How to Retain Top Talent
Hint: Recognize and Reward People for Work
Dr. James Goodnight famously said, “95 percent of my assets drive out the front gate every evening. It’s my job to bring them back.”
Back in 1984 when I joined a prominent data analytics company, it was common for people to spend their entire careers in one place. In fact, our attrition rate was an astoundingly low 3 percent. Today, people change jobs more frequently. Voluntary separation across all companies now averages 25 percent (what the Bureau of Labor Statistics calls quits). For tech firms, the percentage is lower, and for high-performing employees in the best tech firms, the average is closer to zero. So what if your firm is inching into the double digits of turnover? What can you do to retain top talent?
I’ve talked with a lot of people who have left for greener pastures, and I have boiled their thoughts down to a few key reasons. HR hears these reasons over and over in exit interviews. For each one, I’ll suggest ways to address and counter it. The reasons people leave (or stay) fall into four categories:
- Appreciation and growth
- Compensation
- Connection to the company’s purpose
- Leadership
Appreciation and Growth
People want to work on important projects, get recognition for their work, and see their work being used to help other people. Over time, people want to advance in responsibilities, influence, and title. Sometimes all this happens, but more often, work is under-appreciated.
🏆 Showing recognition and appreciation is both easy and free.
You should openly give credit to every person who contributed to a product. It doesn’t have to be in your face, just put the credits in an About box or database. Support people in their careers in a methodical way: recognize good work, increase responsibilities, and more good work follows — it becomes a virtuous cycle. Treat people as the valuable assets they are. If they’re not happy, find out why immediately and address it. Don’t let issues fester. If a person is exceptionally productive and innovative, hold them up frequently as an example to others, and give them more responsibilities. Listen to their ideas.
💥 Important: If your top people are in danger of leaving, fight to keep them! They will feel more appreciated and you’ll prevent valuable know-how from being lost.
Compensation
Salary, bonuses, and stock options are not the number one drivers of attrition, but a company cannot attract and keep good talent without a competitive package. If your company’s compensation is below what people can make at other companies, people will leave. Companies are offering, right now, bonuses of up to 20 percent of annual salary, signing bonuses, retention bonuses, 401K matching, and more. Want to retain your best employees? Offer to match compensation offers from other companies. It makes sound financial sense when you consider that low attrition can save tens of millions of dollars in recruiting and training costs in the long term.
💸 Some employees who leave are actually looking for an excuse to stay, and all it takes is for you to meet them halfway. Show people they are valued by the company.
Connection to the Company’s Purpose
What are the mission, vision, and values of your company? Amazon, Pendo, and other companies have very well-defined values, and they apply them to day-to-day decisions. A real value or vision is not something the marketing and branding departments came up with or a slogan that changes every year or two.
You should be able to use the mission statement during interviews and in meetings. When there is a difficult decision to make, pull it out and ask the question, “Which choice would help satisfy our mission?”
🖼 I actually did this with our mission statement. One day the team presented me with a signed and framed copy, letting me know how much they appreciated that clarity of purpose.
Leadership
All these solutions have one thing in common: they have to be created and encouraged by thoughtful, talented leaders. Instead, what often drives companies is something more organic and reactive.
Consider programs like voluntary retirement. Leaders wait for the dust to settle and see who is left to pick up the pieces. Instead, when change is needed, leaders should intentionally and completely reorganize the company around goals that are grounded in the reality of where the market is going. Reorganize around the talented and forward-looking people who get it — even if it is a completely new direction. While you’re at it, reduce management depth, and get rid of matrix management.
🔑Cohesive groups with excellent management, clear forward-looking goals, and a sense of ownership and optimism — that’s the way to be successful.
