3 Ways To Retain The Best Professionals

On The Business: Feature


I have always been troubled by the high turnover rate among service professionals. It’s not the same across the board, but attrition is certainly high among the junior ranks of many investment banking, law, accounting and consulting firms.

Losing the best professionals is costly (an average of 150% of salary) and is a huge hit to morale. It is a sign that organizational health isn’t what it could be.

Professional services aren’t the only industries with this reputation – others include hospitality, food service and retail. While many companies and leaders accept this as ‘part of the industry’ and something that can’t change, I am encouraged by the following:

I realize the examples above aren’t perfect comparisons for banking, law or accounting, but these three companies have figured out how to be different and rise above the norms. And if three major retailers can do it, don’t you think advisors and capital providers can do it too? I am convinced that high turnover doesn’t have to be the norm.

Many factors impact retention, including competitive compensation and benefits, culture, and hiring practices, but for now I’ll focus on three areas:

1. Training & Development

One of the reasons The Container Store has such high retention is that it provides every employee with 263 hours of training in the first year. Think about that for a moment – 263 hours equates to more than 6.5 weeks of training. And that’s just in the first year! This may sound like a large investment, but much of the training is to teach employees about every product in the store so they can provide better service to customers and sell more product. When done well, training increases retention and prepares everyone to generate more revenue.

It is thoroughly documented that intrinsic motivation (autonomy, mastery and sense of purpose) is much more powerful than extrinsic motivation (money, praise, etc.). Training and development feed this natural desire for mastery. People put in even more effort when the skill or project has a greater significance or meaning.

Training can have a profound impact on retention due to the psychological contract it encourages between employer-employee. Training is a social exchange that creates a feeling of reciprocity, and leads to the employee feeling more committed to the organization. Conversely, when employers violate this contract by not delivering on expected benefits (assumed or formally agreed-upon), retention can plummet.

2. Communication

Communication (more specifically, feedback) is a major component of training and development and every organization can improve in this area. Communication issues range from giving direct feedback, to making sure people understand the direction of the organization, to collaboration. The effects of inadequate communication ripple through every level of the organization.

Lack of feedback is one of the major reasons people leave. Many companies believe they have open communication and give great feedback, but more than 60% of employees believe they don’t receive enough feedback. Unfortunately, the first thing people often think about when they hear the word feedback is the annual review. It is important, yes, but the feedback that keeps people around must be far more frequent.

Feedback is most effective when you factor in the experience level of the individual. As professionals move from novice to expert they desire more negative feedback. The purpose of feedback changes from wanting to do a good job to wanting to achieve mastery. People want to know what they are doing wrong so they can fix it and move on. For people pursuing mastery, praise may even dampen their desire to do the work for intrinsic reasons.

3. Leadership

One of my virtual mentors, Michael Hyatt (former CEO and Chairman of Thomas Nelson), talks about a time earlier in his career when he fell short of achieving quarterly financial results. When asked why he missed, he responded in the way many of us would, by blaming the economic environment and other external factors. Then he was asked a question than would put most of us on our heels, “what was it about your leadership that produced these results?”

For those of us senior professionals, we should ask ourselves the same question every time we lose a good person.

“What is it about my leadership that made this person leave?”

Truthfully, everything starts with leadership, including training, development and communication. Leadership sets the tone for how people collaborate, how much people trust each other and, ultimately, whether or not good people feel committed enough to the organization to stick around.

Employee engagement has been a hot topic for several years and is now the #1 issue for HR and talent managers – every company wants their employees to be more engaged. But engagement itself can’t be achieved unless leaders work hard to foster an environment where people want to be engaged. Some factors that matter (after basic financial needs are met) include:

  • a shared sense of purpose and values throughout the organization
  • transparency from (and trust in) the senior levels of leadership
  • a talent system where roles are clearly defined and filled with people possessing the right skills
  • an inclusive environment where people feel safe to vocalize their opinions and feel their contributions are valued

Conversely, in a study on the link between leadership and the health / job satisfaction of subordinates (their term, not mine), a bad leader:

  • Does not show genuine care for people
  • Initiates structure without showing consideration, or deprives subordinates of participation, autonomy, and control
  • Is too transactional with subordinates (doesn’t build real relationships)
  • Is laissez-faire – does not respond to subordinates and does not monitor performance

Leadership is also responsible for instilling a sense of greater purpose into the organization. It confounds me when professionals trivialize things like ‘purpose’ because the evidence is piled high – people value meaning over money, just check out these three books:

The last thing I’ll say about retention and leadership for now is we need to figure out a way to engage and keep talented young professionals. It is difficult for some people to understand the next generation and others don’t like it, but a tidal wave is coming and we need to adapt.

More on retention:

 

On The Business: Leadership


Most of us are hesitant to invest in executive coaching for ourselves, but the ROI can be compelling. A PWC study on the matter showed an average ROI of 7x, with 25% of participants achieving ROIs of 10-49x.

