I hear a lot from internal audit leaders about the difficulty of retaining top talent. In a tight job market with specialized skills in short supply, there are many attractive opportunities for high performers. Leaders must avoid mistakes to positively impact retention and decrease the likelihood of turnover.
The biggest mistake a leader can make is putting the wrong people in charge. There is no amount of money, perks, or other benefits that can mitigate the damage you do when you subject your employees to a bad director, manager, or supervisor. Top performers, who can most easily find a new job, are the first to go. Morale plummets, turnover climbs, and before long your reputation as a leader is permanently tarnished.
Think about it: If you are telling yourself "we are good leaders" while experiencing declining morale, high turnover, or reduced productivity, it's time to step back and rethink your position.
Research by Gallup backs this up. In one study of 7,272 U. S. adults, half of employees, at some point in their lives, left their job "to get away from their manager to improve their overall life." In the summary to the State of the American Workplace report, Gallup CEO Jim Clifton says naming a manager is "the single biggest decision you make in your job — bigger than all the rest." Decision-makers at the top of the food chain spend billions of dollars every year on everything but hiring the right managers, Clifton says: "When you name the wrong person manager, nothing fixes that bad decision. Not compensation, not benefits — nothing."
In addition to making employees miserable, a bad manager who causes turnover is expensive. Credit Suisse estimates it saved $75 million to $100 million in rehiring and training costs when it identified employees at risk of leaving and eventually moved 300 unhappy people to new internal positions.
Whether you are the person in charge of hiring and promoting others into leadership positions, or you are the leader more directly impacting staff, here are seven tips to ensure leaders positively impact retention:
- Focus hiring and promotions on performance and leadership competencies, not personality. This will not only positively impact retention, but also culture. Tae Hea Nahm, managing director of venture capital firm Storm Ventures, says it best in a New York Times article: "No matter what people say about culture, it's all tied to who gets promoted, who gets raises, and who gets fired. You can have your stated culture, but the real culture is defined by compensation, promotions, and terminations."
- Don't overwork top talent. Yes, you are recognizing their strengths, but it's not fair to go to that well every time. Fatigue leads to burnout, which builds frustration and resentment. This is especially dangerous because it often starts as a reward for good performance with the leader thinking, "I'm giving you more responsibility because you've proven your value." It often ends up with the high performer wondering, "Why am I putting in all of this extra time and effort while others sit around getting paid as much or more than me?"
- Recognize that longevity doesn't create leaders. Too often we equate length of employment with preparation for a leadership position. Leadership skills don't come naturally to everyone and there is no correlation between the two.
- Incentivize and reward good effort, not just good work. Individuals and organizations can learn a lot from failure that can be leveraged for future success. Make "It's OK to fail" a genuine living, breathing thing.
- Model empathetic and compassionate behavior. Understand that employees have lives outside of the office and those lives can be complicated. Instead of assuming that an employee doesn't want to get ahead because he or she leaves right at 5pm every day, consider that the employee may be the sole caretaker for an elderly parent at home.
- Be profoundly honest. Employees tend to mirror their boss' behavior. In that sense, the more authentic and vulnerable you are, the more you will see it reflected back at you. If you're seen as inauthentic or phony, that is what you'll get in return and you'll be completely caught off guard when the next high performer tenders his or her resignation.
- Focus on self-awareness. Too many leaders cruise through the day assuming everyone is on board with their decisions and actions. Turn off the cruise control and take time to check in with people. How are they really feeling? How did that decision truly impact their workload and how they do things? Not every decision is going to be popular, but understanding how you are impacting people allows you to make adjustments and address problems before they grow out of control.
The key success factor in any organization is its employees. Sticking with legacy ideas and failing to embrace change risks alienating your best employees who can find success elsewhere. Now more than ever, we must recognize the significant changes happening in the workplace and ensure skilled leaders are guiding the way.
That's my point of view, I'd be happy to hear yours.