Train to retain: holding onto your best people
pharmafile | January 13, 2010 | Feature | Business Services, Sales and Marketing | MSI, careers, training
It’s a widely-held myth that retaining staff is easy in a recession. As jobs are cut the attraction of staying put will always be stronger, it is true. But the best people – the ones you really need to hold on to in a downturn – will always be able to find another job. They are not just motivated by salary, but are planning a long-term career – and are looking for employers who will help them achieve that.
This means that offering a structured career plan and meaningful personal development is vital. Career development is fundamental to holding on to your best people, and having effective and targeted training plans in place is essential to stopping your current and future stars leaving.
In a knowledge-based economy, human capital is the most valuable business asset. Holding onto that resource in a recession is difficult and an increasing number of businesses are announcing lay-offs. Losing skilled staff now could have long term implications, and when redundancies are likely, many talented people start looking around so they stay in control of their own destiny.
Whether it is because of the global financial crisis or changes in the healthcare environment, many employers are cutting staff. Tighter margins also lead to greater scrutiny around pay and rewards, and salary advancement is challenging. Making redundancies may be the only option for some companies.
However, a more productive course of action might be the reverse – to invest more in staff as the going gets tougher. If businesses follow the philosophy that a company is nothing but its people, then retaining them with better training may reap rich rewards when an upturn in fortunes comes.
The War for Talent
In 1997, McKinsey and Company completed a landmark study on talent management “The War for Talent”. The study argued that competitive advantage could be gained from having superior talent, and that managing that talent was critical to any business.
An updated version of the survey in 2001 showed that the supply of top talent was worsening, in part, due to demographic and social changes. In the developed nations, supply of 35- to 44-year-olds is shrinking while the baby boomers are starting to leave the workforce.
The problem is not going away. The 2009 Chartered Institute of Personnel and Development (CIPD) survey on recruitment, retention and turnover showed that a high proportion of organisations experienced retention (69%) and recruitment difficulties (81%), with key reason for recruitment difficulties reported to be a lack of necessary specialist skills (73%).
Where skills are relatively scarce, recruitment is costly or where it takes several months to fill a vacancy, staff turnover is likely to be problematic. This can be made worse when your staff are moving to direct competitors. Over a quarter (26%) of respondents in the 2009 CIPD survey reported their organisation has been forced to change its approach to talent management as a result of the current climate.
Taking measures to retain valued employees saves cost, preserves profit margins and leads to better business opportunities. It also means the workforce is ready when business conditions improve and will be able to respond swiftly to the challenges of the future. Direct costs to replace lost personnel are high (advertising, selection and assessment processes, head hunter fees, relocation and hiring bonuses), while indirect costs include lost sales and productivity, missed opportunities, lower employee morale, and lost organisational knowledge.
Promotion outside the organisation is typically a factor in 50% of all employee turnover as is change of career, but lack of development or career opportunities is cited in 37% of cases, with managers and professionals being the most difficult to retain.
Turnover in healthcare employees is relatively low compared with other industries, but it is still a problem and has a significant impact on business performance. In 2006, the Chartered Institute of Management found even for the pharma industry, financial rewards alone aren’t enough to retain talent. Over half the organisations surveyed reported retention problems and six in ten admitted difficulty recruiting. Organisations cited dissatisfaction with the working environment and frustrations with company structures, but also lack of skills training or development opportunities. Employees are asking for opportunities to develop, but 37% of organisations admit to offering little career development or training. Of these companies, 29% said structured training was not open to all staff. Yet over half said they could not find staff with the required specialist skills.
One key factor in motivation and retention is an employee’s own drive to continue to grow and develop career enhancing skills.
After money and development opportunities, the chance to receive continued training is viewed as the most important factor in retention. Employees link that training to their earnings potential, however, and they won’t stay if training is not accompanied by appropriate pay increases.
Value of the training budget
Investing in employee training and development is critical in attracting and retaining a superior workforce. Enhanced skills and knowledge mean employees can carry out existing tasks more efficiently. Additionally, staff training and development can be entwined with succession plans, preparing top talent to take on a different or new role. This maximises the value the employee has to the company in the long-term. But it is critical to address the individual’s needs as well as those of the company, or they will leave.
One study found that when employees received training as part of their jobs, 12% left anyway. However, when they didn’t receive training, 41% left. Training may make employees more marketable if they decide to look elsewhere, however what incentive is there to stay if we don’t train them?
During hard times, companies are under pressure to contain costs. Consequently, they tend to concentrate on the business at hand, and put human capital issues on the back burner.
However, human capital is a precious resource and it’s essential that organisations avoid knee-jerk reactions and cost-cutting in areas that make the biggest difference in the long term. Now is not the time to halt employee development, postpone or scale back talent management strategies.
Is Talent Management the solution?
In the 2006 CIPD survey, only 56% of private (i.e. not public) organisations had some form of talent management programme, with larger companies (greater than 500 people) more likely, but then only 61 per cent.
