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Strategies for success: Talent retention

With over 50% of the UK workforce either quiet or actively quitting, we review the challenges and pitfalls of talent retention, explore the current conundrum of reward and remuneration, and identify the key characteristics of the organisations that people are queuing up to work for (there is one that trumps them all).

A recent report from Culture Amp, surveying employees from over 1000 organisations in the UK, suggests that 20% of the workforce will quit their jobs in the next six months, while Work Buzz’s annual survey of over 450 senior HR professionals has retention as the number-one challenge for HR in 2024. 

We don’t have to look too far to work out why. According to Gallup’s State of the Global Workplace 2023 Report, only 10% of the UK workforce is engaged in their work, ranking us 33rd among European countries for engagement.

So, what are you doing to retain your best people?

Identifying the best talent

In businesses where the HR function is a driver, a talent plan will already be in place. Probably using traditional tools, like the Potential/Performance Matrix, they will have already identified the Stars, as well as the Risks, earmarking their Potential Gems for future development. That said, not all organisations will have one and the jury is out on how accurate and useful they are, anyway, even if they are up to date.(2)

However, identifying key roles to inform a retention plan is one area where time must be invested. Traditionally, businesses have taken a top-down approach, relying on senior leaders to make their recommendations. In large organisations, where they are often remote from the day-to-day processes and procedures, our experience is that a bottom-up approach, engaging with all key stakeholders, is crucial. For example, depending on your criteria, key people may not be in key roles (and vis a versa). Clearly defining the two will be an important first step in your retention plan.

Successful outcomes will be dependent on your leaders leaning-in to listen. Developing a profound understanding of what is happening on the ground will require engagement and collaboration. It is necessarily a bottom-up approach where decisions are made collectively.

Assessment & Profiling

Good decision-making requires accurate insight. As we have seen, cultural synergy is imperative for organisational success.(3)  Today’s sophisticated personality profiling and psychometric tools will help. They offer accurate and predictive insight that is invaluable in assessing not only who has the necessary technical capabilities but also the right personality, emotional intelligence, and interpersonal style to ensure a good cultural add. I’m using the word ‘add’ rather than ‘fit’, here, because the goal is not conformity, but complementarity, it is about offering something more to the business. After all, diversity, rather than homogeneity, is the hallmark of a creative, progressive organisation.

As well as identifying strengths, assessment & profiling will also uncover areas where investment in development may be needed.

To learn more about assessment & profiling, download our factsheet here

Why people leave

Identifying the key roles and the best people is only the start. Ensuring those people stay, can be the real challenge. The number one reason people leave is still money. Against the backdrop of the cost of living crisis, people need to make ends meet. People also want to see a clear development pathway, that there are opportunities for personal and career development. A post-pandemic focus on health and wellbeing means employees are prioritising a good work-life balance, too. Integral to this is a desire for flexible working.

In a business environment where the only certainty is change, continual adaptation and reinvention is a prerequisite. However necessary, change causes anxiety. Rather than wait for the outcome, if they have options, people will sometimes prefer to take control of the situation and jump ship.

Whatever change your organisation is considering, an open, honest communication and engagement process is required from the outset. In our experience, understanding and clearly communicating the ‘WHY!?’ of any change creates a firm foundation on which to build. Essentially, it is an exercise in captivating the hearts and minds of your people. In the absence of a clear, coherent, persuasive story, people will create their own narrative, giving rise to unhelpful misinformation. 

Whether it is a change in job role, responsibilities, even location, it can be unsettling. The most significant change, causing people to leave, however, is in management. A recent report by the Chartered Management Institute (CMI) in conjunction with YouGov states that 50% of workers unhappy with their managers plan to leave. The same report highlights that ‘82% of workers entering management positions have not had any formal management and leadership training, adding to the UK’s stock of “accidental managers.”’ Characterised by high staff turnover, toxic cultures created by poor management contributes to an unmotivated, disengaged, stressed-out workforce that is inevitably unproductive. We are all more focused on our wellbeing, post pandemic. As such, if a culture is toxic, people will walk.

 If 82% of the UK’s managers are ‘accidental’, then we don’t have to look too far to work out why 90% of UK employees are disengaged from their job and are either quiet or loud quitting.

Money, money, money

When it can cost over double an annual salary to recruit someone new – and over three times the annual salary, if you get it wrong – having a talent retention plan is crucial for the success of any organisation.(4) It is why businesses incentivise key people to stay. As well as protecting their intellectual and client-relationship investment and showing a top-performing employee they are valued, they are also looking to make their Star prohibitively expensive to any competitor. But can money really buy hard work, loyalty, and trust?

