Three Keys to Retaining High Potential Employees
Around 25 percent of top-performing employees intend to leave their jobs — even in today’s economy! Your company’s future effectiveness depends on retaining top talent at all levels of the organization, and so you better make sure you get it right.
August 23 2011 by Joseph A. De Feo
Research shows top performing managers are leaving their jobs, even in today’s dismal employment environment. The better the results they’re achieving the more confident they are about their ability to succeed elsewhere. One quarter of top performers intend to leave their company, according to a study by the Corporate Leadership Council. Some 42 percent of employers are increasingly concerned that other companies are prepared to poach their top talent, reports Challenger, Gray & Christmas.
Competitors may be trying to recruit your best managers right now in preparation for a business rebound, knowing that companies that strengthen themselves during an economic slowdown bounce back fastest when the inevitable upturn comes.
Here’s a strategy that can keep your future leaders working for your organization. It focuses on helping them reach their maximum potential, which is what they value most, and keeping them engaged. This three-part plan is based on research at Juran and my experience as an executive coach.
1. Assess Your Top Performers and Let Them Know They Are on Top
Determine why your top performers are successful. Look beyond the results they’re achieving to understand how they’re producing them. Managers apply a wide range of tactics and execution styles to achieve their targets. Are they consistently using best practices or are they creative geniuses who break all the rules? Are their bottom line results due to increasing revenue or cutting costs? Are they intuitive or analytical? Moreover, does your organization understand their personalities, values, life plans and work expectations?
Successful leaders know their rising stars. Whenever he travels, Phillips Electronics EVP and co-COO Gerard Kleisterlee has three priorities: meeting local management, meeting a key customer — and lunch with a high-potential manager.
By knowing your rising managers well, you can make more confident decisions about your organization’s future leaders and who will be better in other roles, perhaps as subject matter experts in technology or finance. You’ll be able to structure the best development plan for each.
2. Improve Their Performance
Align your top performers’ development plans with your company’s strategy so what they do supports the organization’s needs as well as their own. Determine the best pace for their tracks. Companies sometimes move their rising managers around too quickly. The risk is they may tend to pick only the low-hanging fruit when planning projects and recast the challenge so they can handle it with existing skills. Give them the time needed to plan their projects, implement them and stay to see the results so they can evaluate their performance.
Let these managers participate in the career track planning from its start. By working in partnership with them you can make the most suitable changes together. You can use many different kinds of development techniques.
Mentoring can really pay off: A five-year study of 1,000 Sun Microsystems employees found that 25 percent of mentored employees enjoyed salary grade changes, while only 5 percent of those in the control group did. Those who were mentored were also promoted six times more often than others.
Rockwell Collins matches mentors and high performers using a web-based program. IBM has three distinct mentoring programs: expert mentoring, career mentoring and, for new hires, socialization mentoring. At Eli Lilly, new MBA grads get a full 20 percent of their learning from coaching, while 70 percent comes from their work and 10 percent from formal education. All these programs are productive. In contrast, other mentoring programs peter out and some even generate conflict. The ways mentors are matched with mentees can sometimes look like blind dating.
Let’s picture a different kind of mentoring. The mentor does the usual mentoring things but is also an advocate for the manager. This advocate, a confidante, keeps the manager current on what’s happening in the company, provides counsel, identifies internal resources and helps clear obstacles that impede performance.
The advocate-mentor also helps to resolve conflicts that can easily develop when, for example, a newly rotated top performer is assigned a critical role and the operating unit head would prefer a more experienced manager on the job. The advocate also keeps senior management up to date on the manager’s performance.
Other strategies for developing your high-potential talent can include rotation to a supplier, process improvement team projects, executive education, tuition reimbursement, shadowing, executive coaching, job swaps, stretch assignments and specialized skills training. The training can include courses of one or two days on management skills like project management or making effective presentations. There are short courses that deal with potential problems like ethics or diversity.
There are also longer, more technical training initiatives designed to improve the quality of your company’s products and services to meet customers’ needs, such as Lean and Six Sigma methodologies. Creating a corporate university, like those at companies like GE and Motorola, might be the best approach for leadership development on a large scale.
Don’t make it public about who’s a rising star or you’ll create a culture of winners and losers.
3. Measure Progress Quarterly – Not Annually
The annual performance review is losing out to quarterly reviews at some Silicon Valley businesses. Your high-potential managers also should be given quarterly evaluations because many are in jobs that are totally new for them. Your company is driven by quarterly performance; why not your top talent? Continually monitor and measure the results they’ve achieving and take corrective action if necessary to get them back on track.
The traditional performance review often fails, as both an assessment tool and a plan for future performance improvement, because reviewing managers are given little guidance in conducting it. The review can become the most stressful event of the year for the top performer and the reviewing manager. High-potential managers must be reviewed with great care. A good approach is to have them make a presentation about the results they achieved since the previous review, identifying goals reached and those missed. The meeting is collegial, the manager’s advocate participates, and senior leaders provide encouragement and support. Not a word is said about salary, which is negotiated later.
Salary is only one of the factors that affect retention but disappointment with raises can impact retention rates. When the financial climate is right, top performers who achieve results should get bigger raise rates than other managers who don’t. But what should the differential be? The teachings of the non-profit WorldatWork organization, which provides education, conferences and research on HR issues, suggest a differential of between 50 and 100 percent. Over the last five years, including an estimate for 2011, differential rates have averaged between 40 and 47 percent.
Get to know your rising managers. Let them know they’re valued and that they can achieve all their goals at your company. By managing their development strategically you’ll create powerful, productive leaders who will help your organization reach new breakthroughs in performance. And they may be less interested in jumping ship.