Talent Retention: Advice for Companies

There has been lots of screaming and hand-wringing about the role of "talent," that is highly skilled, knowledgable and creative people, in economic development. I agree that it is an issue.

So, what can be done about the problem? The starting place is retaining the talent that a company already has--that should always be the first focus.

Here are some tools and ideas that any company can use to facilitate talent retention:

HR experts say that in order to retain people, a company must satisfy three basic groups of conditions:

(1) there must be things that satisfy people such as proper compensation, adequate job scope, met expectations, and acceptable stress levels,

(2) there must be things that create commitment such as a sense of justice and fairness, employment security, a belief that the job held is valuable and useful, and a belief that the company invests in its people, and

(3) the labor market has its own influence on employee’s decisions to leave or stay.

The labor market will always be a factor in the talent retention equation. For everyone's sake, it's a good thing there is competition for talented people.

Here are the four specific areas where every company needs to focus attention to retain its existing talent:

1. Pay: Although many have downplayed the importance of compensation, the research continues to show that people who feel well and fairly paid are less likely to leave than those who feel inadequately or unfairly paid. Companies such as Apple Computer in its heyday were well known for paying generously in both cash and in stock options. Many hundreds of employees stayed happily at Apple (and in fact did not want to leave even when times were very tough there) partly because of their perception of very fair pay. IBM retained people easily for decades (perhaps even retained too many) by offering one of the most generous pay and benefit packages in the world.

2. Benefits: This is one of the most powerful retention tools, and some research shows that the broader and more extensive the perceived benefit package is, the higher the acceptance rate is for job offers. Those companies with generous time off policies, sabbaticals, dependent care leave policies, leaves-of-absences with benefit retention, and so one are those with low turnover rates.

3. Fairness: Yes, it continues to show up in a number of studies as a key determinate of satisfaction and hence the desire to stay. While not being fairly paid may not immediately precipitate a job search, it opens the crack that eventually splits the person from the company.

4. Role Conflict: Increasingly people are torn between family, children, aging parents, and their jobs. Those companies that have instituted policies and procedures for employees to allow flexibility and control over their working time have less turnover. This flexibility can be created by flexible work hours, telecommuting, part-time or job sharing policies, and other similar practices.

As an economic developer or a workforce developer trying to help companies address these issues, you may want to keep this basic advice in mind when it comes to talent retention.