Optimizing Your Retention Strategy: How To Keep Talent And Reduce Turnover
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It’s a challenging time for employers when it comes to retaining great employees. A 2016 Willis Towers Watson global study found that only 24% of professionals in the Middle East would like to continue working for their employers until retirement, compared to a global average of 51%. More worryingly, 38% said they were likely to leave in the next two years.
Shifting demands and expectations are driving changes in what valuable employees want from their workplace. Talent increasingly expects their employers to treat them as they would treat external clients. Very simply, and in the same manner that companies proactively identify their key clients’ needs and expectations and address them, employers need to have an on-going dialogue with their key employees to investigate their individual expectations and preferences in order to meet those and increase their level of satisfaction and engagement, hence, achieving higher levels of retention of key talent that is critical for their business.
What’s more, increased opportunities in the UAE and GCC region make it easier for dissatisfied employees to jump ship, while gaps in employer understanding of retention drivers are creating considerable turnover risk. Organizations across the Middle East may be losing their top talent, and the buck doesn’t stop there: high employee turnover takes a financial toll. At the client management level, the cost of turnover can amount to 59% of annual compensation, a figure that increases to 74% for senior managers and executives. So, what’s behind low employee retention and how can we fix it?
What drives employee exit?
For an optimal retention strategy, you’ll need to identify where issues lie. According to our research, the following are dominant factors driving employee exit:
Dissatisfaction with remuneration: It’s no surprise that financial concerns can distract from work and negatively affect productivity, but it’s concerning when nearly half of the employees (49%) surveyed in our study report worrying often about their current financial state. It’s also easier than ever to compare salaries with new online tools. One in six employees report doing so in the last month, while one in five now disagree that they are paid fairly. In the UAE, only 32% of employees surveyed (compared with a global 51%) believe they are paid fairly compared to other people.
Poor work-life balance: Since 2014, workload and flexibility have climbed to become the second highest factor driving employee engagement. This suggests that employees are feeling the pressure of work-related stress and greater competition in the Middle East job market, and will increasingly value an organisational culture that promotes good work-life balance or compensates for it.
Lack of career prospects: Over 40% of employees think they need to leave their current organization to advance their careers, and only 43% think their company has a good system in place for providing career advancement opportunities. Relationship with management: Only 9% of employees remain ‘highly engaged’ if they do not see their manager or senior leaders as effective. Yet, when they perceive both managers and senior leaders to be effective, engagement rises to 67%. An employee’s relationship with their manager is thus a key retention driver, while a negative perception of leadership competencies can erode staying power.
Benefits offered: When employees are considering leaving (or joining) your company, benefits usually get weighed. They look for packages that go beyond the basics, whether that’s to include flexibility or wellness benefits. Healthcare is the most significant part of most offerings, but it’s often the more unique and unexpected perks that hold the biggest sway in attracting and retaining employees.
Job security: Employees generally list job security as a high driver of attraction, whereas employers actually omit it from their list. It’s important to understand how employees define job security, when only one in four (26%) fear losing their jobs. Concerns about financial well-being, ability to handle change, and being aligned with the company’s overall direction can all help to define employees’ sense of job security.
What goes into a successful talent retention strategy?
Once you have honed in on the problem areas that contribute to employee exit, you can develop an effective talent retention strategy more confidently, which will take into account and address the following top drivers of attraction and retention.
The top three attraction drivers in the Middle East from the employee point of view are:
- Base pay
- Job security
- Opportunities to learn new skills
That’s an almost perfect overlap with the top retention metrics– again from the employee point of view:
- Base pay
- Job security → the employer view puts ‘career advancement opportunities’ in second place.
- Career advancement opportunities → from employer view, it’s ‘relationship with managers.’
With the potential cost, both financial and operational, an optimal solution would focus on the long-game of retention with a strategic combination of attraction drivers. The effective communication of expectations between employers and talent will equally be key to optimizing your company’s talent retention. As well, and to optimize their spending and achieve a quicker and higher return on their investment in their people, employers need to adopt a workforce segmentation approach, where they segment their employee population into efficient, proficient and pivotal roles, and focus their strategy and investment (be it development and fast-tracking growth to rewarding for high performance) on the roles that are critical to the success and sustainability of their business and that will provide a higher pay-back.
So, let’s take a look at three steps to help you encourage employee loyalty and higher levels of engagement– all of which can ultimately pay high dividends.
1. Rewards that retain: First, let’s address that core driver of attraction and retention: base pay. Pivotal to improving your unique EVP is performance-related pay. Customized pay-for-performance programs are a source of competitive advantage and a critical component of a highly evolved EVP, essential to attracting, retaining and engaging top talent. HR departments should be looking to deliver a compelling employment deal and introduce a total rewards strategy with performance-related bonuses to foster the best levels of engagement. When only one in three employees see a clear link between their performance and their pay, clear communication and transparency around remuneration, as well as employee expectations, are vital to engaging key talent and sustaining high performance.
2. Communicative leadership so employees feel job secure: Over 67% of employers report that the performance management process in their company is effective at driving high performance. Employees disagree: they give employers mediocre ratings on key aspects of performance management. Professionals in 2017 are looking for more than just a job. They want a personalized experience that allows them to work and live in a way that’s aligned with their values. So, how do you create an experience that resonates with your staff and leaves them feeling job secure? This second step involves ensuring management and leadership understand the importance of workplace culture and what job security means to their talent. They must be ready to invest the time and effort in relevant employee experiences that build loyalty and mutually supportive dynamics. These leadership competencies will directly benefit both your company objectives and help sustain employee engagement. When people feel invested, they are more likely to give their best. And to keep a finger on the pulse of where and how to invest, we need communicative leadership.
3. Opportunities to grow: ‘Career advancement opportunities’ is among the top three drivers of attraction and retention globally. When companies do a good job of providing opportunities for advancement, 61% of employees are highly engaged, while only 9% are disengaged. Employees cite two key barriers in this area: ineffective supervisors and poor use of technology. Here, we’ll only focus on this first issue. Around 11% of employees report they’ve not had a career development discussion with their immediate supervisor in the past year, and only 38% reported that their immediate supervisor helps with career planning and decisions.
A common misconception is that this requires tremendous investment from employers to improve. However, you can ensure that career management is integrated in other aspects of talent management and reward programmes– for example, career discussions can be a key part of performance management, while training opportunities and mentoring programmes may be an integral part of total rewards. You can also offer to your key employees lateral or dual career paths and advancement opportunities like special assignments or skill-building experiences. Look out for ways to design jobs that will both capture the changing nature of work and facilitate skill growth.
Companies that succeed in optimizing their retention strategies and building a fully engaged workforce are likely to achieve better outcomes. Increasing information around remuneration is a trend that some HR teams may find hard to swallow. But it’s not something that can be swept under the rug if you want a sustained and engaged workforce. Despite online salary comparison tools, only 44% of employees report understanding how their pay compares to similar roles in other businesses. This means employees still aren’t getting the information that they’re looking for and may be making decisions to exit based on misinformation.
It’s time to open a new dialogue. Greater information around pay and rewards, especially the factors that determine them, will increase the perception of fairness in your company. Moreover, it doubles as a way of increasing performance incentives and engagement with employees. We all know success is hard to come by in competitive markets without a talented, motivated and dedicated workforce. Good people aren’t always easy to find. They can be even harder to replace. Companies that achieve a synergy between communicative leadership and talent only stand to grow with them.