Quantum Workplace has identified six drivers of employee engagement that have the greatest impact:
- The leaders of their organisation are committed to making it a great place to work.
- Trust in the leaders of the organisation to set the right course.
- The belief that the organisation will be successful in the future.
- Understanding of how I fit into the organisation’s future plans.
- The leaders of the organisation value people as their most important resource.
- The organisation makes investments to make employees more successful.
Key principles
- These are a few key principles for you to address when it comes to top talent attraction and retention:
- Differentiation is key
- Use the Total Reward framework to define the retention levers that you will use
- Guaranteed pay
- Variable pay
- Attraction and Retention bonuses
- Employee wellbeing
- Talent development
- Recognition
- Differentiation is key:
- Many organisations make the mistake of “spreading the peanut butter too thin”. They try to treat almost all employees as top talent.
- As a guideline, when considering top talent, the key employees should constitute no more than 5%-10% of the workforce.
- Each company must agree on what they define as top talent and then stick to that definition. As an example, you could define top talent as follows:
- Employees in the top performance ranking of your organisation and who are viewed as having a high level of potential to succeed in bigger roles in the future.
Another approach to be considered is to select the jobs that are defined as key skills for the organisation (eg Data Science, Software Engineering, Brand Management) and then pin-point the best talent in those key skill areas.
- When thinking about attraction and retention ensure that you address all of the key areas of Total Reward:
- Guaranteed pay
- Although most organisations would define a targeted market position of, for example, the 50th percentile, when it comes to top talent the company must be prepared to break out of this mould.
- Guaranteed pay should not be a distraction for top talent. Their guaranteed pay should be positioned at the upper end of the market so that they are not doubting that the company values them.
- Positioning guaranteed pay at the 75th percentile (or above) will also ensure that any unsolicited approaches from competitors will be more difficult to get over the line.
- Variable pay
- To be competitive your organisation would need to have both short-term and long-term incentive schemes which are competitive within the market and which disproportionally reward high performance.
- If your average performers are receiving variable payments which are just below those of top talent then your schemes are not working effectively.
- Furthermore, shareholders expect that variable payments should be aligned to company and individual performance and it would therefore be difficult to justify strong incentives for average performers.
- Short-term incentives: top talent should be able to earn a short-term bonus which is at least 50% to 100% higher than their peers.
- Long-term incentives: when making annual LTI awards consider a matrix to help you ensure that top talent receives disproportionally more in shares.
- Attraction and Retention bonuses
- By definition, most top talent candidates in which your organisation is interested should have a significant “lock-in” in terms of reward. You will find that they are probably due for a sizeable bonus and that their unvested share value is well above market norms.
- As a hiring company you will need to make sure your offer is attractive, and at minimum ensure that the candidate is compensated for the STI and LTI which they may forfeit. As an example, if a candidate is due for a R1m STI in six months time and their unvested share value is R4m, you may need to offer an attraction and retention package as follows:
- R1m in cash on joining with a 12 month retention period
- R4m-R5m in shares on joining, assuming the share schemes of the two companies are similar in design and structure. The additional R1m in LTI is to compensate the candidate for the fact that their vesting period will start from scratch when they join your company.
- In addition to competitive STI and LTI offerings, retention bonuses can be very powerful retention instruments. The logic here is that your top talent receives a percentage of guaranteed pay (eg 50%) payable over two years with a further one-year retention period. This will give you a 3 year retention window and make the poaching of your top talent more difficult.
- Employee wellbeing
- Employee wellbeing has grown in importance over the years but for some companies it still a “nice to have” and leaders are not completely on-board as to the value that this can add to an employee’s life.
- COVID-19 has massively upped the stakes on employee wellbeing.
- In May 2020, research called “Navigating COVID-19 – Impact of the pandemic on mental health,” by the US-based Society for Human Resource Management, found that 41% of respondents felt burned out from grappling with lives altered by COVID-19. Respondents felt pressurised by threats to their job security, pay and benefits. They felt “out of sight, out of mind” or that their work ethic and performance were being questioned because they were not in the office every day.
- It is critical that organisations provide a well thought through employee wellbeing solution for all employees, and especially for top talent.
- Beyond all your physical protection measures, make sure employees know where to find information, guidance and support for mental health. Set up an Employee Assistance Programme (EAP) where employees can reach out to external professionals for support and counselling. Develop in-house channels and hubs to respond promptly to employee questions and concerns.
