Talent Retention

This is a general guide to post-pandemic business management.

Talent has always been difficult to retain. The bar has just been set higher by the pandemic. Organizations, as we know them, are all about people. Even when processes are automated, we still need talented people to oversee those processes. Talent retention is moving from the periphery of being a desirable business attribute to being a necessary condition for business success.

Organizations strive hard to attract talent. This article is targeted at those organizations that manage to attract talent in the first place. Organizations that fail to acquire talent do not need to worry about talent retention.

Most HR practitioners have a habit of broadly classifying a lot of employees as talent. The reality is that talented individuals are fewer than preached. Talent is scarce. It is not an abundant resource. Most companies will have only a few talented individuals. There are only a few companies that manage to acquire a very large pool of talent. Big tech giants are notorious for this. Investment banks used to be in that league but are quickly losing flavor as talent starts to consider work-life balance seriously. The rest of the non-big-tech and non-investment bank companies typically manage to obtain some talent but do not have a workforce pool that can be predominantly labeled as talent.

Thus, the issue of talent retention is very critical for the company outside the big boys. Big boys can scoop talent from anywhere, at any time, because of their ability to offer very high salaries. The average firm does not have that advantage in attracting talent, thus it is imperative that it aims to retain the little talent that it has.

Problems unearthed and exacerbated by the pandemic:

• decreasing loyalty.
• YOLO trends are decreasing the appetite for climbing the corporate ladder.
• complex work-life needs amidst a repricing of time.
• automation is making the need for talent more pronounced.
• evolving talent war.

Decreasing Loyalty

The decreasing loyalty of employees is a phenomenon that was underway long before the pandemic. Millennials and Gen Z’s had already rubbished the idea of being loyal to a company. Whilst the Boomers would stay at the same job for 20 years, millennials would only stay for three years. This is a huge difference. Job-hopping was an abomination a generation ago but is now being accepted as something to live with.

The decreasing loyalty is consistent across employees, the good ones are not spared. As a business manager, you are obviously not worried when an average employee resigns, but you will be very worried when your best performer puts in a two-week notice, and you never expected it. Events that transpired during the pandemic signaled to employees that companies would always protect the bottom line ahead of employees, which makes sense from a business perspective but doesn't make sense from a human relations perspective? This realization obviously worsens the loyalty situation. The post-pandemic manager has to tackle this challenge.

YOLO trends!

The You Only Live Once (YOLO) zeitgeist is changing the way people in general, and talent in particular, view their odds at successfully climbing the corporate ladder. Instead of actively pursuing growth inside the corporation, talent might choose to pursue gambles in financial markets, or in entrepreneurship. If a gamble pays off, the reward is a windfall and early retirement. Even though many who attempt this are not successful, the few that are successful become the “goal” for the many who choose the YOLO way.

The point here is that talent might not be only lost from one company, but from the workforce pool of the industry, as young people choose the YOLO way, the entrepreneurship way, or simply choose not to work(e.g the lying flat movement in China). The idea of a talented person simply choosing not to work is unimaginable to those who are accustomed to the pre-pandemic order of things, but it is an evolving reality that is set to shock the system in a manner that is harder than the Hippies movement of the 60s and 70s.

The complex and evolving work-life balance considerations were covered in the Repricing of Time article.

Automation

The automation of many processes taking place, or set to take place, has the consequence of eliminating the low-level jobs, typically the jobs that are occupied by persons who are not talented. At the same time, automation creates high-level jobs that require talent.

Because the pandemic accelerated automation, it has also accelerated the demand for talent. Every other company now needs a talented marketer, developer, accountant, et cetera who can single-handedly oversee the heavily automated systems and processes. The company needs a person who can stand on his own. A person who can replace four or five people who were carrying out the tasks that have now been automated. Once a company has this type of person, the need to retain him/her is stronger than ever before. It is in this regard that I emphasize talent retention as an important facet shaping post-pandemic business success.

Talent War

The higher demand for talent has kicked in what recruitment experts are terming “talent war”. Whilst thousands of resumes may be received in response to a job advert, the number of candidates who fulfill the requirements of the job is low. From that low pool of qualified and capable potential employees, those that can be referred to as talent, are fewer. This scarcity of talent drives recruiters into a head-hunting mode. The ‘talent war’ spills into the currently employed workforce that is not looking for jobs. Uninvited offers and poaching of talent are emerging features of the labor market and are set to exacerbate as technology eats the world and the digital divide deepens. Talent retention becomes imperative for the business manager.

The problems described above are not exhaustive. Many other labor market problems have been unearthed and exacerbated by the pandemic and they all drive up the need to retain talent.