Common reasons mentioned for investing in talent management activities are developing high-potential individuals (67%), growing future senior managers (62%) and enabling the achievement of strategic goals (42%). Retaining staff was only cited by 33% of respondents.
These findings suggest talent management is a future-focused activity, with organisations using it to develop their workforce to meet the strategic needs of the organisation. But it’s also clear that there is a focus on the development of employees considered to have ‘high potential’ or to be future senior managers/leaders.
The survey results showed that organisations mostly chose to focus resources on a select group of employees. 40% of respondents aim activities at high-potential employees, while slightly fewer organisations (26–32%) reported including their managerial employees in talent management activities. ‘All staff’ are only included by 28% of respondents, demonstrating the relative rarity of an inclusive, ‘whole workforce’ approach to talent management.
So ‘talent management’ does not necessarily achieve what is required when it comes to overall staff retention.
How do we develop and retain our people?
You can impact training and development significantly through increased or expanded responsibilities in an employee’s current job, but this may not always be possible. Sideways movement and broadening experience can provide a short to medium term solution, but in the long run, people want to feel they’re learning new things and hence growing.
The 2006 CIPD survey showed that 85% of respondents believed that training is now more geared to meeting the strategic needs of the business than it was previously.
However, what doesn’t appear to be recognised is the trainee or talented individual’s perspective. Allowing employees to pursue training and development in directions they choose, in addition to company-assigned and needed directions can make a big difference.
So training needs to operate on a variety of different levels.
Firstly there is the company’s need for better skilled and competent people. Much of the training offered to employees is linked to job specific activities e.g. strategic planning, project management, process training, etc to ensure knowledge of and proficiency in the different aspects of the role.
This training helps the company and in part the individual in their role, but the value of training ‘for the job’ is far less in retaining people than training ‘for me’.
One way to bridge that gap is by using thorough ‘training needs analyses’ based on the competency set appropriate for the role. This helps the company identify the gaps from their perspective and demonstrates they are taking an individual’s development seriously.
But training also needs to operate on a far more personal level. What is even more motivating to people is to allow them to pursue training that interests them. This cannot be carte blanche, but most people are looking to develop their commercial skills. So while the proposed training may not be directly attributable to an immediate business need, there is value in allowing people to develop their specific functional skills.
When it comes to marketers, a recent survey by The MSI Consultancy showed some of the key gaps in skills. The areas include:
• Use of segmentation to develop motivating positioning for brands
• Modelling return on investment of different strategies to drive growth
• Aligning customer and company goals to achieve business success
• Developing compelling messages based on clinical outcomes/health economics that demonstrate real benefits and motivate behaviour change.
What is interesting is these are typical areas that work on company, brand and personal levels. While improving skills and competence in these areas will help the company better achieve their business objectives, and maximise return on prior clinical and future marketing investment. They will also address marketers’ personal needs to improve their capabilities in an increasingly challenging market environment.
How to train to retain
Providing learning and development opportunities is recognised as a highly effective way to retain staff. A survey conducted this year by CIPD found over 80% of respondents believed this approach could help retain staff, yet only 47% of the organisations used it.
Most people learn best by doing, while some organisations consider coaching and mentoring ‘on the job’ as the solution that relies heavily on having suitably qualified and competent mentors. Without efforts to ‘train the trainers’ (mentors) there is a danger that the employee won’t be given the necessary knowledge foundation and any ‘new’ thinking. The net result can be the classic problem of young marketers who perpetuate the practices they saw when in the field.
What works best are ‘action learning sets’ that make people focus on solving current live business issues. In many cases it is not possible to solve these problems by replicating past practice, so people need to learn how to diagnose the issue and then how to solve it.
The ideal is structured in-house development programmes, already used frequently and considered to be highly effective (95%).
However, there is a need to go beyond just a workshop and really embed the learning into daily practice by using of a variety of different vehicles.
The first step is to provide a structured approach to the business challenge, using sound business principles, but allowing room for new and creative solutions to be developed. This involves providing face-to-face input from experienced practitioners in a group setting. Previous examples of best practice can be used to exemplify the principles, but care must be taken that the ‘cut and paste’ generation do not just pick up these examples and redeploy them as the solution.
Once the theory is understood and the ideal quality clear, learners can then move on to applying their new knowledge to the real life issue. However, learning is a trial and error process; just getting it right is not the ideal way to learn. There is value in making errors, so part of the learning process must include coaching on the chosen business challenges to allow for correction and redirection – but from people who know the differences between ‘technically correct’ and ‘meaningful’ in the real business world.
The final step is consolidation of the learning points before moving on to the next level of development. This approach show the company is interested in the employees’ needs as well as its own.
In Conclusion
A key factor in retention is keeping the employee interested, attending, and engaged in which training and development activities play a key role.
If the company is seen to support learning in general – and not just to programmes to support business aims – then employees are much more likely to feel valued and remain loyal to the company.
Paul Stuart Kregor is is Director of The MSI Consultancy. He can be contacted at pstuartkregor@msi.co.uk. Alternatively, visit the MSI Consultancy website at www.msi.co.uk.
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