“Theoretically, finding a good candidate to fill a position should now be a very straightforward exercise. There have never been as many educated people in the world, nor has it ever been as simple for employers to tap this vast pool.” So opens the section of PwC’s 15th global CEO survey report titled “The Talent Challenge,” released in 2012. But read on: “…The reality is far different.”
As finding external hires has become more difficult for organizations, earning the loyalty of your current high-potentials and high-performers becomes increasingly critical. But how do you earn that loyalty? We conducted interviews with thought-leaders and seasoned HR experts from effective organizations to find actionable answers.
(in alphabetical order)
Kathy Anthony, COO and Partner
O’Sullivan Creel (www.osullivancreel.net)
Pensacola, FL, USA
Tom Callam, Director of HR
Corbett Duncan Hubly (http://www.cdhcpa.com)*
Itasca, IL, USA
David Creelman, Partner
Creelman Lambert (http://www.creelmanlambert.com)
Human capital research
Toronto, ON, Canada
Next Generation Consulting (http://nextgenerationconsulting.com)
Market research firm
Madison, WI, USA
Visionary Leadership (www.VisionaryLeadership.com)
Author/consultant on innovation and business growth
Glen Echo, MD, USA
Angelique Keenley, Director of Human Resources
The Motley Fool (www.fool.com)
Multimedia financial-services solution provider
Alexandria, VA, USA
Henryk Krajewski, Vice President and Senior Leadership Advisor
Anderson Leadership Group (http://taglar.com/)
Leadership advice and research firm
Toronto, ON, Canada
Melanie Rydalch, Senior HR Manager,
Basic American Foods (www.baf.com)*
Dehydrated food solutions for wholesale and retail
Walnut Creek, CA, USA
* Halogen Software customer
Too much need for hiring, especially due to middle-management turnover, is a leading indicator of risk related to talent strategies. Of the CEOs who responded to the 2012 PwC survey, 43 percent agreed with the statement: “Our talent-related expenses rose more than expected.” Talent constraints have also factored into lost opportunities: one in four CEOs reported having to cancel or delay a strategic initiative, or being unable to pursue a market opportunity, due to talent shortages or mismatches. In the 2011 survey, a top concern was recruiting and retaining high-potential middle managers (essentially, Generation X). Clearly, CEOs feel they haven’t yet completely solved the talent puzzle.
And yet, according to Henryk Krajewski, “The whole thing was solved in 1976,” referring to the Job characteristics model proposed that year by Hackman and Oldham. “If a company just applied that research,” Krajewski continued, “they would have lower turnover, fewer issues with loyalty, and higher retention overall.”
In fact, today’s consultants have tried to call the attention of CEOs and talent managers to Hackman and Oldham’s insights. In his 2009 book Drive: The Surprising Truth About What Motivates Us, Daniel Pink repackaged that knowledge for the 21st century. And still, CEOs and their HR managers worry.
Is a return to the basics of motivation the answer to today’s quest for a loyal, motivated, productive workforce? Could it really be so simple? Yes — and no. Interviewees’ insights suggest that three complex contemporary issues demand action:
- Maintaining the employee value proposition in a punishing economy;
- Developing leaders and key contributors at every level; and
- Increasing HR departments’ ability to serve as capable members of the C-suite.
In 1976 J. Richard Hackman and Greg Oldham proposed that jobs have five characteristics that impact motivation:
- Variety: People have opportunities to use and develop a wide range of skills.
- Task identity: People are able to complete a whole piece of work, completing all tasks from beginning to end of a production process.
- Task significance: People understand how their work impacts others; they feel their tasks are meaningful to the organization and its customers.
- Autonomy: People are able to schedule tasks and carry them out at their discretion.
- Feedback: People get direct feedback about how well they are performing, serving the innate desire to learn and improve over time.
In 2009 Daniel Pink updated Hackman and Oldham’s theory to focus on three aspects:
- Autonomy: People need control over what, when, with whom, and how they perform tasks.
- Mastery: People seek “flow” experiences where the challenges they face are well-matched to their abilities.
- Purpose: People desire alignment with causes greater and more enduring than themselves.
Sources: J. Richard Hackman and Greg Oldham, 1976; Daniel Pink, 2009
Maintain the employee value proposition
The sharp economic downturn of recent years necessitated deep staff cuts and workforce reorganization. David Creelman spoke to a negative unintended outcome: “Expecting loyalty in general is unrealistic in today’s world. That’s not the fault of employees; it’s the fault of employers who abandoned the loyalty deal.”
Components of an inspiring employee value proposition include compassion, flexibility, and clear expectations aligned with the recommendations of the Job characteristics model.
People need to be treated with compassion and respect, no matter the economic climate. “If the organization acts with compassion towards its employees, then they’ll be more inclined to stick around,” Creelman continued. Compassion for individuals’ personal needs or short-term performance problems builds relationships that can weather difficult situations. Compassion is a foundation on which a strong employee value proposition can be built — defined by Krajewski as a promise that workers agree to provide certain services and can, in exchange, expect certain compensation, benefits, and rewards, as well as intangibles like flexibility to achieve work/life balance and have a voice in one’s development plan. Krajewski said, “The employee value proposition is essentially a deal, because you sign a contract with a company.” In a compassionate company, that deal is fair to all parties. Each party needs to understand this as the basis of the employee/company relationship. “Further, with competition for talent at an all-time high, it is incumbent on the company to offer its two-way value proposition succinctly to potential new hires. Too few organizations do so,” Krajewski concluded.
