It may still be a tight job market, but organizations are seeing increasing numbers of talented executives jump ship as the economy rebounds, new studies show. Faced with a staggering cost to recruit replacements, companies are willing to ante up to keep employees loyal, a trend that creates opportunity for those who would like to stay and move ahead.
Almost two-thirds of companies are worried that they could lose high-performing managers in a brightening job market, according to a survey of 262 employers by recruiting and coaching company OI Partners-Feldman Daxon Partners Inc. in Toronto.
And 54 per cent of organizations have already involuntarily lost key managers and executives during the first half of the year, according to another survey of 558 U.S. companies by staffing company Right Management. Only 28 per cent of the companies said they were able to retain all of their management talent.
The reasons show up in a third study by human resources consultancy Towers Watson. Two-thirds of 155 Canadian employers surveyed believe their cost-cutting actions increased employees' workloads, while 57 per cent said extra work load has adversely impacted employees' ability to manage their work-related stress. As a result, 56 per cent said employee engagement scores have dropped from pre-recession levels and 50 per cent said workers feel less able to balance their work with personal commitments.
"Some have stayed with their employers mainly because there were no other available jobs. But now, even with the economy only adding jobs at a modest pace, there are more opportunities. Organizations need to demonstrate to employees that they are valued, or they risk losing them," said Corey Daxon, OI Partners senior partner in Toronto.
That has made talent retention a priority, and created an opportunity for those who would like to stay and move ahead, Mr. Daxon said. "Because most organizations haven't set aside large amounts of extra money for salary and bonuses this year, more are looking at providing training and coaching."
What might sound like an offer of remedial help should be welcomed, he advises. "In the past, if management urged an executive to take additional training, there was a feeling that 'I've done something wrong and I'm on my way out.' Now it should be a seen as a reward that the company wants you and is going to commit to an executive development program."
Rather than focus on technical skills, most companies are encouraging their management to hone skills in leadership and get coaching in how to develop strategies and implement them, Mr. Daxon said.
An investment in loyalty
Derrick Gray director of research at audience measurement company BBM Canada in Toronto.
Situation: The statistics expert has received three promotions since starting in 2002 and he realizes he would be a hot prospect if he wanted to move to another employer in his field or a related one.
His decision: "I meet regularly with senior manages to discuss what do I need to develop in my career. I am being encouraged to come up a development plan that will lead to future promotions. It is a form of self-assessment. It's all voluntary and a lot of it is left up to me to decide what I want, so it is not just the managers' ideas.
What he received: At the height of the recession last year, he asked to take a masters program in statistics at the University of Toronto, which the company agreed to pay for and he gets time during business hours to attend some classes. The company has also supported him in course work he took at the University of Michigan's Survey Research Centre and has paid for him to attend several conferences.
Result: "I feel secure in my job and feel that the company recognizes what I bring to the table. This tells me they will help me obtain the tools to advance, so I see the long-term potential with the company. They also do a good job of supporting and recognizing what you do. When I do a presentation at meeting, they give me full credit. It shows that they appreciate what you are doing and all the hard work means something."
Insight: "I have several friends at other companies who say they wish their employers are supporting them. They all seem pretty unhappy and they are looking for options."
The talent drain
65 percentage of Canadian companies who cite employee morale and burnout as a barrier to achieving their business goals.
50 percentage of executives who see losing top talent as a key challenge
36 percentage concerned with not having the skills required to compete.
54 percentage of U.S. companies that said they lost "a lot" of high-performing managers during the first half of this year.
18 percentage that said they lost "some" top talent.
28 percentage of organizations able to retain all of their top talent.
Source: surveys of 2,000 Canadian executives and 558 U.S. companies by Right Management
"Frustration and burnout in the Canadian workplace are directly related to the massive downsizings of the past 18 months," said Right Management vice-president, Dr. Henryk Krajewski. "What is most interesting is that productivity has actually increased over this time period. But, clearly such effort - doing more with less - has a shelf life, and these data indicate we are fast approaching that limit."
Who's on the move
36 percentage of professionals under 30 in Canada who plan to move to a new employer this year.
30 percentage of those 30 to 49 who plan to jump.
24 percentage of those over 50 who plan a move.
Source: Robert Half survey of 1,400 professionals across Canada.
Why employees jump ship
Management gaffes that make employees move on:
1. Demands that one person do the jobs of two people, meaning employees have longer days and weekend work.
2. Cutbacks on administrative help, which forces workers to use their time copying, stapling, collating, filing and performing other clerical duties.
3. Freezing raises and promotions.
4. Not allowing the rank and file to make decisions, or denying them pride of ownership of their ideas.
5. Constantly reorganizing and changing direction or having rapid churn in management, leading to confusion and poor morale.
Source: Gregory Smith, President of management development company Chart Your Course International, in Atlanta and author of Here Today, Here Tomorrow: Transforming Your Workforce from High-Turnover to High-Retention.
Methods employers are using to retain executives:
52 per cent in-house coaches and trainers
45 per cent better compensation and benefits
33 per cent executives to outside coaching firms
22 per cent stock options
14 per cent retention bonuses
11 per cent mentoring programs
Source: OI Partners survey
Top reasons why executives don't work out
65 Percentage of companies who have let go recently hired executives for failing to motivate employees and build teamwork.
45 Percentage of companies that have had executives who were unable to make changes needed in the workplace.
35 Percentage of companies who have had new hires fail because they lack necessary technical or people skills.
Source: OI Partners survey
What hiring or promoting the wrong executive does:
81 percentage of companies that said it lowers morale
74 percentage that said it lowers worker productivity
53 percentage that said it resulted in losing clients
48 percentage that said it led to higher employee turnover.
Source: OI Partners survey