Is this the greatest business challenge of the next thirty years?
For years we have been told that the greatest business differentiator is the quality of the people we employee. Sure, this is important, but is it the greatest differentiator? After all aren’t there plenty of others that are at least as important - innovation, scale, efficiency, quality …
But now, there are several universal trends that indicate ‘people’ will almost certainly be the most important differentiator for the next few decades, and the reason is simple – scarcity.
The western world and to some extent the developing world will find it increasingly difficult to find employees. Those organisations that compete effectively for labour will thrive and those that don’t will disappear. The labour market will become increasingly competitive as employers position themselves to attract and then retain the people they need.
The GFC was nothing more than a temporary distraction from this on-going issue. The trends across all of the western world and much of the developing world are the same:
1) Lower birth rates
2) People living longer
3) A shortage of skilled labour
4) Greater work mobility
So what are the implications?
It all comes down to this.
It will be harder to find people and it will be harder to keep people; that organisational success will be increasingly determined by how successful an organisation is at finding and keeping good people.
Much to their credit, many organisations resisted the temptation to reduce their workforce during the recent economic downturn. If the last major recession of 1991-92 taught us anything, it was that employees do not forget. If an organisation fails to look after their employees during the tough times then those same employees are not going to show any commitment to that employer during the good times. This time around many organisations moved fast to protect their employer brand by ensuring that wherever possible, employees were retained, even if that meant in some instances reducing work hours and conditions.
The employer brand, the attractiveness of that organisation as a place to work, has therefore become as important to retention as the product brand is to product sales. Leading organisations now have in place a wide range of ongoing initiatives to protect and strengthen their employer brand.
Those organisations with a strong employer brand are not only able to attract the very best people but they are able to retain them longer and employ them more productively.
Whilst estimates vary, it is generally calculated that the cost of losing an employee is equivalent to 85% of their total employment costs - and this is just the bottom-line impact. On top of this you have the disruption that a departing employee causes in terms of the continuity of the customers relationships and the general disruption to the focus of their team and their team leader. Employees that work within a stable work environment with lower turnover tend to stay whilst those employees who work in an environment with a high turnover tend to leave. In other words high employee turnover is self-reinforcing.
What actions are employers taking to help build their employer brand?
The first thing they are doing is undertaking research, finding out what it is that existing and potential employees are looking for from an employer. The analogy with product branding is obvious. Get to know your market!
There are, of course, many complexities involved in this exercise. No two people are likely to have exactly the same requirements from their employer. Some may be happy to trade job security for less money, whilst for others they are happy to face higher employment risk for more income. Some employees like to work in a collegiate, co-operative environment, others in an environment based more on individual effort. There are of course, an infinite number of variables.
The challenge for the employer therefore is to clearly define what ‘types’ of employees they require. This requires a clear articulation of values and behaviours, work types and organisational culture. Once the organisation has clearly defined the types of employees they are seeking and also clearly understand what employees are seeking from employers, they can then set about the task of:
1) Building a work environment that retains these types of employees
2) Putting in place recruitment strategies that will secure these type of employees
Of course some organisations focus on attracting employees without focussing on what is necessary to retain them. These employees are attracted by what is promised and are disappointed by the reality once they arrive. In the marketing world this is like being attracted to a box of chocolates in pretty wrapping which then turn out to taste pretty awful. We have all had these purchasing decisions and we generally feel conned as a result. Certainly we would not by that product again and we may even bad-mouth the product to our friends.
The reason why many employers focus on the recruitment strategies to the detriment of the retention strategies is that it is easier. It is easier to put up a stand at a university to attract the young and the brightest than it is to actually build an organisational environment that lives up to the promise.
Building a strong retention environment requires a number of things.
First, the employer needs to think of their employees as customers and the leaders within that organisation responsible for ensuring that these customer needs are met. Each leader is responsible for a unique customer group, their team. Each team will have its unique customer issues and requirements. A team within a large manufacturing company that works on the shop floor will be extremely concerned about Occupational Health and Safety, whereas a white collar worker within the accounting department of the same organisation will have no such concerns.
So the first step any organisation must take is build an understanding of each of these unique employee groups (once again this is exactly the same as building a segmented marketing strategy for products), asking the question ‘what is it they want in order to feel passionate and committed, productive and focussed?’
Of course, the only way to know this is to ask them. The leader, for example, could simply sit with his or her team members and ask the question, "What is it that you need to be more engaged, committed, passionate and productive in your job?"
There are, however, some serious problems with this approach. First, it would be a very unusual team where all employees felt they could speak openly about every issue they have. Are they, for example, really going to criticise their team leader’s communication practices? Are they going to complain that they are too busy in case this is misinterpreted as their inability to cope? Are they going to raise issues about their overly bureaucratic information systems when this could be seen as simply their desire to dodge the paper work?
Secondly, they may not actually know or be able to clearly articulate what it is they require. Most of us are unclear about what really drives us, whether this is be with respect to our jobs, our purchasing decisions or our personal lives. Often our thoughts are jumbled and priorities are unclear.
Because of these problems there is a tendency for employees to give a simple and obvious answer to what they need, that is, they simply want more money. But research has shown that money is rarely the prime motivator. Organisations who simply out pay their competitors will struggle. Pay is a blunt instrument. The challenge for the organisation is to identify and encourage intrinsic motivators or emotional connections. Whilst these are more difficult to identify, the employer who indentifies and delivers these emotional connectors will build the most compelling employer brand.
This is not to say one on one conversations are invaluable, they are. But they are not sufficient.
To find out what employees really want, the organisation needs to do its research. A confidential, well-constructed contemporary employee opinion survey is the most popular vehicle for this. Over the past ten years employee surveys have moved from mere tokenism to become one of the most powerful organisational performance improvement initiatives available.
What other single initiative can:
- Make teams and businesses more efficient
- Strengthen leadership
- Improve employee engagement, passion and commitment
- Increase customer focus
- Improve sales
- Build alignment
- Enhance employer branding
- Reduce employee turnover
Other tools such as exit interview software also provides valuable insights.
Retention improvement action planning software helps larger organisations deliver different retention strategies to different segments or teams.
Conclusion
Building the best possible employer brand is based on developing the best possible understanding of employee needs and then meeting these needs. Because these needs evolve over time and the structure and makeup of corporations change, this research needs to be fresh and continuous. Great organisations will have in place an effective, on-going process for capturing employee issues and addressing them.
Every successful organisation will be constantly striving to build the best possible business environment for their employees, a workplace that encourages ideas, passion and commitment.
This organisation has the retention issue under control and they have built and can defend what is becoming the true business differentiator for all companies, people.
Source:
Lanning Bennett
Founder
COI Group
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