Mid-sized companies risk losing the war for talent as employee retention practices are left wanting
Despite the high cost of replacing talented staff, the majority of mid-sized companies still have an erratic approach to keeping their people happy, according to new research from KPMG.
In a study of 223 leaders of mid-sized companies (with a turnover of between £10m to £500m), only 29% of businesses described their approach to talent retention as “formalised”. Meanwhile, nearly half – 44% - said their approach was “thorough but unplanned, with lots of initiatives which were not integrated into an overall strategy”. A further 27% admitted their approach was nothing more than ad-hoc.
In terms of actually how companies said they monitored and retained their people, nearly eight out of 10 said they carried out annual career development reviews with staff, while seven out of 10 said they actively encouraged open and honest communication between line managers and employees. Yet while these practices were quite widely used, the statistics rapidly dwindled when it came to the use of more in-depth techniques.
For example, fewer than half (49%) actually trained managers to manage their staff effectively and a similar number (46%) offered non-financial incentives to staff. In addition, less than one-third (30%) attempted to capture and analyse key performance indicators relating to talent.
Ingrid Waterfield, Director, KPMG’s People Powered Performance team, said: “Despite the fact that many of our clients frequently complain that they are engaged in a ‘war for talent’, these results show that mid-sized companies are a lot less systematic than larger businesses in their approach to talent retention.
“While that is not surprising in itself, given the perceived cost of implementing more formalised practices, the impact of a talented individual leaving a smaller business is likely to cause much larger ripples throughout the rest of the company. Talented people take time and cost money to replace. So by not adopting more formalised talent management strategies, companies are almost fighting this war with one hand tied behind their back.”
“Many of the practices we would suggest mid-sized companies implement need not cost the earth but can really go a long way to improving relationships between companies and their people. For example, being able to reward staff as part of a recognition scheme outside of the normal bonus can be of minimal cost to run, but can pay for itself many times over in terms of employee motivation and engagement.”
Away from retention management practices, another invaluable tool companies can use in trying to keep their staff is the exit interview. Exit interviews can identify problems that companies may not be aware of, but which can be dealt with in order to prevent other people from moving.
Yet despite the obvious need for employers to carefully review information gleaned from exit interviews, only half of employers (50.4%) said they felt they got a full and honest picture of why someone was leaving them. This was backed up by only 51.5% of employees saying they had been open and honest around the reasons why they were exiting the business.
Ingrid continued: “Clearly there is a lack of honest and open communication around this issue of people leaving. Indeed, our survey highlighted some disconnect between why employers think employees are leaving – and what employees say themselves.
“Employers generally like to think that staff members have been lured away by competitors. For employees, however, the number one reason for moving on is to seek better career opportunities – and interestingly, trust in leadership and how often they feel appreciated are also more influential drivers for exit than many employers realise.
“This difference in perception is only being exacerbated as our research found that individuals felt they cannot be completely honest. One way to find out more of the truth would be to offer leavers anonymity in exit surveys. But more importantly, developing a culture where there is greater focus on honesty and regular feedback and recognition throughout the year would go leaps and bounds towards talent retention.”