0 Comments | May 11, 2010

HOT: Talent Management Talks Talent Erosion

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We’ve been writing for a while about RIGHT NOW being the time to get back on board with best practices for employee retention. Today’s edition of Talent Management, the flagship HR resource, picks up the torch in their lead story:

The economic upturn is driving new job opportunities, but low levels of employee trust and engagement, even lower levels of entry-level recruitment, and increasing demand for executive talent have created a crossroads. Companies must rethink their talent management strategies if they hope to retain key talent and remain competitive in today’s marketplace.

Why the “sudden” emphasis on employee retention techniques? Well, it’s really not so sudden. A retention crisis has been brewing for some time, for a few reasons:

  • Perceptions of job scarcity have kept unsatisfied employees from leaving.
  • Businesses have slashed employee benefit packages in a fire-sale approach to cost cutting, leaving otherwise happy employees anxious, unhappy, and far less loyal.
  • Economic realities have made top talent even more valuable, not less valuable, as businesses posture to gain market share and seize new opportunity.
  • Businesses have all but abandoned their employee retention plans, relying on high unemployment rates to keep talent on their team.
  • Artificially low turnover numbers have lulled human resources employee benefits folks into a false sense of security. It doesn’t feel like a crisis now, so nobody’s doing much about employee retention.

But turnover costs are among the highest expenses businesses face, and employee turnover is postured to return with a vengeance. In fact, there’s a school of thought that business’ lack of focus on employee retention plans will actually delay the economic recovery, as the enormous burden of replacing talent – costing up to three times as much as the position’s annual salary and benefits expense – comes home to roost.

OK, so if it’s not already a problem, it’s about to become a nightmare. Where do you start?

Employee benefits.

20% of workers surveyed reported that employee benefit packages matter most in their retention decision.

Do five things:

  1. Prepare to spend some money on your employee benefit package. You can spend a little now, or you can spend gobs of cash in a few months. It’s an easy choice.
  2. Establish solid employee health and wellness programs. If your staff doesn’t like your employee wellness programs, they’re four times more likely to leave your company for a better offer.
  3. Ask your employees what employee benefit package options appeal to them. Then be prepared to implement as many of the most popular options as possible. Many won’t cost much money – telecommute options, flex time, etc are virtually free.
  4. Think out of the box. Implement a wellness travel benefit, such as Vacation Wellness™. Do something to differentiate your employee wellness benefit programs from your competition.
  5. Be careful before you offer a raise. While salary increases can be effective employee retention techniques, if your business isn’t in a position to offer a meaningful salary increase, the offer could actually accelerate your employees’ departure. If you’re cash-strapped, you’re far better off improving your employee benefit package due to the power of perceived value.

Is a crisis looming? Probably. Is there still time to avert it? Maybe. But only if you begin now.