Retaining Talent

Retaining Your Organization’s Best Talent

The inability to attract, and keep, new leadership is one of the top dilemmas facing senior management today. World-class companies know the value of hiring key employees and the importance of keeping these top contributors on board. The loss of an integral leader can shake an organization’s foundation and disrupt a business that had been running smoothly. In small to mid-sized companies the loss of a high-impact executive can be especially difficult to overcome.

In building and retaining a management team, companies must take into account several critical factors including their recruiting strategy, compensation plans, short and long-term incentive plans, culture, and employee recognition. The time to address retention is now. Over the next decade, a large number of baby boomers will be retiring from key management positions and the incoming population of leaders is not sufficient to fill the vacated jobs. We will see a much greater dependence on older workers and thus the need for greater flexibility in work environments to encourage them the put off retirement.

Why High-Performing Leaders Quit

Many people believe that money is the top reason high-level employees leave their jobs. This simply is not so. While compensation is important to everyone, when you look at the big picture it does not provide a complete answer to why people leave companies.

Consider a recent survey developed by a leading North American Recruiting Firm, whereby 150 executives with the nation’s 1,000 largest companies were asked which of the following is most likely to cause good employees to quit their jobs.

Their responses were as follows:

Limited advancement 41%
Lack of recognition 25%
Inadequate salary and benefits 15%
Unhappiness with management 10%
Bored with job 5%
No response 4%


Given the importance of finding and keeping top performers, we would offer the following suggestions on how to address retention in your organization:

Hire the right individual to begin with.

Without a doubt, the single biggest reason an employee does not work out is the lack of fit within a company culture. As a potential employer, you should develop a detailed job description, making certain the person you hire “fits” your culture and the competencies needed via a thorough recruiting and interviewing process. Engaging an outside search firm as an objective resource can help as well. Lastly, take the time to integrate this new person into your company through orientation, training and providing resources to them in their move and transition.

Provide Growth Opportunities.

The top reason high-caliber managers leave is due to limited advancement opportunities. Keep in mind, advancement does not always mean moving upwards in the organizational chart. Providing the opportunity to lead a team on a specific project or to head up the opening of a new division can provide challenge and growth. If you constantly look for ways to keep your management team challenged and learning, they will stay. When you stretch the perceived capabilities of a high-performing individual, they may surprise you with what they can do, and the risk will pay dividends down the road with better retention and employee motivation.


Everyone wants to be appreciated and recognized for the hard work they put in. Your goal in recognition should be to strengthen the bond and affiliation an executive feels with the company. Recognition should be sincere and public when appropriate. Annual awards are great, but it’s the day-to-day interactions managers have with their superiors that can often make the difference between motivating or losing a key contributor. A good friend of mine in the headhunting industry asks every potential recruit he calls the same question: “when was the last time your boss came up to you and told you that you are doing a great job and are important to the team?”

Culture and Mission.

Does your company have clearly defined goals and an overall mission? A recent study by outsourcing firm Drake, Beam and Morim (DBM) revealed that creating an inspiring vision and strong sense of purpose is critical to building a sense of affiliation between employees and organizations. The stronger the sense of affiliation an employee feels to their organization, the higher the levels of productivity and retention.

Many times we see employees who leave because they felt their company had no cohesive mission or goal. In addition, every company has a culture associated with it (whether that culture is by design or not is another matter). One way to find out what your culture is currently saying about you is through employee feedback. Provide channels through which employees can voice their opinions and speak out. Exit interviews can be especially important and should be analyzed. Losing managers will cost you the expenses of recruiting and training a replacement as well as lost productivity, reduced morale, lost intellectual capital and business. Often companies make the mistake of ignoring the causes of turnover in their organization.

Take the time to find out how the public perceives your company as well. One request we receive quite often from our clients is to keep a record of observations and insights outside parties and potential candidates have of their company. This “litmus test” can be especially valuable and may uncover some negative press that may be hindering your recruiting and retention efforts.

Keep your Stable of Talent Well-Stocked.

A top priority for a human resource/recruiting team and senior management should be to constantly look for star talent in their industry. Don’t make the mistake of waiting for a need to arise before identifying potential performers. One key measure of a recruiting team should be how well they keep the “bullpen” stocked. As a senior executive, taking 30 minutes to meet a potential future prospect can be well worth the effort. Employees rarely advertise they are seeking other employment and may leave, thus many positions come open when an organization is least expecting it. You can plan for this contingency by having a full list of talent identified outside the company. When you partner with an outside search firm, insist that they make you aware, from time to time, of the stars in your industry. Recruiters spend all day in the marketplace and are usually aware of executives who are in play and may be interested in speaking with you.

A Word on Compensation.

Compensation does play an important role in employee retention. Salary is a key component of most compensation plans but only one of many. Over the past decade, we have seen a definite trend towards more incentive-based compensation models and less emphasis on company stock option plans. While we could devote an entire website to executive compensation, we would offer a few tips on competing successfully for the market’s best talent:

Be flexible. There are many moving parts to management compensation plans and you should be prepared to adjust them when appropriate. Find out what is important to the candidate. For some the benefits package may far outweigh the gym membership or car you may be offering. For others, the loss of an annual bonus or current stock options may necessitate a buyout or sign-on bonus. Make sure your recruiter details every aspect of a candidate’s current compensation for you and works with you to structure a plan that makes sense.

Tie compensation to performance. This may include a bonus tied to company performance, individual performance or a combination of the two. We have seen many companies who have gone to a quarterly bonus system, replacing the traditional year-end model. In a performance model, both sides can benefit.

Look into other creative ways to compensate your best performers including both long and short-term incentives. These may include an increased amount of vacation time, personal financial planning and deferred compensation.

While compensation is by no means the only factor in retaining your best performers, we do encourage you to look at how you are currently compensating your management team. Make sure the incentives you offer are tied to the results you want and that they encourage the behaviors you are seeking. When done properly, a good compensation plan can reinforce an organization’s vision, goals and employee loyalty.