How to Recruit & Retain People in the Current Economy

January 16, 2023

I’m always fascinated to be in conversations with CEOs and executives who are concerned about their ability to retain key talent.

And I’m intrigued by how quickly the conversation goes to compensation, bonuses, STIPs and LTIPs (short- and long-term incentive plans). After listening to their thoughts and views, I ask a simple question:

Have you ever done any research on the root drivers of retention of high performers?

After the room goes quiet, most people respond with, “I think…”, “I believe…”, “I feel…”

Then, I point them to a body of research we found more than a decade ago, in the recently updated book The Seven Hidden Reasons Employees Leave by Leigh Branham. The book summarizes research from 20,000 exit interviews to extract the real reasons why people leave.

While managers said that money was the reason people left 90% of the time, the research shows that money was a major factor closer to 10% of the time.

Not About the Money

Since reading this book, I’ve been pressure-testing the data by asking keen, new-to-a-company executives why they left their old job. I have never heard someone cite compensation. Never. In a few hundred conversations, they’ve always pointed back to one of the reasons in the book.

On the flip side, I have also asked the same question to key executives when they tell me stories of getting offered 30%, 50% and 100% more money to go somewhere else. When I ask them why they stay, they almost always cite one of the reasons in the book.

Reason 1: The job or workplace was not as expected.

An expectation wasn’t met. People were misled or oversold during the interviews, usually because the hiring process was too rushed to give candidates a realistic view of the job or the company.

Reason 2: There is a mismatch between job and person.

This is about getting the right people in the right seat – to make sure they are capable and a good fit for company culture and values.

Reason 3: There is too little coaching and feedback.

Many managers are not trained how to give ongoing, constructive and candid coaching and feedback – nor do they provide development programs to help employees grow and improve.

Reason 4: There are too few growth and advancement opportunities.

Employees who want to advance in their careers need to see that there is a supportive and formal path to do so.

Reason 5: Workers feel devalued and unrecognized.

Lack of acknowledgement, respect, pay equity, and the right and enough resources for people to do their jobs well, including a safe and pleasant work environment.

Reason 6: Workers suffer from stress due to overwork and work-life imbalance.

No management support for a healthy work-life balance means more stress, burnout, turnover and absenteeism vs loyalty, productivity, health and mental well-being.

Reason 7: There is a loss of trust and confidence in senior leaders.

Many employees see an inequity in how CEOs/executives and others are treated with pay, perks and advancement opportunities.

Of course, people tell you it’s about money because it’s the most socially acceptable reason. They don’t want to tell us we are incompetent or jerks or untrustworthy or have behaved badly. They want a good reference check and future opportunities in their industry, and don’t want to burn any bridges.

Of course, people can be persuaded or interested in more money when they change jobs – who wouldn’t be? – but only once a whole bunch of other criteria have been met.

What about STIPs and LTIPS?

As an aside, when it comes to short- and long-term incentive plans, I think they are a great way to share the financial success with a team that helps make it happen. Just don’t kid yourself that they are a driver of retention. If you think that ‘bribing’ people to stay engaged is an incentive plan, you may have bigger problems.

The Retention Solution

If you really want to focus on retaining your high performers, make a list of all their names across the top of a page, and the seven reasons why people leave, down the side. Then make sure all seven reasons are handled for each of your key people.

The Challenge

Take the seven reasons people leave and make it your checklist for ensuring that people stay.
Pick which of the seven reasons you believe has the biggest impact on helping to retain your best people.

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