For years we have heard countless reports and read numerous articles about the challenges organizations are facing in retaining their employees. Now that the economic tide has turned and jobs are scarce, a new employee retention crisis has popped up: companies are retaining too many low performers.
Few organization have taken notice that the real employee retention / talent management problem is one of the wrong employees being retained over the long-run. The reality is not all employees should be retained.
In years of working with organizations large and small, I have observed organizations at both ends of the employee retention / talent management spectrum.
At one end of the spectrum, I find companies that hang on to their talent for the long-term regardless of value added (or not added). I call these organizations "till death or retirement do us part" companies.
Privately held and publicly traded companies are not alone in this strategy. State and federal governments generally adhere to a "till death or retirement do us part" employee retention strategy as well.
This strategy may be formally articulated or just silently understood. If one is "fortunate" enough to get a job with such an organization, one is "in" for life - regardless of whether or not value is actually added.
In such an organization, one may literally oppose change, create knowledge silos, and allow office politics to flourish. Most "till death or retirement do us part" companies are unaware of the production or value created by each employee team member. Surprisingly, some of the organizations are actually successful and manage to consistently turn a profit (albeit significantly diminished in terms of what is possible). I sometimes call these companies - "successful in spite of themselves".
Yes, these companies do exist today. They are actually everywhere. Companies with this strategy quite often have a unique differentiation of their products/services that provides them the market power necessary to retain low-performing employees over the long-run, or they are family or closely-held where shareholders are not aware of the opportunity costs of the job mismatch problem and retaining low performers.
The biggest danger with this talent management strategy is that market forces inevitably change and the company will be forced to pay the consequences of years of corporate welfare and ultimately must let people go. When this happens, the "till death or retirement do us part" organization typically lets the most recent hires go first. This strategy is often the beginning of the end as higher performers are inadvertently let go in the process of saving the "most loyal".
Conversely, on the other end of the employee retention spectrum is the "Rainmaker Company". A "Rainmaker Company" is one that requires high performance accountability on a consistent basis. Employee team members know what is expected of them and their performance reflects this. These companies often provide strong returns to shareholders and typically are at the top of their game. I call these organizations "Rainmaker Companies" for a reason. "Rainmaker Companies" make the impossible happen and get results consistently. Compared to the "till death or retirement do us part" companies, "Rainmaker Companies" are few and far between.
"Rainmaker Companies" utilize a measured-value-add employee retention program. In these companies, if one is not adding measured value, one is a direct cost and it is only a matter of time until they are removed from the organization.
An excellent example would be GE when it was under Jack Welch's leadership. At GE, if one were a recognized bottom ten percent sales performer, one could be expected to be looking for a job within 12 months. This may sound like a harsh strategy, however, an employee always knows where they stand in a "Rainmaker Company" and understands that such decisions are made objectively based on performance.
Harsh reality. In today's (and tomorrow's) economy, companies will be forced toward the "value-add talent management strategy" due to economic conditions and uncertainty. Not all companies will make the complete transition to the "Rainmaker Company" status, but competitive economic forces will push the low-performing companies to reassess their overall talent strategy.
Which strategy is best? You tell me. If one is a low performer, one clearly desires the "till death or retirement do us part" perspective. If one is a high performer, one would likely want to work for the "Rainmaker Company".
If you want results, the best strategy is to be a true "Rainmaker Company". If you want mediocrity - then protect the status quo by retaining low performers for life.
A company or organization cannot have it both ways. If low performers are allowed to stay on board, the business model and bottom line will suffer directly. Customer Experiences will diminish. High performers will leave for "greener pastures".
The bottom line - is the bottom line. If a company is in a "profit maximization game", the best employee retention strategy is one where each employee team member fits the job and is adding as much value as possible. It sounds absurd, does it not? Ask any non-government, profit-seeking company if they are in the business to add value to their shareholders, and many will say, "of course."
Yet I get the call just about every day... "Can you help us improve?" My response is always... "Are you truly interested in improving - even if it means that some of your talent is re-aligned in the workforce?"
The real problem many of these organizations have is that they love their employees far more than they should and performance suffers as a result. Some of these companies can be saved. Others refuse to change the way they manage their talent and cannot be helped. Harsh but true.
Rainmaker Companies understand the importance of...
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Job Match and Fit - How each employee team member fits the job (Job Benchmark).
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Results - How each employee team member is expected to add measurable value.
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Accountability - Each employee team member knows what is expected of them and is held accountable for job performance.
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Performance Improvement Plan - Each employee team member has a coaching and performance improvement plan.
What side of the employee retention spectrum does your organization fall? If you lead or own an organization that falls on the "till death or retirement do we part" end of the spectrum are you prepared to make the diffucult, yet rewarding changes necessary to become a "Rainmaker company"?
Now go Maximize Possibility! Other blog posts you may be interested in: Chris Young helps organizations Maximize Possibility through talent management, cultural transformation, and strategic intervention. Bring Chris in today!
