Why Talent Management Investments Generate Poor Returns and What to Do About It: The Retention Problem
In the last issue of The Talent Blog, I talked about how and why organizations with more diverse workforces will have more robust talent pipelines. In this issue, I look at the second of three organizational habits that sabotage the talent agenda: the retention problem.
Organizational Sabotage: Things Organizations Do That Keep Them on the Talent Treadmill
One organization I know looked back at what happened to their cadre of senior leaders identified as high potential - specifically, those ‘ready for a promotion within 2 years’. They found 40% had actually been promoted in the last 3 years. Unfortunately, 58% of those promoted were in more senior roles in other organizations. In other words, they did a fair job identifying potential and a lousy job retaining it. And I don’t think their experience was unique.
Why you have to retain talent
The reality is, many organizations do a pretty good job of recognizing talent but are less successful in retaining it. Since everyone is on the hunt for these elusive resources, if you don’t pay attention they will slip out from under you. Per employee, talent management is an expensive proposition. If you regularly lose 40-50% of those you have already identified as promotable leaders, you are playing an extreme game of ‘catch up’.
Over time, talent will naturally drift to organizations with the best value proposition. And while ‘exchanging’ talent with other organizations may not be the worst thing ever, it is a very expensive way to bolster your pipeline. The only people who win that particular game are the recruitment firms. Solution? Get serious about hanging onto your talent.
What is at the root of talent drift?
A lot has been written about high potential talent over the years. Let me summarize, very briefly. High potentials are defined by two very different predictors of success: past performance and future potential. A high potential leader is someone who outperforms his or her peer group and possesses the ability, motivation and commitment to perform at the next level (Corporate Leadership Council, 2007). You measure these two dimensions very differently. One is relatively straightforward - look back at what they have delivered and compare it to peers with similar tenure and goals. Predicting future potential is the tricky bit, and we’re not always going to get this exactly right. So what are we looking for?
Defining characteristics of high potentials are, in a nutshell: an over-developed drive to excel, a keen ability to rapidly and proactively translate new learning into tangible action, an ‘enterprising spirit’, and an innate sense of timing (Ready, Conger & Hill, 2012). This article isn’t about how to identify talent; it’s about how to keep it when you think you’ve found it. Can understanding what drives away high potentials help us retain them? Looking at their defining characteristics provides some insight.
When demand is great and a resource is in short supply, we need to think carefully about how we nurture and protect it. If the optimistic odds are one high potential per 10 employees, every time we lose one we need a generate a pool of 10 to replace him or her. Or you can steal one from someone else. In my next article I will talk about how and why recruitment as a talent building strategy is a lose-lose proposition.
Stay tuned for the next Talent Blog issue on this topic: the recruitment problem.
Realizing the Full Potential of Rising Talent: Understanding the Identification and Development of High-Potential Employees. Corporate Leadership Council, 2007.
Are You a High Potential? Douglas A. Ready, Jay A. Conger, and Linda A. Hill, Harvard Business Review, June, 2010.