Once the contract is inked, compassion develops into mutual trust. Angelique Keenley said to build trust, “Transparency is huge. Every month at the Motley Fool, we have a company-wide meeting called the “huddle” where our financial statements are distributed and we talk about exactly how the company is doing. Nobody feels like things are being spun for their benefit.”
Flexibility is critical to the employee value proposition, but especially for middle managers, many of whom fall in the Generation X cohort typified by a stress-inducing “sandwich” of responsibility for both young children and aging parents. To earn the loyalty of your employees, be flexible in rewards as well as work culture.
Kathy Anthony explained how flexibility and clear expectations come together in the accounting firm where she serves as Partner and COO. “People are in different modes in their life and career — one about to start a family, another wanting to advance quickly. Why would you set their goals at the same level?” Anthony’s firm lets individuals develop their career according to their needs, with customization of rewards via personalized incentive plans. “Raises are based on performance; rewards are individually determined. Some people want public recognition and some want compensation.” Her firm creates customized plans with clear career roadmaps that help people understand what it takes to get from one level to the next. Anthony was quick to point out, “The true value of a performance management process is that it forces you to have those critical conversations with individuals. If you are not having those conversations, then you are going to treat everybody the same and you are going to have retention issues.”
Seth Kahan pointed out that extraordinary companies attract extraordinary talent. “Provide high achievers with unique opportunities to develop and perform. Top talent is highly motivated and will go quickly to where the most lucrative or rewarding circumstances prevail. If you are the source of exceptional achievement opportunities, you will become a talent magnet. But you yourself must be prepared to excel. You must execute leadership that stands out.”
And setting clear expectations is vital. On the job, help your high-potential and high-performing employees understand what they’ll be judged on and where they stand. Kahan said, “You need to provide people with a clear connection to the organization's larger purpose, the opportunity to self-lead, and develop their skills beyond passable to a really extraordinary level.” Kahan’s advice echoes Pink’s mantra of “autonomy, mastery, and purpose.”
Compassion, expressed as respect and trust; flexibility to achieve work/life balance while working autonomously and developing skills; being managed with clear expectations, individualized to meet personal needs; these are aspects of the employee value proposition that earn employees' loyalty.
Develop leaders and key contributors at every level
Every leader must understand the importance of developing people. “Organizations should be taking steps to identifying high-potentials — who can you see as CEO someday?” Molly Foley said. And who is contributing critical knowledge or skills in strategic areas? She advises creating a trusting environment where conversations with high-potentials can be frank. “Tell them we see good things for you, we want to support you whether it’s here or elsewhere,” she said, emphasizing that too often, employers pull back on developing individuals once it’s known they have career ambitions outside the organization. “We need to get beyond that. Who knows where your company will be ten years from now either?” Foley pointed out.
Melanie Rydalch said, “It's important to have great leaders because great leaders are able to retain the A players. We have to not only focus on the new people we're bringing in, but ensure that our current leaders are being developed.” HR and training departments must provide the robust support managers need for developing those great leaders Rydalch referred to, as well as key contributors throughout the organization. At the Motley Fool, Keenley reported that, “We’ve been beefing up our internal training programs, and we just developed our corporate university, which is going to go further toward developing our people without taking so much of our managers’ time.”
Creelman also called attention to the role of the manager’s manager. “That person should be having skip-level meetings with the high-performers and high-potentials,” he noted, mentioning the need to monitor whether the employee value proposition is still working for those individuals. “It can be easier for employees to tell their manager’s manager about their concerns and aspirations than their immediate boss,” he added.
Callam recommended investment in software to automate the performance management and development process, and added that “we have to be consistent in how we apply it or people’s loyalty goes down. You need to train managers on what they need to review and how they need to appraise. The software makes it possible for us to be more consistent overall.”
Employees thrive when they're given access to a variety of robust development resources like the Motley Fool’s new corporate university and their manager supports their development. Execute well on that and loyalty should follow.
To ensure profits, make loyalty a priority
Organizations that learn how to earn their top talent’s loyalty will see the benefit go straight to their bottom line. The cost of recruitment, mis-hires, and mis-promotions will be reduced significantly.
Truly successful organizations focus on the enduring wisdom of encouraging motivation by applying the Job characteristics model, in either its original flavor or Pink’s update. With HR's guidance and strategic contributions, the organization can focus on maintaining a winning employee value proposition with each high-potential, high-performing individual, developing leaders and key contributors at every level, and earning the loyalty of their top talent.
Read how others are earning the loyalty of their top talent
One of the ways top accounting firm Clark Nuber keeps their high performers happy is by providing them with a way to track their performance and progress on goals.
At FuelCell Energy, ensuring their high-potential employees are recognized and nurtured is a high priority for HR and managers.