Improving Retention Among High Potentials

 -  6/23/11

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Keeping high potentials is becoming a risky business and can hit a company’s bottom line.

One in four top employees plans to change jobs in the next 12 months alone, according to a recent study by the Corporate Executive Board, a research and advisory services company. Losing a high-potential employee can cost an employer up to 3 1/2 times that employee’s annual compensation, when considering expenses, such as replacement costs, and contributive costs, such as business relationships and financial contributions.

“Organizations really need to stop the bleeding of their top talent loss to help with their competitive advantage,” said George Penn, senior director of the Corporate Leadership Council at the Corporate Executive Board. “We saw some disturbing trends in the intent of high potentials to leave their current employer.”

This 25 percent statistic is a “significant leap” considering that number was just 10 percent in 2008. The increase could be at least in part attributed to the state of the economy, Penn said. High potentials have been impacted more significantly than other employees, especially with companies restructuring, rounds of layoffs, and the departure of peers and managers.

“High-potential employees have gone through a disproportionate amount of disruptions within their jobs and within their workplace,” Penn said.

Michael K. Burroughs, president of executive integration and coaching services at DHR International, an executive search firm, connects the numbers with manager and executive failure.

“It’s a costly problem — there are costs to bringing leaders on board especially if they’ve been recruited from the outside to the executive level,” Burroughs said. “If you lose somebody it doesn’t happen typically overnight.”

Burroughs said in his experience, high potentials leave after not receiving the attention they wanted or thought they should get. According to the same Corporate Executive Board survey, 64 percent of high potentials said they were unhappy with their development activities.

Talent mapping is one way companies can retain top talent, as this will create a gap analysis, Burroughs said.

It can allow an organization to see who is prepared for future advancement and which positions they will need to obtain from outside. The result will be a development plan, but a one-size-fits-all development plan isn't motivating to high potentials, he said. High potentials tend to want tailored development efforts, and organizations can show them they are valued by involving them in development plans.

“People need to know that the culture of the company is to advance high-potential people from within,” Burroughs said. “That’s a very key factor in employee loyalty and management loyalty. There is an upward path in this organization and management doesn’t always go outside to bring in people when there’s a vacancy.”

Another key tactic to help retain high potentials is coaching. Having a coach assigned to a particular employee for a specified amount of time is a good investment.

“Having a coach dedicated to their development is really helpful,” Burroughs said. “That coach is the go-between [for] the organization’s management and the high-potential person.”

The coaches would put development plans together, communicate with managers, have meetings and keep in constant contact with high potentials.

Experiential learning, network-oriented learning, action learning and mentoring drive the emotional commitment of a high potential, Penn said.

“You’re going to get a higher impact on their engagement levels,” he said.

Besides putting these programs in place, there’s still the question of effectiveness.

“Through our research, [we have found] only 8 percent effectively measure the impact of their high-potential programs, which includes those development experiences,” Penn said. “There’s a lack of insight, a lack of awareness, and a lack of connectivity between the development activities their spending dollars are on and the ultimate impact those activities have on critical workforce outcomes, such as retention, engagement, productivity.”

Only 6 to 9 percent of the employee population falls into the high-potential space, so the chances of being able to replace a high potential with another is unlikely, Penn explained.

“Statistically speaking, you have a lower chance and that’s why it’s even more important to retain these individuals,” he said.

Natalie Morera is an associate editor at Talent Management magazine. She can be reached at nmorera@talentmgt.com.