The economic crisis was swift, brutal and indiscriminate. The way businesses functions – budgeting, planning and managing – has adapted to cope with this new environment, in some cases for the better. On the other hand, there is reason to believe some of the practices adopted during the economic downturn were not positive, and organizations that utilized them may feel the sting of negative decisions long into the recovery period.
In Managing Talent in a Turbulent Economy, a study released by Deloitte, 65% of executives worldwide reported they have a “high” or “very high” concern about retaining talent once the recovery begins. These concerns are most likely painfully valid. The Watson Wyatt/World at Work 2009-2010 U.S. Strategic Rewards Survey, from 2008 to 2009, found engagement levels among employees considered to be top performers dropped 23%.
In terms of the younger generation specifically, companies that do nothing to re-engage their workforce can expect 71% of their Gen Y employees to walk out the door as soon as they feel the economy has recovered.
Organizations which prepare now to retain employees will be miles ahead of their competition, and in a better position to take advantage of the recovering market, saving thousands (and in some cases millions) of dollars, and generating more revenue than their competitors.
It is a well-known fact that losing a mid-level manager can directly affect an organization’s costs from 150% to 200% of the manager’s base salary. Even attrition of entry-level and non-skilled workers cost thousands of dollars in plummeting morale (survivor syndrome), lost productivity, hiring and training. Furthermore, even after a replacement is hired, he or she often yields comparatively small returns for a considerable period of time until they are fully on board, a process which can take months.
How can you best prepare & plan to retain your employees?
Take a hard look at compensation and benefits. Were salaries frozen or reduced? Were benefits eliminated as a result of the recession? In many cases, base salaries were reduced, compensation plans were restructured, and retirement plan matching, stipends and health care benefits were cut. As soon as revenue growth and profitability allow, begin reinstating the reduced or eliminated salaries and benefits as quickly as possible. But be sure to start with your most valuable and productive talent first. This may require staging the return of salary and benefit programs but retaining your top performers is of paramount concern.
Next, take a close look at your internal communications. Are employees really and truly aware of the strategic direction of the company and what plans are in place for them? Don’t assume that your valuable talent knows they are valuable and the company intends to keep them. Most likely they are feeling insecure and disillusioned, and your competitors are ready to snap them up as soon as they leave.
What should we do in the meantime?
Organizations should have had a plan for managing the increased workloads, longer hours and stress of the past 18 months. If there was no plan in your organization and the events were addressed in an ad hoc manner as they occurred, it is still not too late to develop a plan for managing top talent during the recovery. If nothing was implemented to help support and relieve employees during this time, now is the time to start.
Take this opportunity to streamline processes. Your employees, especially Gen Y’s have no doubt mastered new skills as a result of increased responsibility. This is an opportunity to re-engage employees with praise and recognition, lateral promotions to keep engagement high and reduce the “grass is greener” mentality, and new job descriptions that better encompass individual’s new skill sets and career goals.
Oftentimes, disillusioned employees can be re-engaged and retained without any monetary costs. Being deliberate and mindful in communication strategies, as well as taking the time to identify how your employees are working today and what might help them work better tomorrow can prevent your organization from losing your top performers and foundering as we pull out of the economic downturn.
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During 2010 we will be providing a monthly article for the PHRMA Newsletter. We would welcome your comments on published articles and also your suggestions for future article or questions you would like us to address. Who are we? Genevieve Beatty-Tinsay and Peter Lund – GenCubed.com, Eric Wilson -HRISolutions.com, and Larry Hellie and Rick Howell HHRC2.com.