What should a business manager do to retain talent?

• remunerate your talent well (it’s the most important thing you can do).
• do not overwork your talent.
• handle your talent with care (no bad bosses, no bullying, etc).
• submit to their work-life balance considerations (it's worth it).
• do not rely on culture as a retention mechanism (others are easily copying that).

Pay Well

It goes without saying that you should remunerate your best employees very well. There are many factors that feed into job satisfaction. Remuneration is the biggest factor. Everything else is secondary. Employees nowadays know exactly what they are worth. It's the information age. Remunerations are disclosed in job adverts, on social media, and on anonymous message boards. Whilst any ‘salary talk’ is prohibited within an organization, outside the organization the taboo of not revealing your salary is falling away amongst friends.

In general, employees know if they are being paid above or below average. The talented employees typically know more of these matters than the average employee. They receive solicitations on LinkedIn, and they have friends at other workplaces who earn so much. Your talented employees will stay if they believe that the gap between what they are paid and what their counterparts are paid is reasonable and if they believe it will be closed in due course.

Two employees holding the same job title should be remunerated the same, for equality purposes. However, your talented employees know they perform better than others. Maintaining “pay equality” is borderline unfair (violates equity) in this particular instance because the talented employee performs say 1.5X better than others and deserves to be paid a higher salary. The business manager should find ways to remunerate the talent above their paygrade. Discretionary bonuses, incentives, allowances, commissions, etc can be “structured-in” to effectively raise the remuneration. The simplest way, however, is to change the job title of your talented employees so that they can earn more.

Don't Overwork them

Overworking your talented employees happens naturally. If you really want something to be done, you allocate the task to the most capable person, the one who gets stuff done, which happens to be your best employee. Inadvertently, every other task in the daily life of the corporation appears to be so important. As such, it is allocated to talented employees.

The end result is that talented employees are overwhelmed with work. They often do not know how to say no, they keep on taking the tasks allocated to them. They do get stuff done, but they eventually get burned out, stressed out, overworked, and want to leave. When they hand in their one-month notice, it comes as a surprise. You, the business manager, never knew that your talented employee was unhappy and wanted to leave. At that point, it is usually too late to make them stay, even if you make a counteroffer.

Don’t Bully them

Handling your talented employees with care is a necessary condition for business success. They know what they are worth. They won't tolerate bad bosses, harassment, and bullying. Governance is on the shoulder of the business manager. He or she should generally treat all employees with respect.

That being said, the bad employees and the average employees tend to stay even if they are treated badly. They take it in. They respond to the bad treatment by not putting in their best effort. They simply work just enough not to get fired. You cannot fire them because they don't give you a reason to do so. But you cannot get above-average performance out of them.

Your talented employees, however, are often intrinsically motivated. These are the fellas that still work hard even after being scolded and looked down upon. The dissonance between their work effort and the treatment they get causes them to suddenly quit. It happens when you least expect it as a business manager. And you get stuck with your poor performers, or you have to jump into the market offering way more than what you paid your top performers, just to get some talent walking into the door.

Strike a perfect Work-life Balance

The work-life balance is a recurring theme. It is central to post-pandemic human capital management. A business manager can be stubborn and decide not to give in to requests for a more balanced work-life scenario from employees. However, there are consequences to pay. Your top talent will leave. They will go where they have the ability to strike a perfect balance. If you cannot allow your top talent to work from home, in the post-pandemic labor market, they will (sooner or later) find another employer who allows them to work from home, for the same level of remuneration or to work-from-the office but for a higher level of remuneration, overcompensating for the balance lost. Stories are being told of employees who are quitting the jobs that require them to work from the office and taking up new jobs that allow them to work from home, even though the new job has a lower salary.

Reduce reliance on culture

One aspect that is overemphasized by HR experts is corporate culture. Most of the twaddle and gibberish advice on building the best culture is not going to be relevant in the post-pandemic world. In short, the power of culture is getting eroded very fast. It was easy to build and maintain an excellent culture when everyone was coming into the office. Culture is typically maintained via practices and symbolism. These are items that are quickly being eroded as well, due to reduced physical proximity.

Relying on a good corporate culture as a talent retention mechanism is not going to be a very wise move. The desirable aspects of a specific culture (e.g., the culture at Google) can easily be copied by a medium-sized company, in an environment where people are primarily not working from the office.

Employees are developing their own ‘work’ cultures. Some control and input into the corporate culture are being handed over to employees as we speak. Traditionally, corporate culture has been something that is sculptured in the hands of the fellas at the top. That is changing very fast.

The post-pandemic business manager should not heavily rely on culture because it is something that he or she will have reduced influence over.

Ciao!