It seems counterintuitive – however, more than ever, business executives and leaders should focus on and prioritize the retention of top talent. Although job growth is stagnant, as leaders, we still have the responsibility to maintain a fully engaged workforce. Retaining talent is critical to the success of our organizations; it is a strategic issue that commands focus, time and resources and should be a key priority for business leaders.
Misconceptions About Unemployment
Houston’s unemployment rate has risen to 5.8% in August 2016, up from 4.9% in August of last year and experts predict even more layoffs in the coming months. The assumption is that employees wouldn’t dare leave their jobs in this economy. After all, where would they go when the talent pool in Houston is only growing?
Despite the perception that there is large pool of unemployed professionals, unemployment in the Houston area is relatively low, especially with highly skilled workers.
The oil and gas industry has experienced the largest drop in drilling activity since the 1980’s so there is no argument that the price of oil has had a significant impact on employment and job growth in Houston. However, much of Houston’s job growth since the 1980’s has come from growth in other business sectors including: healthcare, construction, technology, global trade and manufacturing. Now, oil and gas companies make up only 50% of the Houston economy. So although the oil and gas industry has experienced tremendous job loss, other industries are hiring and expanding.
Still, many companies are struggling in an effort to manage this business climate. With reduced budgets, employees are often forced to work more and produce more with depleting resources in an environment that is inherently more stressful. Stressed employees, especially those who are top performers, are at risk for being lured away by another company.
Business leaders must focus on the following key areas to effectively protect its most prized asset-human capital-during the current economic climate:
Too often retention efforts are minimal until the company suspects an individual may leave. It is often addressed by offering some form of enticement to stay, and then it is back to business as usual. This approach may seem effective, but it does nothing to cultivate long-term loyalty.
Instead, leaders must dig deeper and assess their retention strategies and prioritize a plan to engage and retain their best talent.
If business leaders are still not sure why it is important to prioritize retention, they should consider cost. Studies show that the total cost of losing an employee can range from tens of thousands of dollars to 1.5 to 2 times their annual salary. Senior management should recognize that people represent an appreciating asset, and tenured employees provide far greater value than those just cycling through the organization.
Employees who are consciously engaged in their work environment care deeply about the company and its success. Despite increased pressure and decreased resources, they are more likely to stay.
Communication is key to employee engagement. Employees need to know – on a continuous basis – how both they and the company are performing. Communication creates a sense of security for an employee, even when the company may not be performing well. If people understand how the organization is doing and how their contribution makes a difference in that organization, they are generally more connected and invested in it.
The steps to engage employees are clear. Communicate clear expectations. Provide frequent feedback. Build opportunities for transparent conversations that leave the employees feeling valued, empowered, and confident in their ability to get the job done, regardless of market conditions.
Once the lines of communication are open, management also needs to seek input from employees. This two-way street approach to communication solidifies loyalty and promotes cohesiveness across the organization. Employees become committed to the long-term goals of the organization and are eager to contribute to the bottom line.
Make Retention Personal
At a time when many companies are not able to increase salaries and provide bonus incentives, it is important to realize there are other ways to compensate and retain valued employees. Each employee is motivated differently so retention strategies need to be tailored to the individual.
Successful organizations make retention strategies personal. How? By simply asking the employee, “What motivates you?”. It may be surprising to find that monetary incentives are lower than expected on the list of responses. Top performers are often equally concerned with challenging work, personal and professional growth opportunities, work/life balance, and workplace flexibility. Offering flexible work arrangements, like having the option to work from home or more flexible vacation offerings can boost employee morale during a sluggish economy.
As the job market evolves in the coming weeks and months, recruiting talented professionals continues to be challenging and holding on to key players is more important than ever.
Regardless of the economic conditions, retaining talent is instrumental in the success of our organizations; it is a strategic issue and should be a key priority for business leaders.