The world of work has changed significantly since the pandemic. While in the UK we may not have seen the Great Resignation in quite the same way as the US, the priorities and values of UK workers have shifted. As such, organisations need to take a more holistic approach to reward and remuneration.

The pandemic underscored the importance of employee well-being, prompting companies to expand their view of compensation beyond monetary rewards. Well-being programmes, mental health support, and a healthy work-life balance are now integral to pay packages.

None of this is to say that money is unimportant. Some companies are bucking the total-rewards trend and continue to maintain a monetary focus. This includes assisting employees, with salaries under £70k, by providing interest-free loans, holiday buy-back, and cost-of-living payments. As LinkedIn’s latest Global Talent Trends report (May 2023) shows, an excellent compensation and benefits package is still the top priority for job seekers. This is true especially for employees on lower incomes, where, as we have seen, the bottom line is the Bottomline: they need to make ends meet.

What we are saying is that a holistic, personalised approach to reward and remuneration will contribute to a more engaged, loyal, and productive workforce.

To read our recent report on Pay Reviews: Current trends and priorities, click here

The conundrum of the counteroffer

To go back to our question: can money really buy hard work, loyalty, and trust? Statistics around counteroffering an employee when they have resigned are illuminating. In essence, you are only putting off the inevitable. A recent survey by UK Recruiter has 50% of candidates who accept counteroffers from their current employer actively job seeking again within 60 days, while Phaidon International state that up to 80% of people who accept a counteroffer either leave or are let go within a year. Whether because of employer distrust or continued employee dissatisfaction, money is not the salve to smooth over every crack.

Culture: Is your organisation a great place to work?

When it comes to talent attraction and retention, culture rules. As we have seen in our previous article in this series, values-led, purpose-driven organisations are magnets for high-performing individuals seeking meaningful work. They have a track record of not only attracting but also retaining employees who find greater satisfaction when they believe their work contributes to a higher purpose, leading to long-term commitment.

To attract, retain, and get the best out of your people, you need to create cultures where they feel valued, engaged, and motivated. Businesses that trust their employees and give them the autonomy to do the job they were hired to do have high-performing cultures that tend to attract and retain the best people. As do businesses that prioritise personal development and where roles have a clear career-development path.

With fewer jobs being advertised and greater candidate availability, our recruitment consultants are reporting that the market has mellowed since its post-Covid bounce-back high. However, competition for the very best people remains fierce. Whether for attraction or retention, the best candidates are prioritising an organisation’s culture over expected salary.

Our consultants are also reporting that there is a growing standoff between increasing numbers of organisations wanting everyone back in the office and a desire among candidates for flexible working. How you work this one out will impact on your ability to retain the best people. For many employees this remains a non-negotiable.

In brief

If an organisation is only as good as its people, then identifying the key roles and retaining the best talent must be a priority for its sustainable success.

As we have seen, culture is key. The companies retaining talent are values-led and purpose-driven, giving their workers autonomy, trusting them to do the job they were hired to do and treating them as unique individuals, with personal values and drivers. They are the organisations that offer flexible working and clear personal and career-development paths; the organisations that engage openly, honestly, and collaboratively with their people, leaning-in to listen and acting on what they have to say; they are the organisations that have created and communicated a compelling narrative around why change is necessary, and why it will be in the best interests of everyone, from the outset. As such, they are the organisations that understand that HR is integral to their success.

1. Kate Hardcastle, Mergers & Acquisitions: HR is integral to success: https://www.seymourjohn.com/articles/mergers-%26-acquisitions%3a-hr-is-integral-to-success/a35

2. Lucy Adams, 9 Box Grid Fatigue: https://disruptivehr.com/9-box-grid-fatigue/

3. Kate Hardcastle, Mergers & Acquisitions: Creating cultural synergy: https://www.seymourjohn.com/articles/mergers-%26-acquisitions%3a-creating-cultural-synergy/a37

4. Recruitment and Employment Federation (REC), Perfect match: Making the right hire and the cost of getting it wrong, June 2017: https://www.rec.uk.com/our-view/research/recruitment-insights/perfect-match-making-right-hire-and-cost-getting-it-wrong
Kate Hardcastle

Kate Hardcastle

Kate is a Chartered MCIPD HR professional and one of our business-improvement gurus. With over 20 years’ experience in consulting and other business-improvement roles, she inspires individuals, leaders, and organisations to perform to their best.

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