- Research in Hong Kong after the 2003 SARS outbreak found that increased social connectedness offset the negative mental health impacts of the pandemic. For many people, connection with colleagues can provide an important buffer to their feelings of social isolation and disconnection. Encourage employees to stay regularly connected with virtual video meetings. With employees feeling overwhelmed and anxious, ask people leaders to make themselves available to staff to talk about their fears, answer questions and reassure them about work and personal issues.
- It is critical that organisations provide a well thought through employee wellbeing solution for all employees, and especially for top talent.
- The sudden shift to working from home has the potential to de-rail performance. Make sure employees have sufficient infrastructure, flexibility and support to do their job to the best of their ability under the current circumstances. As an example, some organisations have negotiated highly competitive prices with home office data, and technology suppliers to enable employees to enhance their home working environment.
- Don’t expect all employees to be available for 18 hours a day. Leaders should agree with their teams what the core working hours are (eg 9am to 3pm) where everyone is available and then allow for the remainder of the work to be done at times which suits the needs of each household who may be juggling home schooling, providing additional meals, taking care of those who are self-isolating, and dealing with possible loss of loved ones due to COVID.
- Your top talent may be under even greater pressure at this time as the company looks to them to deal with greater complexity and more challenging financial goals. Be deliberate in checking in with the leaders of top talent to see that they are supporting their teams, and ensuring that top talent is given the flexibility and support they need in order to sustain performance.
- Talent development
- There is a risk that top talent get so busy with delivery that they are not able to grow and develop, both technically and personally. One way of ensuring growth and development is through targeted learning and development interventions. This demonstrates your commitment to nurturing your people’s potential.
- Recruitment agency, Robert Half, found that candidates evaluate job offers holistically, specifically looking for companies that will invest in their career development. Young professionals (millennials) have also been found to ‘job hop’ due to feeling a lack of opportunity for learning and growth.
- Development for top talent must be tracked and reported on a regular basis. Senior leadership should own the overall development plan for the top talent pool and ensure that there is alignment with overall organisational needs and the aspirations of the top employees.
- Recognition
- During times of crisis, employee recognition often takes a back seat. Managers have ‘more important’ things to get to, but little do they know, it’s very often the reason they lose their top-talent during such times.
- Although retrenchments may be taking place, there’s still the same amount of work to be done –and, of course, less staff to lean on. It’s typically the top performers that are asked to close this skills gap.
- Top talent need recognition from their peers and from their leaders. As much as we can bolster their overall reward, we do need to ensure that they receive the appreciation and affirmation which they deserve.
- When designing your recognition programme be sure to think about these areas:
- When designing your recognition programme be sure to think about these areas:
- Recognition comes in many shapes and sizes – there is a great deal of research that indicates people are motivated by more than just cash. Get a clearer picture of the primary language of appreciation in your company. You will typically need to use a combination of cash, gifts, travel and public recognition to achieve your aims.
- Make it easy for managers to celebrate employees – use technology to make nomination, approval, and awards as effortless as possible.
- Make a big deal of recognition – appreciation is a fundamental human need. Employees respond to appreciation expressed through recognition of their good work because it confirms their work is valued by others. Make sure that all recipients of a recognition award are recognised publicly. Use channels such as internal announcements, newsletters, promotional videos and gala functions to “trumpet” the achievements of your top talent.
- Recognition comes in many shapes and sizes – there is a great deal of research that indicates people are motivated by more than just cash. Get a clearer picture of the primary language of appreciation in your company. You will typically need to use a combination of cash, gifts, travel and public recognition to achieve your aims.
- Make it easy for managers to celebrate employees – use technology to make nomination, approval, and awards as effortless as possible.
- Make a big deal of recognition – appreciation is a fundamental human need. Employees respond to appreciation expressed through recognition of their good work because it confirms their work is valued by others. Make sure that all recipients of a recognition award are recognised publicly. Use channels such as internal announcements, newsletters, promotional videos and gala functions to “trumpet” the achievements of your top talent.
Summary
- Employee retention is a critical issue as companies compete for both market share and top talent in a tight economy.
- The payoff for organisations that focus on employee retention is well worth the time and investment. Increased performance, better productivity, higher employee morale and improved quality of work, not to mention a reduction in turnover, are benefits to your organisation as you navigate the perils of COVID-19.
- To ensure that you don’t overlook your top talent and the levers to retain them, think about developing a heat map such as the one below to track and action the retention strategies which are so important in the uncertain world we live in.