11 Business Challenges in 2011: Keeping Talent

The economy will gradually improve over the course of 2011, which is mostly good news, but will present some challenges to business. Notably, your best employees will have opportunities at other companies. You may still be hunkered down, with no bonuses or raises, making you seriously at risk of losing key staff members. I highlighted this issue last year with a post, “Human Resources Management in the Economic Recovery” and it still makes sense. The job market recovery has been slower to arrive than we expected, so much of the effect is still ahead of us.

Bad management survives–and even thrives–when labor markets are soft. Workers will stay with a bad boss because they don’t have many good alternatives. When the job market improves, though, they sing a cover of Johnny Paycheck, “Take this job and shove it.”  The job market does not have to fully revive for this to happen. In the early stages of labor market recovery, the pace of hiring steps up just a bit. Last month over four million people were hired. This may sound surprising, because net job creation was fairly low. However, there’s plenty of hiring to replace voluntary quits, deaths and retirements. In addition, some firms grow while others contract.

Here’s what is going to happen. One of your top employees will hear from a friend that another company is hiring. He’ll interview, see decent wage and benefits, and maybe a boss who is a nice guy or gal. Boom, that worker is gone.  Most employee departures are not motivated by money, but rather by desire for recognition and praise. As the economy improves, people who work for poor managers will increasingly bail out.

Your action plan for employee retention: first review the basics of employee retention. A few years ago I compiled a list of resources for managing employee turnover. Second, review the basics of good management practices with your first-line supervisors. Bring in a consultant if necessary, but make sure that they all know how to manage to retain top workers. (That’s not the kind of consulting I do, but I can refer you to solid advisors; feel free to contact me for a referral.)

Previous posts in the series “11 Business Challenges in 2011″:

Ignoring Politics

Going Global

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“Dr. Bill Conerly is the consultant who connects the dots between the economy and business decisions. He holds a Ph.D. in economics from Duke University and was formerly Senior Vice President at First Interstate Bank.
Dr. Conerly is author of Businomics: From the Headlines to Your Bottomline—How to Profit in Any Economic Cycle (http://www.businomics.com/), which provides business leaders with a framework for understanding current economic news. He is co-author of Thinking Economics, a multi-media high school economics curriculum used in 24 states.”

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