Talent Retention: The Formula – Talent Management

Organizations must act now to improve retention efforts, ensuring that talent retention is as critical as talent development.

Large global organizations are always looking to build a talent economy, but this presents a challenge when it comes to retaining top talent. According DDI Global Leadership Forecast 2021, only 11% of HR professionals said they have a strong talent pipeline for the future – the lowest rate in a decade. Additionally, companies report that they can only fulfill 47% of their critical roles.

The challenge

In the past, organizations could more easily predict the challenges of the next three to five years and prepare talent accordingly. But as markets have changed rapidly and companies feel increased pressure to innovate and redefine their markets, companies need talent ready to lead during rapid change and reprioritization. One of the biggest leadership trends for 2022 is developing the next generation of leaders. In fact in The DDI report, it was the main problem that worried CEOs. This issue has taken precedence over concerns about a global recession and slowing economic growth. But it was closely followed by the need to retain top talent.

We asked HR professionals and employees (EE) to rate and rank the factors that they believe motivate employees to stay or leave their organization. The results showed that the two groups have different perspectives. We started by reviewing the literature on employee retention and came up with a list of 20 potential reasons why employees might stay or leave their jobs:

Employees and HR professionals indicated the factors they felt most influenced an employee’s decision. We have identified six broad classifications for these factors.

  1. Motivational adjustment: challenge, meaning, autonomy, organizational suitability, manager relationship, job clarity
  2. External awards: recognition, growth/advancement, compensation, compensation vs contributions, business responsiveness
  3. Cooperation and trust: cooperation with colleagues, level of trust in the workplace
  4. company management: clear vision and strategy, appropriate selection practices
  5. home life: location, work-life balance
  6. Discord in the workplace: internal politics, stress, volatility at work

By focusing change efforts on the factors that make the biggest difference, organizations can maximize their retention rates. In some cases, it’s a good idea to capitalize on strengths and make a good situation even better. In other cases, organizations need to focus on the issues that will make the biggest difference to their employees. We conducted an analysis to see where change efforts should be focused to achieve the maximum impact on retention. Employee ratings were combined with ratings of the company’s current performance.

Weaknesses — Retention factors that are important but are not performance strengths for the organization.

The most obvious way to improve retention is to address issues associated with important retention factors. Many of the top 10 retention factors do not receive high strength ratings. About 75% of employees gave their company lower strength ratings for these factors. Implementing programs that give meaning to work, promote trust and improve the quality of compensation could have a significant impact on retention rates.

Strengths — Retention factors that are important and constitute performance strengths for the organization.

If an organization already has high scores for certain factors, take steps to further strengthen its performance in those factors. In our sample, the quality of relationships with managers and work-life balance are already reasonably high. These two main factors received above-average ratings for the company’s current strength in performance.

Organizations that understand employee retention and its causes will ultimately have a competitive advantage. To avoid the costly damage and effects of increased turnover, organizations must act now to improve retention efforts, ensuring that talent retention is as essential as talent development.

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