Keeping hold of your best people

by 27 May 2009

Retaining and engaging high performers is especially important for businesses in tough times. Hay Group’s Jane Fraser looks at what organisations can do to retain, engage and enable their best people during these uncertain times

The global financial crisis has presented leaders with a challenge some of them have never faced before –how to prepare their organisation for the better times that inevitably lie ahead while at the same time addressing the short-term need to reduce costs and increase efficiencies.

Not surprisingly, because labour items are usually one of the biggest costs on an organisation’s balance sheet, many organisations across the globe are coming under pressure to lay off staff and/or freeze pay. A Hay Group sur vey at the end of 2008 found that 24 per cent of organi sations in Australia and New Zealand were freezing (8 per cent) or considering freezing (16 per cent) pay for all employees in 2009 and 17 per cent of Australian and New Zealand organisations were decreasing staff levels. While this is an obvious quick fix to address the financial issues, the cost savings can be offset by a decrease in the productivity and motivation of employees.

Consequently, keeping people engaged is a key chal lenge. But keeping hold of people is equally challenging, especially high performers. History shows that when an organisation hits hard times, the best people leave first. Recent research by the Compliance and Ethics Leadership Council found that one in four high-potential employees (those that perform best now and show the best promise for the future) plan on quitting their job in 2009. Even in a tough market the best people can always find opportu nities elsewhere, while savvy organisations use this oppor tunity to actively poach talent from their competitors.

To make matters worse, this same research found that disengaged employees are 24 per cent less likely to quit now than in previous years – so the people you might be less concerned about losing are the very people most likely to stay put.

This means that organisations need to be prepared for growth when the economy swings back by keeping hold of their best people – their future leaders – and keeping them engaged. Those organisations that take a laissez faire approach to their talent pool will find themselves scram bling to hire and develop new leaders from scratch.

In this article we outline our views on how to retain, engage and enable your best people during tough times. Our insights are based on research and experience and reflect what organisations can practically focus on given the current pressures on cost and time.

Recognise and reward them

What does recognising and rewarding high performers really mean? It means:

• Clearly defining and communicating what good per formance looks like so that your high performers can see they are indeed performing.

• Telling them that they are doing a good job and reward ing them for it. This doesn’t have to mean paying them more – your best people work for more than money.

• Showing them that performance is differentiated – that they are receiving an appropriate level of reward and recognition for their contribution and that this is more than those who are contributing less.

• Demonstrating that poor performance is being addressed. One of the biggest frustrations for high performers is to see underperformance ignored or even rewarded.

Implicit in these actions is the need for a robust per formance culture supported by a strong performance man agement system. In difficult times this becomes more important than ever. In a boom market, with a tight labour supply, companies often gloss over poor performance and are reluctant to enforce strong performance management systems. In crunch times, many companies do the same thing in reverse, imposing restrictions on all employees regardless of performance.

Mediocre performers are unlikely to see the need to change, and high performers see no return on their discretionary effort and either become disengaged or leave.

Gain their trust

How do you gain the trust of your best people? The key here is to actively communicate with them. This is espe cially important when conditions are as challenging and uncertain as they are now.

In the absence of clear information from the top, peo ple will naturally fill the void, and human nature being what it is they’ll tend to fill it with rumours, negativity and distrust. In our experience, these rumours and speculation are almost always more drastic than anything the executive team is actually planning. So, even if organisations have bad news it’s important to communicate it.

And because the goal is to maintain a level of trust, organisations have to be honest and genuine. Your best people can tell when they are being patronised or misled. Many organisations put off communicating until they have the full facts, until they are certain of what they are going to do – this can be a mistake. Your best people want to know what senior leaders are thinking as well as the decisions they have made.

Build their confidence in senior leaders

In our experience, maintaining the confidence of high performers in their senior leaders is critical. Your best people will soon get despondent if they start to question the ability of their senior leaders to get the company through the downturn. So how do you build and maintain their confidence?

First, remind them that your business model is sound (assuming it is of course) and demonstrate that top man agement has not lost sight of where the business is heading over the long term. This doesn’t mean that leaders are naïve about the challenges of the present, but at the same time they are already thinking about the upturn and are preparing for it.

Second, demonstrate that the senior management team is thinking rationally. Companies in crisis mode too often resort to uniform cuts in headcount and salary. This sends a message that either the company is in trouble, or its sen ior leaders are not thinking straight. High performers want to know that the company is cutting costs strategically. Show them that while cuts are being made in some areas, the company is still investing in those roles, functions and people that will see it through the downturn and beyond.

Provide clarity and direction

In uncertain times, it is more important than ever that your best people are clear about where the organisation is head ing and how and where they fit into that. In our experience, it is high performers that most demand and expect clarity of direction.

