Executive Insight: Best ways to retain your company's human capital

Pay them enough and they will stay. If they do not we can always find someone else to fill their place.

This gung ho, take-it-or-leave it approach is commonplace among certain types of employers in the region. Yet it is in marked contrast to the policies in place among the best companies in the world, that is those that show the best performance. Invariably, these are also the most desirable to work for, companies such as Accenture, Citibank, GE, McKinsey, SouthWest Airline. These tend to make retention of their A players a top priority, although not necessarily from any enlightened altruism. They do it because of the huge payback.

To retain staff there are some basic issues any company would have to resolve, not the least of which is the availability of training and development.

Once the company has the talent in place it needs to maintain its edge, nurture it and keep it stimulated. Meeting all of these requirements will increase the possibility of keeping the best employees. So regular training and developmental opportunities and the right type are a must.

Nevertheless, training is not simply about fancy programmes in agreeable locations such as Beirut, Dubai, London or Boston. It is about giving job-specific training which is put into practice as soon as the individual returns. Theory has to meet reality and as soon as possible. Development opportunities come about as a result of senior managers being prepared to put their team members into new positions or stretch them with testing projects.

Of course, this also implies having senior managers who themselves have the imagination and wisdom to understand the capabilities and unique gifts of their team. It also means that these same senior managers need to have the humility and decency to delight in the success of those who work for them rather than is all too frequently the case, feel threatened by them.

Spin-off

One spin-off is that by constantly investing in people in this manner, the company gains an external reputation for being an employer that values the development of its human assets. The consequence of that is that it becomes an employer of choice.

This means the company is more likely to become a leading career destination. In a world where outstanding talent is scarce and sought after, the company can gather an abundance of riches which translates into sustained competitive advantage and a cheaper initial cost of acquiring talent.

Creating the right corporate culture is also a factor in hanging on to the best talent. It needs to be right, which means it has to foster a sense of pride and purpose while at the same time showing a deep commitment to transparency and meritocracy. The yardsticks that measure and determine success must be clear and accessible to everyone.

Ultimately, do not all these factors pale into insignificance if the money is not right?

There are four components that need to be addressed: Salary, bonus, long-term incentives and benefits. The salary needs to be competitive without being stupid. Sometimes companies tie themselves to regional salary surveys without realising this merely recycles what is in the market while preventing them from bringing 'bench market' talent or change agents.

Some companies pay salaries higher than they need to because they do not have a decent bonus programme. Others forget to review and increase salaries, putting some of their most important employees below current market rates.

Let us be clear on what a bonus is. It is that part of a compensation programme that rewards an individual for his/her personal performance and his/her contribution to the overall success of the company. It should not be mandatory and there should be a clear differentiation between what good and poor performers receive. There is nothing more de-motivating than seeing a poor performer receive the same bonus as that paid to a good performer.

Long-term incentives are a highly pragmatic tool to help companies keep their best employees. Typically, these take the form of stock options, phantom share options, deferred bonus payouts or percentages of sustained economic value added. Thus, there is a substantial penalty to the employee if he leaves within a given period. Good quality benefits, such as a fair salary, are a basic hygiene factor. Giving employees poor benefits, or benefits that exclude a standard market component, demotivates over the long term and is likely to increase turnover of the least dispensable staff.

The different aspects outlined training and development, corporate culture, and compensation are not complex but they do require complete commitment from an organisation. They are not simply the preserve of the human resources department. Commitment to these has to come from the chief executive officer and each of his senior managers.

Retaining the A team will guarantee a sustained competitive advantage and greater bottom line results. No company in this increasingly competitive environment can ignore this.

The writer is the managing director of Korn/Ferry International in the Middle East.