Keeping your best and brightest

by 19 Feb 2008

According to a recent survey, 61 per cent of Australian employers are having difficulty finding the right people to fill jobs a dramatic increase compared to 2006. Teresa Russell looks at how organisations are making retention a strategic imperative in practice

In 2007, Australian firms participating in the Manpower survey of 37,000 employers across 27 countries came an unenviable fourth behind Costa Rica (92 per cent), Mexico (82 per cent) and New Zealand (62 per cent) in its talent shortage survey. Experienced sales representatives and skilled manual trades workers were the hottest jobs worldwide in 2007 (see box).

It’s been 10 years since McKinsey conducted its “War for Talent” research and since then “organisations have invested heavily to implement HR systems and processes, and talent issues have unquestionably moved up the boardroom agenda. Although these moves are laudable and necessary, they have been insufficient at best, superficial and wasteful at worst,” according to the authors of “Making Talent a Strategic Priority” in last month’s edition of The McKinsey Quarterly.

The core of any organisation’s talent strategy is its ability to attract, develop and retain its employees. Many organisations have realised that it is not just the high-performers that need focus, but all the foot soldiers as well.

Sparke Helmore Lawyers is a national firm specialising in insurance, government, commercial and workplace relations law. Employing more than 600 people, including 59 partners, 30 special counsel and more than 200 lawyers and law clerks, talent retention has been a key issue on management’s radar for about five years.

“The challenges we face are no different to most firms. After lawyers have a couple of years’ experience, it is very easy to move between firms. The industry churn rate for lawyers can be over 34 per cent. Our challenge is to transition new recruits into long-term employees,” says Jane Lewis, human resources director. She adds that partner turnover at Sparke Helmore runs below the industry average of 9.8 per cent.

Makarand Tare, head of human resources for Novartis Consumer Health Australasia’s OTC (over the counter) division, says that minimising turnover among sales representatives is a major challenge. “The field force brings in the money and they cost a lot to train and equip. We can lose face with our customers who think there is something wrong with our business if there are too many new faces,” he explains.

Tare categorises his field force of 26 into either “high-performers” or “general”. “We currently target turnover to be below 14–15 per cent in the general field force, but less than 5 per cent among our high-performers,” he says. High-performer attrition at Novartis Consumer Health was 3 per cent in 2006 and 3.9 per cent in 2007.

Measure it move it

The two areas of focus on employee retention at Sparke Helmore have been firstly to increase visibility about the issue by assessing the actual cost of turnover, and secondly to build manager retention skills. The legal profession measures costs as a percentage of revenue. Factors used in the calculation of turnover costs include loss of billable time; damage to client relationship; recruitment costs; ramp-up costs; administration process costs; and loss of manager and colleague time during handover. “I was deliberately conservative in the estimates to reduce cynicism about the impact of attrition on the business,” says Lewis, who added that because it is essential to present lawyers with facts and statistics.

Feedback from exit interviews (which are analysed by Retention Partners) and engagement surveys that identified the key drivers for attrition were reported by practice group and location to highlight potential risks to the business. HR processes such as career planning and performance and development reviews were also introduced.

The main reasons for leaving given by junior lawyers in exit interviews were that they wanted more challenge, more opportunity for advancement and, especially among the recent graduates, more variety in their work.

A focus on building management skills resulted in the introduction of a 360-degree feedback tool, a leadership development program and on-boarding kits for managers. The latter had an immediate impact and resulted in “a marked increase in the integration and retention of new recruits”.

Lewis says they have embedded expectations around leadership skills in their retention programs by diagnosing and auditing the leadership skills of people coming up for promotion. In many firms, performance assessment means billable performance, but at Sparke Helmore, this is supplemented by competency assessments of leadership skills and client development.

Never rest

Tare says that his business, as part of a global pharmaceutical/consumer company, has great systems and processes in place, including a “pretty robust” recruitment process and an annual Great Place to Work survey” that measures employee engagement in the OTC division across the world. “Our retention rate among [non-sales] staff is high, because our work culture is very positive. Any initiative we invest in must convey a message that we value our employees. Communication and making employees feel valued are the key aspects of our retention success,” says Tare.

Novartis Consumer Health was named one of the 11 best organisations in Hewitt Associates’ recent Best Employers’ survey. In its internal survey, staff reported an 81 per cent satisfaction rate, however Tare says they still acted on those results. “We took the three issues in which we were rated lowest and ran workshops to identify ways to implement remedial action. We are serious about what we do with feedback,” he says.

All of the initiatives undertaken at Novartis have been internally developed and run. They revised their car policy to include cars with CO2 reduction; provide reward and recognition programs for all employees and contractors; provide 100 per cent study assistance program; free medical check-ups for all staff; snacks and fruit for employees and closing of offices at 2.30pm every Friday to address work-life balance issues – just to name a few.

Five employees make up Novartis’“Focus Five”group, charged with reviewing and modifying (if required) all new communication and policies that management wants to launch.

Cost vs investment

A short-term mindset about the value of investing in talent retention is at the root of any uneasiness people may have about the costs of talent management programs. Because these costs are expensed, not amortised over years as other capital expenditure is, talent retention strategies can be found in the firing line of managers looking for short-term cost-cutting to boost revenue.

Lewis says research is an essential part of any retention strategy. “It is important to understand the key levers impacting attrition in your business and to be able to target your strategies accordingly,” she says.

At Novartis, retention/turnover is not looked at from a dollar perspective, but rather is measured and reported monthly in its business report. “We doubled our sales force last year and evaluated retention at the end of 2007 and were happy to see we had retained 90 per cent of the new recruits.” Due to recent restructuring and redundancies, the challenge is going to keep the momentum is going to be tough.

Organisations that do a good job of retaining employees put talent management (recruitment, development and retention) programs at the centre of their business strategy.

“Nothing is more important [at Novartis] than having the best talent. Talent management is on everyone’s objectives and all activities line up behind these objectives,” says Tare. “We treat talent as a key business driver,” he adds.

“Make sure business leadership is engaged on the issue of retention. If they don’t see it as a critical issue, it will be impossible to drive change,” says Lewis.

The hot jobs

2007 Hot Jobs

1. Sales representatives

2. Skilled manual trades (primarily carpenters, welders and plumbers)

3. Technicians (primarily production/operations, engineering and maintenance)

4. Engineers

5. Accountants

6. Labourers

7. Production operators

8. Drivers

9. Management/executives

10. Machinists/operators

2006 Hot Jobs

1. Sales representatives

2. Engineers

3. Technicians (primarily production/operations, engineering and maintenance)

4. Production operators

5. Skilled manual trades (primarily carpenters, welders and plumbers)

6. IT staff (primarily programmers/developers)

7. Administrative assistants/personal assistants

8. Drivers

9. Accountants

10. Management/executives

Source: Manpower Talent Shortage Survey Results

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