Connecting your high performers with the big picture is critical but right now they also need clarity about their immediate goals and priorities. What are the essential, value-adding tasks that you need them to focus their efforts on? What objectives do you need them to achieve? What behaviours should they be exhibiting?

Continually offer learning and development opportunities

Opportunities for growth and development are among the most consistent predictors of employee engagement. Your best people know that, if they are not expanding their skills, they risk compromising their future employability. This doesn’t have to mean spending money on expensive lead ership development programs. High performers appreciate opportunities to be coached and mentored by respected “role models” in the organisation. They also appreciate shadowing opportunities, job rotation assignments and a chance to be exposed to senior leaders.

Difficult times present an excellent opportunity to help your best people broaden their capabilities. Clever organ isations are using the downturn as an opportunity to get their best people focused on critical tasks such as re-exam ining the operating model and evaluating opportunities to increase efficiency. Fresh ideas and insights can be gained this way. Also, by allowing them to participate in teams tackling these critical tasks they can participate in prob lem solving and decision making without the burden of responsibility. What better learning opportunity is there than figuring out how to survive a recession?

Provide ongoing feedback regarding performance

Your best people have a strong desire to become the best that they can be. High performers thrive on feedback, are keen to know:

• where they stand, where their strengths are that they can build on and

• where their weaknesses are that they need to address.

• Outstanding employees quickly become disengaged without ongoing, constructive performance and behavioural feedback.

In uncertain times, this feedback is more critical than ever. Your best people need to know that they are focus ing on the right things, behaving appropriately and adding value – and if they are not, they need to know what you need them to do differently.

Listen to their ideas and concerns

In tough times, your high performers demand open and honest dialogue with their line managers more than ever. They need their thoughts, concerns and ideas to be listened to, acknowledged and considered. Many leaders avoid such conversations, afraid that this dialogue will unearth issues they cannot resolve. Your best people do not expect the organisation and its leaders to have all the answers - they do expect the organisation to take an interest in them, to listen to them and to at least try and take on board their suggestions.

Put them in the right roles

Our research into employment effectiveness highlights that engagement is only half the story. Enablement is just as important. Recent Hay Group research shows that high performers who are both engaged and enabled are much more likely to stay with the organisation. One of the keys to ensuring they are enabled is to make sure their skills and abilities are put to good use. This involves not only considering the requirements of the job and employees' ability to meet them, but also the extent to which the job will draw upon and leverage the employees' distinctive competencies and aptitudes.

It is important to recognise that being a "star performer" is not an enduring trait of a person. Great performance is a state, the condition of enjoying a good match between a person's capabilities and the requirements of the job. It lasts as long as that match stays in balance, with challenges that are neither too easy nor too hard.

Provide a supportive environment

Ensuring that your high performers are enabled also involves providing them with the essential resources to get the job done. Clarity of direction is meaningless unless people have the time, space, support and resources they need to deliver. This involves information, technology, tools and equipment as well as financial support. It also involves allowing them to focus on the most important accountabilities by eliminating/reducing non essential tasks and procedural red tape.

Finally, it means giving them the appropriate autonomy and discretion to take action. High performers quickly become frustrated if they have to refer upwards when they have the capability and confidence to make their own decisions.

HR's role in retaining and engaging high performers during tough times

Gaining the trust of your best people is especially important in these difficult times. Trust only comes through active, ongoing and honest communication. Even if organisations have bad news it's important to communicate it. HR leaders can play a key role in challenging senior leaders to communicate even when they do not have the full facts and to 'tell it as it is', rather than try to gloss over the truth.

HR leaders have a key role in ensuring that senior leaders cut costs strategically and can demonstrate to their high performers that while cuts are being made in some areas - the company is still investing in those roles, functions and people that will see it through the downturn and beyond.

HR leaders can use the downturn as an opportunity to help their best people to broaden their capabilities by focusing them on critical tasks such as re-examining the operating model and evaluating opportunities to increase efficiency.

HR leaders can also help by ensuring that:

Line managers listen to, acknowledge and consider their high performers ideas and concerns.

High performers are connected with the big picture and have clarity about their immediate goals and priorities.

Their best people are put in the right roles, roles that make sure that their skills and abilities are put to good use.

Line managers provide their high performers with a supportive environment, i.e. provide them with the essential resources to get the job done, allow them to focus on the most important accountabilities by eliminating non essential tasks and procedural red tape and give them the appropriate autonomy and discretion to take action.

High performers receive ongoing feedback regarding their performance.

Source: Jane Fraser, consultant, Hay Group

Reproduced from the Hay Group paper Talking talent: Keeping hold of your best people. For more information contact Jane Fraser on 02 8227 9300 or email