are coming up on their two-year anniversary. How do you plan accordingly? Many managers will ask HR for a raise to retain them. Some managers will use a reward and recognition system to mark the two-year milestone. Other managers will do nothing.
I think the key is to have a conversation with the high performers to understand where they stand. What are their career goals and how are they enjoying their work? The goal is to find out what motivates that individual. For about 60% of employees, it's not money. In most research, career advancement, training and developing, and challenging work are more important for employees than a simple raise. Most of the time, the money is seen as a Band-Aid for an underlying issue; it's a mere satisfier and not a motivator.
Retention strategies that work for your company
Like with any investment the organization makes, the anticipated ROI must be considered before embarking on any major spend. Human capital isn't any different. You need to be critical of retention, engagement and recognition programs in order to make sure the organization is receiving the desired result. HR's role is to make sure that these programs and initiatives are aligned to the organizational strategy and that the investment leads to better performance, productivity and/or an increase in financial results.