In today’s world of lean staffing, where businesses are often woefully short of personnel, business leaders have a momentous decision before them. They can choose to treat their employees as durable equipment – with inevitable depreciation until replacement day arrives – or as assets that grow in value.
The more serious a company’s purpose, the more essential it is to take this second path.
At Midwestern convenience chain Kum & Go, leaders in a turnover crisis found the business paying $1,500 each to replace shift employees. Their operations spiraled toward the breaking point as the loss of some employees prompted substantial overtime among others. Those employees, in turn, went elsewhere.
Of course, lean staffing is confined principally to retail and food service sectors – where it does enough harm. It is not often seen among businesses that rely on experienced knowledge workers with broad career prospects. But are such businesses really doing enough to distinguish their recruitment and retention practices?
In too many cases, the answer is an unfortunate “no.”
The Cost Of Employee Retention Can Hamstring An Enterprise
In 2019, an estimated 41 million people voluntarily left their jobs. Prior to the coronavirus pandemic, that figure was expected to increase to 47 million – which would have represented approximately 33% of the workforce.
The recent economic reversal has given employers substantial clout in the job market. The more reliant they are on skills that are both sophisticated and rare, however, the less the overall state of the job market matters: An employee exodus can take a knowledge economy business from shipshape to dead in the water.
Experts estimate that, on average, each employee costs about a third of his or her annual salary to replace. But these costs are not inevitable. According to research from The Work Institute, more than 75% of employees who quit were amenable to retention efforts during that decision-making process.
A reasonable question to ask, then, is “What is the most effective employee retention program?”
Of voluntary employee departures in 2019, a Work Institute study states:
- 22% were caused by a desire for career development
- 12% were caused by a desire for better work-life balance
- 11% were intended to avoid a direct manager’s behavior
- 9% were related to the need for better compensation
- 8% were related to, respectively, well-being or a job’s characteristics
- 5% were caused by employee desire to leave the work environment
Far and away, those who might have been induced to remain on the job would have responded best to a concerted talent development effort.
Talent Development Prevents Talent Elopement – And That Requires Sound KPIs
KPIs are measurable indicators of progress toward a goal. Each staff member, team, department, and division must have clear, well-understood KPIs that fall squarely within their sphere of influence. As KPI performance improves on the individual and team level, it empowers departments and divisions.
When KPIs are first introduced, performance benchmarking is often performed. This allows KPI owners at various levels to see where the enterprise stands so continuous improvement can be enacted. Significantly, it also helps spotlight high-potential employees across the organization.
These employees can become the greatest drivers of future success.
They are surfaced by the introduction of new KPIs for a few reasons:
- They are the most interested in the details of the KPIs and their responsibilities in this framework
- They show strong ability to adapt to new requirements and are soon clearly outperforming others
KPIs also take some of the guesswork out of employee evaluation. Qualitative feedback can be valuable, but it may be distorted by implicit bias, simple lapse in memory, or any of a number of other factors. KPIs are fuel for data-driven assessments forming the foundation of a collaborative conversation on growth.
That is precisely the kind of discussion that high-potential employees are more likely to respond to.
How To Institute KPI-Focused Talent Development Practices At Your Company
You facilitate the growth of your high-potential employees by ensuring that talent development informs every step of the employee experience. By investing resources into improving employees’ career trajectories – and doing so in a data-driven way – you eliminate one of the biggest temptations to voluntarily separate.
This is not done in a day, much like introducing and tracking KPIs cannot be done in a day.
But one vitalizing effect of KPIs on company culture is that they give you a model for decision-making that stretches beyond the quarter to quarter tunnel vision of some enterprises. In the same way, though it may take ten years to develop an employee to an executive outcome, those efforts have compounding returns.
This is obvious when you consider, for example, the logistics of promoting a new COO from within rather than hiring from outside – a process that may take 3-6 months and incur tremendous costs. Unlike standard salaried employees, managers, and directors, executive recruitment often costs 200% of the candidate’s salary.
Here are some pillars of a KPI-informed talent development strategy:
1. Emphasize Clarity In KPIs For Each Employee
KPIs provide value to individual employees by enabling them to remain focused on the most important tasks in any given scenario. This forms the basis of their ability to allocate their limited time, attention, and energy in the most productive ways. As responsibilities increase, so does the potential for decision fatigue. Just as Steve Jobs fended it off with his ever-present black turtleneck, today’s employees can do so with KPIs.
2. Publish Written Job Descriptions For Each Role
Lean staffing relies on the idea that, like cogs in a machine, employees will work harder as their colleagues “blow out.” In a well-run enterprise, there must be a clear delineation of workplace responsibilities. There is a great difference between an engaged willingness to “stretch” and an open-ended, amorphous, ever-changing commitment. Written descriptions allow employees to excel by knowing how they must improve to rise to more senior roles.
3. Facilitate Mentorship Within The Organization
Mentorship is how individual employees avoid reinventing the wheel as they grow from one position to the next. There is always someone in an organization who has been where you are and stands where you someday wish to be: It is wise for organizations to connect those pairs proactively. Not only does this accelerate growth, it helps sow the seeds of a robust business network for the high-potential employee.
4. Publish And Distribute “Lessons Learned”
Whenever an employee leaves the job, their departure causes “brain drain.” The enterprise must re-learn skills that were lost, often with no idea how to start and only the vaguest definition of the gaps. It is good practice for all projects and programs across the business life-cycle to create resources like knowledge bases and project post-mortems. This illuminates key decisions and makes past mistakes easier to avoid.
KPIs are crucial for a talent development program that fosters loyalty and drives executive outcomes. To learn more about achieving visibility and engagement through a superior company culture, contact us at Equal Parts.