Leaders often get appointed due to job performance, political capital or intellectual intelligence. While reasonable on the surface, this points to a gross misunderstanding of the requirements of a good leader. Communication, empathy and emotional intelligence are far more important, which is why the CEO of The Container Store says Women Make Better Executives Than Men.

 

On The Business: Talent


Today’s feature was about retention, but I think we would agree that some turnover is a good thing. The key is figuring out how to lead the organization into a healthy turnover rate.

Keeping the best people is proving to be tougher and tougher each year but it is possible to create an attractive environment – The Five Elements Of A ‘Simply Irresistible’ Organization.

 

On The Business: Sales & Marketing


How does your website look on mobile devices? If you haven’t given much thought to this, you may want to start. On April 21st, 2015 Google will be launching another update that factors in how usable your site is on mobile devices. Therefore, if your website isn’t mobile responsive, friendly, etc., your ranking in Google’s search results may go down. This is definitely something you will want to look into now.

When advisors and capital providers lose a potential piece of business, we want to know ‘why,’ but it always seems difficult to get the real reason from the client. I am convinced we can figure out a way to get better feedback from clients on our pitches, win or lose. I found an interesting article by Michael McLaughlin from MindShare Consulting about what to do when a client says no. I like his suggested approach of a client debriefing after the dust has settled and you have time to come up with some really good questions that test your assumptions held prior to the pitch.

 

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And that wraps it up for this issue. I have to admit, writing today’s feature proved much more difficult than I originally expected. The issue of retention is complex, the information is vast and it took a while to find the good stuff. I did the best I could for now but I know we’ll cover other aspects of retention in the future.

If you found this issue beneficial would you be kind enough to share it with someone?

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Invest in the important stuff,

David Mariano
Chief Curator
On The Business

How To Build a Healthy (and Wealthy) Service Organization

On The Business: Feature


thrive

verb | (thrīv)

1. to make steady progress: prosper

2. to grow vigorously:flourish

Whether we’re examining nature, individuals or organizations, nothing can thrive, prosper or flourish without being healthy.

And when it comes to health and organizations, Patrick Lencioni’s latest book says it all – The Advantage: Why Organizational Health Trumps Everything Else In Business.

When an organization is healthy you can tell right away – politics are minimal, morale and productivity are high and good people don’t leave.

Healthy companies also perform:

Simply put, healthy companies win.

Sadly, Lencioni estimates that only 15% of organizations are healthy. But this means lots of opportunity for those willing to put in the work.

The Advantage outlines four key components of the Organizational Health Model:

1. Build a Cohesive Leadership Team

A cohesive leadership team is built on a deep foundation of trust. But not just any kind of trust – the vulnerability-based trust where people are willing to say “I need help,” “I don’t know,” and “I was wrong.” With real trust, groups can openly engage in conflict and hold each other accountable without defensiveness.

2. Create Clarity

Creating clarity is about eliminating the potential for confusion. Organizations can achieve clarity by answering six simple questions that have to do with purpose, values, culture, focus, priorities, responsibility and defining success. The questions are simple, but most companies can’t answer them.

3. Overcommunicate Clarity

Once the leadership team is aligned, the rest of the employees need to be aligned as well. They need to understand the answers to those six questions just as well as the leadership team understands them. Clarity throughout an organization is achieved through repetition, simplicity, multiple mediums and by cascading the message through the layers of the organization

4. Reinforce Clarity

In order to sustain health, organizations must reinforce this clarity in everything they do, including hiring, performance management, compensation, etc. If people sense inconsistency in any of these areas, health can quickly deteriorate.

I would argue that organizational health is even more critical for service organizations. There are no machines to maintain a minimum base level of productivity and predictability. Advisors and capital providers only have their people. Conflicts, confusion and division show up quickly, and have a huge impact on performance.

More on healthy organizations:

The Advantage: Why Organizational Health Trumps Everything Else In Business

 

On The Business: Leadership


Speaking of organizational health and trust – a culture of trust means that your open door policy is actually effective. People aren’t afraid to speak up and suggest ways to improve the business.

Leading a team of people to greatness requires the willingness to give regular, candid feedback. The candid part is the most difficult part for many people: The Lost Art of Candor in The Workplace.

 

On The Business: Talent


In a previous issue we covered the impact of long hours on productivity and health. Here is another interesting read on what work stress is doing to your health.

Flexibility is a sometimes forgotten fringe benefit that is becoming more and more valued these days: The 2015 Workplace Flexibility Study from WorkplaceTrends.com.

 

On The Business: Sales & Marketing


Accountants, attorneys, bankers, consultants – we all want to be the trusted advisor. Here is an excellent article on how to achieve it: Want to Be a CEO’s Trusted Advisor? Do These 8 Things

Getting meetings with decision-makers is tough. If you want to increase your chances, spend 12 minutes listening to this short podcast, The Key to Getting Meetings with Decision Makers, and learn about building a process, working with gatekeepers and balancing the use of email in your approach.

 

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That is all for this week. If you are finding this useful, would you mind sharing it with a friend or colleague? And if you missed the first few issues of On The Business, you can find them here and here.

Invest in the important stuff,

David Mariano
Chief Curator
On The Business

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