Talent retention is the iterative process of keeping productive employees with an organization for as long as possible. Retaining top-performing employees is the backbone of a successful organization, as it facilitates consistently high productivity and decreases costs associated with hiring. The opposite of talent retention is talent turnover, in which top performers voluntarily choose to leave an organization to work elsewhere. Talent retention and talent turnover are often viewed as highly interrelated, as factors of an organization can either persuade an employee to stay or convince an employee to quit. Though many factors influence talent retention, compensation and benefits are a common example, as a competitive package can be why an employee chooses to stay and a below-average compensation package can convince an employee to leave for a higher-paying job.
What is the difference between talent acquisition and talent retention?
Talent acquisition includes attracting, recruiting, and hiring high-value employees. Once those employees are acquired, keeping them employed becomes a task of talent retention. If acquiring talent is measured by the number of employees hired, talent retention is measured by the average amount of years that those employees stay with the organization. The strategies taken by talent acquisition teams and talent retention strategies should always be in alignment, though, otherwise it is common to see newly acquired high-potential employees resign after a short tenure.
Why is talent retention important?
Retaining top-performing employees is crucial for any successful organization, as it facilitates consistently high productivity and decreases the costly and time-consuming act of hiring in general. The cost of a bad hire is well known, but the cost associated with losing a high performer is equally severe because those employees often depart with deep organizational knowledge and a strong cultural impact. Organizations that do not prioritize the retention of their high potentials will never reap the benefits of their transformation into high performers, and organizations that do not prioritize the retention of high performers will find it difficult to attract or retain new talent at the same competitive level. Consistent talent turnover is typically a sign of deeper and systematic organizational issues that will not resolve themselves without intervention.
What are talent retention programs?
Talent retention programs are strategic initiatives aimed at retaining an organization’s productive employees. A talent retention program can be specialized and focused solely on the outcome of employee retention, or it may be focused on other areas of employee wellness with the indirect goal of reducing turnover. For example, a retention-specific program may be aimed at reducing the top reasons that employees tend to resign. This information may be gathered directly from employees, past organizational experience, or existing academic research on the topic. An example of more generalized programs are the health and wellness programs that many employers make available, which offer discounts and incentives to employees for healthcare-related costs. Research has shown that these types of benefits are meaningful to employees as they weigh their long-term future with an organization.
How to retain top talent?
Talent retention is arguably the most critical metric for a successful organization, as it facilitates consistently high productivity and decreases costs associated with hiring. The factors that influence a high performer to stay with an organization can broadly be divided into two categories. The first is internal, meaning it is directly related to the organization and is under the company’s control, such as culture, pay, and development opportunities. The second category is external, or outside of the organization’s control, such as the economy’s current state or the local job competition. Talent retention efforts should be aimed at internal factors, though the best retention strategies are developed with the external factors in mind as a contextual backdrop. For example, using competitive pay as a retention strategy will be more successful if an organization incorporates local market rates rather than just measuring against its own internal pay history.
Who should lead talent retention and development initiatives?
The size of an organization should be factored into talent retention and development initiatives, but in general, an employee’s direct manager is going to have the largest impact on their retention. A direct supervisor or close manager will have the most insight into the employee’s individual motivators and is also the person most likely to facilitate an honest conversation about retention before turnover thoughts become turnover intentions.
Senior leadership should also play a role and can be most impactful by clearly signaling their approval and buy-in for the retention initiatives. Research has shown that the success of team-level initiatives is heavily influenced by the behaviors and support of senior leaders. Talent retention programs or teams may also be helpful in brainstorming and organizing the initiatives, but action must be spearheaded at the manager level for maximum impact.
What are the best talent retention strategies?
The most successful talent retention strategies are informed by best practices and then highly tailored for each specific organization. Best practices can inform the process and rollout of retention efforts and can serve as a starting point for the most common issues to address in retention and turnover. Organization-specific context should then be collected via surveys, focus groups, or other employee-focused feedback sessions. Your strategy can then pinpoint the most compelling issues that are facing current employees and solve them using the previously identified best practices.
How can talent retention strategies fail?
The first possible reason is that the true root of the turnover issue was not actually addressed. Even the most well-researched talent retention plans may fail if the context, culture, and environment of the specific organization are not heavily factored into the broader strategy. For example, if compensation is the root of why employees are leaving, it is unlikely that a talent retention strategy targeted at an unrelated issue will influence turnover.
The second possible cause is that the true root of the issue is layered or outside of the organization’s control. For example, if five equally important strategies were identified for retention, a plan that only focuses on one issue is likely to have a small impact on the overall issue. Similarly, if external factors such as the organization’s physical location are shown to have the strongest impact on retention, it is unlikely that the organization can effectively strategize against this without a fundamental change to their core operations. Being realistic about retention goals and demonstrating a candid understanding of the true root cause are smart ways to set your strategy up for success.
5 strategies for upskilling your employees in a tight economy