Employment Tectonics: The Coming Quake


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Executive Perspective by Grahall’s OmniMedia Editorial Board

expert perspective telescopeIn her November 16, 2009 article, Businesses Mount Efforts to Retain Valued Employees  Sarah Needleman says:  “History suggests some of these workers will look elsewhere as the economy improves. So far this year, fewer workers have quit jobs than at any time since the U.S. Labor Department began tracking the data in 2000. But the number of workers quitting jobs jumped 34% between July 2003 and December 2006, during the expansion that followed the prior recession.”

But the fundamental considerations are who will leave and why and what can companies do about it?

Grahall predicts a bifurcated situation is looming on the horizon where even with a continuing high level of unemployment the turnover of senior and high talented people will increase dramatically.  The best advice to companies is not to think the high levels of unemployment will help you to hold onto your best talent. That is just not the case.  As the economy starts to recover, the smartest companies are looking both at selecting and recruiting the top talent from other firms while retaining and motivating their own best employees.

In this coming environment it is not about “equity” in the workplace, but of competitiveness.   Rewards of all types, compensation and benefits should be designed around the needs of your best employees, not “average” employees or the “averages” of the industry.  Here is an example: in study after study employees say their benefits programs are lousy while employer think the programs cost too much.  Having designed these plans to meet the average need what one gets are plans that employees don’t like that also cost too much – a lose-lose situation.  We recommend that companies design rewards programs around your best employees. Of course that requires that you take that first step to determine who those key employees are. What you need to know is who the 90th percentile people in your company are.  That’s right, 90th!

Research has shown that the average employee produces X but the 90th percentile person produces 200% of X.   So a top performer can produce double that of an average employee.  And the good news is that you can usually pay the 90th percentile person only half again as much as the average performer.

As the economy improves, the job market for top talent who can make a difference is going to get hotter than hell.  The pent up “pressure” in the job market akin to that found in plate tectonics just before an earthquake, will result in a major reshuffling of the competitive profile.  With the employer/employee loyalty contract at an all time low, there is no reason why the best talent shouldn’t look for the best opportunity to provide for themselves and their families. 

So what can companies do to retain and motivate the best while selecting and hiring top talent form other firms? 

Step 1: Know who your best people are?  Decide what organizational capabilities are the key drivers of your success, and then identify the positions in the organization that are most highly valued and therefore should be staffed by top talent.

Step 2: Review your Total Rewards programs and redesign them to be more surgical differentiating packages to reward key personnel in meaningful ways while managing risk. In that way you can appropriately compensate and therefore attract and retain key individual.   A surgical approach requires a clear understanding of business strategy and what strategy segment the company will pursue. 

Step 3: Be transparent and consistently communicate your new rewards strategy so it is well understood by your workforce. Particularly, let the key individuals know they are important to your company’s long-term success.

As Michael Graham share in his article “Just Desserts“  Developing an effective reward program takes imagination and effort. Every organization has differentiating characteristics and factors influence each organization in a different way. Accordingly, there is no single algorithm, model or paradigm that covers every situation. Nonetheless, there is a simple formula for success. Align business, people, and reward strategies and an organization can compete in even the most difficult environment.

Read more about how to retain and attract high level talent in our Ask the Expert blog “Sameness is the Mother of Disgust”

Contact Grahall’s Editorial Board at edie.kingston@grahall.com

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