Retaining Key Staff - May Just Save Your Business!
Companies fail. It happens.
Whether the company is high profile, in manufacturing, digital or biotechnology, established or in a phase of start-up companies do fail. One of the reasons this happens, especially for larger companies is that they have a hard time retaining their brightest and best executives. Recently, GigaOM pondered the recent troubles of Yahoo – noting that with a flattened out stock price the “vested” share options for some of their best performers coupled with the obvious attraction of seemingly unending Venture Capital cash luring key staff to do the whole “start up” thing over again it is no surprise that things have not been rosey!
Start ups are a little different – they do not have the incredible advantage that large companies have in the ability to retain key staff but ironically they do not. A key role in most small and medium businesses (SMEs) for any non-executive director is the identification of weakness or “gaps” in the top team and in many cases, where there is no gap it is about then retaining talent and managing the risk that these key members pose should they leave the Board. From discussing this key attribute with many of our members at NonExecutiveDirectors.com, here are a few of the obvious mistakes that companies make that leads to losing top talent:
Company Bureaucracy: Without doubt, NEDs sitting on the Boards of large companies see this as one of the major reasons for executives becoming frustrated. Quoting bureaucracy is probably another way of saying “we don’t like to play by the rules” – especially when staff have not had a say in the creation of the rules!
A wise man once told me that you cannot make a person fit the job – you should only make the job fit the person! How true! Failing to find a project for key members’ talent will serve only to dull their passion. This identification of what ignites passion is a key skill for any SME business owner; top talent is often not driven by money and power – they are driven by the opportunity to be part of something big, possibly that will even (in their eyes) change the world. Again, the big companies rarely take the time to identify this and again, a reason why many of the most talented operators leave.
Again, something simple but essential – annual performance reviews. Boring for the CEO or Board yes but not boring for your key staff! The poor annual review conducted by an uninspired, apathetic HR Manager serves one purpose – to show staff that the company (and in their view, their boss) is not interested in their long-term future. After all, if you are so talented, why stay? This leads nicely in to the next critical point – career development.
The secret here is that most employees have no idea what they will be doing in 5 years or 10 years. In most of our NEDs responses, they suggested that less than 10% of people could tell if asked that question. The irony of this is that despite a low number of staff actually knowing what they will be doing; almost all will want to discuss their future. The members of staff who believe there is a path for them to achieve goals – personal or professional will be more likely to stay.
I have been quoted previously in my assertion that businesses “rot from the top down” and in many circumstances they rot from the top down because the big decisions, the sort that lead the commercial direction of the company are made by commercial people who very often don’t value long termism. If the bottom line is the value then that has to be short-term objective and by implication, the long-term rot may have already started; taking a short-term view can mean growth is possibly compromised. Non-executives bring more than an air of strict governance proceedings; they bring insight and hindsight and get the right NED in to your business and you will benefit from more than a high profile name on your letter-head!
Ian Wright is the CEO of NonExecutiveDirectors.com and OutsideDirectors.net in the USA. Having over a decade’s experience headhunting for fast growing, ambitious businesses for some of the UK’s best known entrepreneurs he is now growing a world-wide network of non-executives who advise thousands of businesses in the start-up space as well as much larger established businesses.
This was posted in Bdaily's Members' News section by Ian Wright .