Management Alert: Connecting Employee Retention and Profits

If you dig deep enough into any industry, companies with best practices in employee retention and development are characteristically the most competitive and most profitable. So why do those companies who struggle to compete find it so difficult?

People Leave Bosses, Not Companies
According to extensive research from the authors of “First, Break All The Rules”, people do not leave primarily for monetary reasons as a motivation. They leave their bosses. Ouch (!) for any who have been bosses with employees who left them.

To discover the real issue, we have to ask the question, “but why do they leave?” In short, the bad news is it’s a matter of poor hiring practices from the top-down, and the bosses are not being developed to the next level of their own individual improvement. The good news is there are solutions for each.

Organizational Capacity and Competitive Edge
How important is all this…really? According to the late, great thought leader Peter Drucker, “Of all the decisions an executive makes, none is as important as the decision about people because they determine the performance capacity of the organization.”

Assuming this to be correct, then decisions about people should be treated as the priority they really are, and nothing less.

Is Top Talent The Priority It Should Be For You?
If we were to do a post-mortem on any company, we would find that hiring and development practices determine retention, and retention determines competitive edge. For the most part, it’s just that simple. Naturally, there are other factors to be considered, but these are real problems.

Since these best practices begin with management, and most importantly, leadership, let’s ask the tough questions for your organization:
1. Have your managers been assessed for their own strengths and weaknesses? Are they being developed by anyone inside or outside of the organization? If you took a snapshot of where they are now in their development versus 12 months ago, would you see a markedly clear improvement?
2. How does your current management identify and recruit top talent? How do they develop the talent they currently have? Is this a symptom of what they’ve been shown from their own leadership?

Pulling It All Together For Profitability
Using assessments for both existing employees to foster development and new hires for selection has become a very practical means to achieve the best decisions for management priorities which include hiring, development which leads to greater retention, business growth, and ultimately, profitability.

Determining the “right fit” for the job, the corporate culture, and even with the employee-boss connection is critical for success.

The most important example of something to be measured for leaders, management and even for certain types of new hires is well expressed by Jack Welch, Chairman of General Electric, “A leader’s intelligence has to have a strong emotional component. He has to have high levels of self-awareness, maturity and self-control. She must be able to withstand the heat, handle setbacks and when those lucky moments arise, enjoy success with equal parts of joy and humility. No doubt emotional intelligence is more rare than book smarts, but my experience says that it is actually more important in the making of a leader. You just can’t ignore it.”

In my experience of assisting clients with hiring decisions, I typically find emotional intelligence to be one of the greatest determining factors for hiring decisions. With it, you can make the job-employee-boss connection with highly productive results.

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