This is the eighth in a series of blogs in which we will look at some of the common issues faced by modern leaders and how they can be addressed. Today, we will consider a topic that has been at the forefront of executives' and managers' thoughts for a considerable period: getting and keeping the best people.
I have spent many years working in different organisations, attending business events across the country and following overseas studies to analyse trends. I have observed that, for some time now, one of the biggest challenges companies have faced is the ability to attract, recruit and retain talented and highly engaged individuals.
Typically, organisations' weight of effort is directed towards financial incentives. However, this almost never works beyond the short term. It is not that financial rewards are unimportant; everyone wants to know they are being fairly rewarded for their efforts, it is that, beyond a certain level and for most people, money is a satisfier rather than a driver of high engagement, i.e., it needs to reflect their value but it is not a source of deep motivation.
HBR recently devoted an issue to 'what most companies get wrong about talent management' (Jan-Feb 23 issue) and concluded that they often misjudge what really matters to employees, not just in terms of money but in terms of offering flexibility as well.
Here is a link to the article: Rethink Your Employee Value Proposition (hbr.org)
For those who cannot access the article, here are the main points supplemented by my own thoughts:
Asking people what they want can be helpful, but the problem is that they are usually focused on their short-term individual desires and will thus raise material aspects of the job (including remote and hybrid working arrangements). Another problem is that, to a point, they are easy to affect, both for you and your competitors. The result could just be a bidding war which drives up costs for no increase in engagement!
A better approach is to take a more balanced short- and long-term view by creating an employee value system with 4 key, interrelated factors:
1. Material Offerings.
As I said, it is not that they are unimportant, but they are only one factor. They should include compensation, office spaces, flexibility, IT equipment, perks, etc.
2. Development Opportunities.
What skills are required both now and in the future? How will you help your employees develop? How do they see their future needs? What will you do to push high-flyers along? What will you do for those who do not desire or are unsuited for promotion but are valuable in their current roles? Questions such as these will help you formulate your offering in this area.
3. Connection and Community.
How can you facilitate excellent interpersonal relationships and cultivate a sense of belonging? Note that a key part of your answer here should address the need people have to be appreciated and valued for what is important to them. A common mistake is to assume that others have (or should have!) the same main motivations as ourselves when in reality we are all different. Psychometric-based workshops or coaching using tools such as SDI 2.0 and DiSC can be very helpful here (see the Aspire website for brief overviews: Tools | Aspire Management Consultancy Ltd | England (aspiremcl.co.uk) ).
A few years ago, I saw a HBR study into the most common causes for people leaving their jobs. By far the most common reason (>60%) was 'to get away from someone', usually the line manager! It is hard to over-emphasise the importance of skilled leader-managers who can build teams and motivate individuals when it comes to the question of retention.
4. Purpose.
How do your employees' desires to improve society fit with your organisational purpose for existence (your mission)?
It is worth noting that the generation now reaching manager/senior manager levels is particularly concerned about the meaning and ethics of their work.
Integration
Of course, many organisations look at each of these areas, but they tend to treat them as stand-alone factors whereas, in reality, they are interrelated. A classic example that shows this is provided by a software company referenced in the HBR article: the executives wanted everyone back in the office post-Covid but employees wanted to remain at home. The executives relented only to find that engagement scores still dropped as people complained about "loss of connection." A good question to ask, therefore, is "How might changing this factor affect other factors our staff care about?"
The article also shows the business benefits of the holistic approach: WD-40's engagement scores have been >90% for more than 2 decades during which time shareholder return has grown at an annual rate of 15%, revenues have tripled and its market cap grew from $300 M to $2.4 Bn (as of Oct 22).
Actions for Leaders:
- Consider your current offering in each area, how employees experience the provision and what they want. Remember that there will be changes and other factors so look at causes rather than just scores.
- Ensure you 'sell' the integrated approach and explain clearly how the factors are related, e.g., the software company noted above could have highlighted the effect on 'connection' that permanent remote working could result in.
- When recruiting and onboarding, be very clear about the offerings you provide over time and how they are balanced. Most of your competitors will not be doing this, so, if done correctly, this will give you an advantage in a scarce talent market.
- Put an emphasis on employees' responsibilities as well: encourage them to think more broadly about how they are contributing to the organisation's mission, what steps they can take to enhance working relationships, etc.
- Having created and implemented an integrated system, reassess it on a regular basis (annually is usually sufficient) and/or when there has been a major change such as a merger or acquisition.
- Use tools such as 'Belbin team Roles' and 'The 6 Types of Working Genius' to help clarify people's high-motivating work. Obviously, we all have elements of our work that we do not especially enjoy, but weighting effort and time into areas that are valued by the individual will significantly boost engagement.
- Develop your own leadership skills! People are far more likely to join, stay in a role and 'go the extra mile' if they are valued for what is important to them and are well-led. Remember that most people leave an organisation to get away from somebody (usually the line manager!).
Case Study
Some years ago, I heard the testimony of the CEO of an American organisation that wanted to recruit a particular individual for a key executive role. He could not match the pay being offered by others, but he wanted the individual so badly that he literally sent him a red carpet and a personal message saying how much he wanted this person on board and how valued his skills would be. It worked! That was only the first step, but it was a good first step.
There are numerous studies, including one by the University of Toronto's Jing Hu and Jacob Hirsch*, that have shown people will accept lower salaries if they are doing work that is meaningful for them and if they get on well with their work colleagues.
Summary
Material offerings are not unimportant, but they are only one of a series of interrelated factors that must be considered if you are to increase your chances of recruiting and retaining top talent.
Too many organisations either focus almost exclusively on pay or, if they consider other factors, do so in isolation. Creating a powerful, systemic offering is both attractive to candidates and a source of competitive advantage (because so few do so properly).
The benefits of having highly engaged employees are well known and this alone makes the financial and time investments in creating and developing the kind of system covered above a very good business investment.
Question: what would you add to the above? Please add any suggestions or observations that could help others in the comments box. Thank you.
As noted, this is the eighth blog in a series addressing leadership issues. If there is a topic you would like Aspire to cover in subsequent releases, or if you would like a no-obligation consultation to discuss any of Aspire MCL's services, please comment or email enquiries@aspiremcl.co.uk. We will not spam you!
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