Engage and Retain the Best

KIM E. RUYLE, PHD

Vice President, Product Development

Korn/Ferry Leadership and Talent Consulting

kim.ruyle@kornferry.com

kornferry.com

Topic: Human Resources

Economic distress. Stiff competitive pressure. Overwhelming uncertainty. The current business climate presents a serious test for any business leader. Leaders who pass the test will be the ones who stay grounded, maintain composure, and train their focus like a laser on fundamental business elements that ensure long-term success. Heading that list is the organization’s talent. A talent focus is important in all phases of economic cycles, but perhaps never more so than in downturns. Data from the Minnesota Department of Employment and Economic Development show that Minnesota employees cut more than 90,000 jobs over the past year. What’s happening in your organization? Are you maintaining a focus on talent? Are you keeping the right people? Are you retaining and engaging your top talent? All employees are important. Some are more important than others. Generally, it makes good business sense to invest in retaining solid contributors and engaging every employee. But the stakes for engaging, developing, and retaining your top talent are much higher. Research has found that the gap between high-performing employees and other employees is huge. When a high-potential, seasoned performer leaves the company, it creates a costly void. The leadership and performance of the firm can be impacted for years. We know that high potentials are more marketable and have more employment options. If special efforts aren’t taken to fully engage them, they are more likely to quickly leave an organization. Organizations with engaged employees outperform those organizations with less engaged employees. It’s that simple. The link between employee engagement and organizational performance is powerful and well documented. Increased employee engagement leads to increases in sales, customer loyalty, and productivity. Very importantly, engagement is highly correlated with retention. The costs of replacing most employees range from one to two times the person's yearly salary. For executives and top managers this climbs to three to fives times salary. Focusing on engagement is not just a nice thing to do. It is a business imperative. Every organization must address engagement within the unique context created by its workforce, culture, and business conditions. The specific actions management takes to engage employees should be tailored to fit that context. But there are some best practices around employee engagement that apply to all organizations. 1. Align the workforce with business objectives. Engagement drives discretionary behavior, but that’s really only meaningful to the extent the behavior is aligned with the goals of the organization. Employee engagement needs to be aligned to create a competitive advantage for the organization. Behaviors that aren’t aligned with organizational goals, even if otherwise benevolent and noble, shouldn’t be considered engagement behaviors. To achieve alignment, ensure that the organization’s vision, mission, values, and strategic objectives are clearly communicated to all employees. Everyone needs to know how their particular job contributes to the goals of the company. 2. Stick to a comprehensive plan. It is a documented best practice to periodically conduct an engagement survey and share the results with employees. Based on survey results, action plans should be created and implemented, and the progress of those plans should be monitored. Be explicit in linking specific action items to survey data and don’t neglect to follow through. Organizations that survey employees without sharing results and action items risk doing more harm than good. 3. Make line managers responsible for engagement. Immediate supervisors and managers are the most crucial rung in the organizational ladder for increasing engagement. In many respects, these individuals define the job for the employee. They directly represent the organization’s culture. They set expectations. They conduct performance appraisals and provide ongoing feedback. They decide who will have training opportunities. They determine workloads. They affect employees emotionally, cognitively, physically, behaviorally, and financially. The role of the front-line leader is of critical importance in building engagement. 4. Get commitment from senior management. Line managers are likely the most important influencers of employee engagement. However, organizational leadership—the executive management team—also plays a vital role. They steer the ship and set the tone. They allocate the resources. They mentor and coach line management on employee engagement issues. They resolve problems lower-level managers may not be able to address. Research on trust suggests that employees distinguish between direct leaders and upper authority levels when making assessments. Employees who trust their organizational leaders will reciprocate in the form of loyalty, support, pride, and identity with the organization. 5. Make Human Resources the owners of the process. For employee engagement to be successful, HR must be at the center of the process. Best-in-class firms make HR the process owner. HR manages the process, removes the barriers, and makes sure there is consistency of implementation. It is important that HR align the different personnel policies, practices, and systems to support employee engagement practices. 6. Pay more attention to top talent. It’s important to engage all employees, but engaging high-potential talent is even more so. The simple fact is that not all employees are of equal value to an organization. Top talent—the top performers and those with most potential—count most, and their loss hurts most. To maximize return on investment, spend the most time and resources on engaging the top talent. Organizations that identify high-potential employees early, carefully develop their careers, and reward them accordingly are much more likely to engage and retain them. 7. Establish an organizational culture of engagement. The traditional approach to employee engagement is to apply a fix-it method. Administer a survey, often in response to a perceived engagement problem. Diagnose the problem. Take action. Fix it. While the fix-it approach often leads to improvements, it’s passive, piecemeal, and slow-moving. Better to be proactive, strategic, and dynamic. Employee engagement should be institutionalized—an integral part of the organization’s culture rather than a tool that is only pulled out when something is broken. When employee engagement becomes ingrained in the culture, it creates and sustains the workforce. High-performing companies are passionate about establishing a positive work environment. The best practices listed above apply to all organizations and form a foundation for other actions that can move the needle on employee engagement in your organization. Focus on them. Take them seriously.