Stemming the tide in the war for talent

What keeps a CEO awake at night? The prospect of arriving at the office the next morning to find that all their most talented personnel have left.

Like all nightmares, this one was formed by a certain amount of exaggeration -- but not much. In recent years, turnover rates at major corporations around the world have been climbing relentlessly and showing no signs of abating.

Making a bad situation worse is the fact that the attrition rate for new hires is nearly 30 percent in the first year of employment.

Not only is such a high turnover extremely costly in monetary terms; in the great majority of cases, when talent leaves a company it is to join a direct competitor. Given the fact that retaining a base of skilled, motivated employees is so critical for success in the new economy, it's no wonder that so many executives are losing sleep.

In addition to all the anxiety, there is widespread confusion about how to deal with the problem of employee retention, and little demonstrable progress in addressing the issue head-on. Retention has become so problematic in some industries that in an attempt to keep people, companies have resorted to the bluntest of instruments: money, and lots of it. Not surprisingly, these organizations eventually discover that money doesn't necessarily buy loyalty.

Research conducted by Accenture, which included in-depth interviews with nearly 500 senior executives from 10 different industries around the world, reveals that to win the war for talent, companies must adopt a new approach in employee retention: one that focuses on communication as well as compensation, on opportunities as well as options, and on performance as well as perks.

It is clear from the research that employee retention is at or near the top of corporate agendas. But awareness and concern do not always translate into effective action.

At the core of the problem is the fact that people issues are still a huge puzzle for most corporate executives and managers. A company is, in reality, a highly complex system whose relationships are often difficult to fully understand or anticipate. Whereas simple mechanical systems feature straightforward casual relationships -- for example, you apply the brakes and the car stops -- corporate systems are composed of many overlapping, nonlinear "feedback loops" that make it hard to predict the ripple effects that one action will have on the entire organization.

A company that competes for talent strictly with cash is vulnerable to the next big offer. This game of escalating salaries is a little like an arms race: expensive and ultimately difficult -- if not impossible -- to win. As hard as it may seem, companies can wean themselves from this reliance on money and implement more effective retention programs.

The research has uncovered several common traits among companies that have been able to actually buck the turnover trend and not only keep their talented employees but also motivate them and improve their performance.

These firms:

* learn what employees really want most by communicating with them, including receiving continual feedback,

* provide a wide range of growth and development opportunities for all levels of employees, and

* adopt measurement and reward systems that clearly articulate what is expected from employees, and reward them accordingly.

The war for talent will continue. But it can be won.