Retention of talent a crucial factor in competitive labour market: Hay Group

Savvy organisational leaders recognise that their best people work for their organisations because they want to, not because they have to, and treat them like volunteers regardless of market conditions. 

   While compensation is often a factor for employees when they consider new employment, it is seldom the precipitating factor. Nonetheless, retention strategies commonly focus on compensation, for example, retention bonuses and stock options. 

 Organisations must focus on two key concerns to retain and motivate their talent: increasing employee engagement and developing systems that provide better support for the success of their employees, the global management consulting firm suggests.

To foster high levels of engagement, companies must make greater use of non-monetary rewards such as career growth opportunities, meaningful job designs, training, and recognition programmes. And, for these measures to be effective, there must be a clear link between performance and rewards in the minds of employees. 

The best way to do this, the company says, is to make sure there is clear differentiation in performance ratings between employees. Those differences in performance should be reflected in meaningful differences in pay and advancement prospects.

Moreover, Hay Group Insight’s research shows that high employee engagement alone does not guarantee an organisation’s effectiveness. A good many companies enjoy high levels of engagement, yet still struggle in terms of performance. 

   “Many organisations have done engagement surveys, but they have been disappointed when they cannot correlate improving engagement scores year after year with performance,” said Mana Lohatepanont, managing director for Southeast Asia at Hay Group.

“What’s missing is real employee enablement to position motivated employees to succeed. In fact, our findings suggest that while organisations in the top quartile on engagement demonstrate revenue growth 2.5 times that of organisations in the bottom quartile, companies in the top quartile on both engagement and enablement achieve revenue growth 4.5 times greater. But how do you ensure that you’re doing the best possible job of enabling your employees?” he said.

The first step is to make sure you are putting the right people in the right jobs, as employees in the wrong role can quickly become disillusioned and unproductive. 

In deploying talent, leaders must consider both the requirements of the job and the employee’s ability to meet them. They also have to think about the extent to which the job will draw upon the employee’s distinctive competencies and make the most of them. 

It is also crucial to root out bad business practices, such as unnecessary or duplicated work, to ensure that work environments are supportive of high levels of productivity, he added.

Finally, organisations have to understand and manage the work climate. The benefits of a positive work climate is often underestimated, but Hay’s research shows that business results can vary by as much as 30 per cent purely due to differences in the work climate created by a manager. 

To create a positive work climate, Mana said leaders must have the right competencies to engage and enable employees. They have to understand how to give employees the authority to get on with their jobs so they feel empowered to act where decisions are best made at a local level. 

If organisations succeed in putting these measures in place, they will reap the rewards of highly engaged employees willing to go the extra mile to make the business a success, and harnessing this discretionary effort through enabling work environments will provide companies with a competitive edge. It will also ensure that they are well positioned in the competitive markets.

 

Six steps to better engagement and motivation

In order to succeed in engaging and motivating employees, Mana said organisations should follow these steps:

1. Ensure that there is a clearly communicated link between performance and rewards within the organisation. 

2. Ensure that there is proper differentiation in performance ratings between employees. 

3. Root out bad business practices, such as unnecessary work and duplication, that can adversely affect employee enablement. 

4. Put the right people in the right jobs by focusing on job sizing and the kind of employee that best fits. 

5. Monitor and improve the work climate within the organisation by ensuring that leaders have the right competencies and management styles to motivate employees. 

6. Focus on non-monetary rewards such as career growth opportunities, development, and recognition programmes.

 

“To stop your people from leaving, not only effective employee engagement but also enablement measures are required,” Mana said.