Invest more money to lose better people?

Burning moneyFew leaders would agree that this is sound business strategy. And yet it happens often, even in sophisticated organizations with significant resources.

One example:
In the midst of working on talent acquisition strategy with a leading bank, an urgent need arose to trouble-shoot recruiting and retention for the role of personal banker in hundreds of branches. Turnover in that position was unusually high. Personal bankers are charged with working with high net worth customers and are crucial revenue-drivers, so the impact was huge – and visible at the highest levels of the organization.

Feedback from their internal exit interviews indicated that the cause was ‘pirating’ by a major competitor whose offer included an annual salary that exceeded my client’s average salary by $10,000 – and was higher than the industry standard. They were seriously considering a compensation adjustment, but I had a hunch that compensation wasn’t the core issue. It rarely is.

They provided us with a list of 20 personal bankers who had recently resigned and we made our own exit interview calls, reaching 16 of the 20. We assured them that their names would not be attached to their responses in our report to their former employer.

  • All of them told us that they were already actively in a job search when they became aware of the competitors’ salary offer and that it did influence their final decision, but that they would have left for a competitor paying their current salary.
  • All of them confirmed that the reason they gave during the internal exit interview was more money, and that they had given that response either because it was easier than entering into a conversation about the real reason – and/or because they thought that telling the truth might negatively affect an employment reference. 
  • All of them told us that the real reason they decided to leave was [with some minor variation] incompetent branch managers with minimal leadership skills, who were forcefully directive, disrespectful and in some cases verbally abusive. 

NOTE: as is often the case, branch managers were former bankers who had been promoted – with minimal assessment of their leadership skills and with inadequate training. They were under pressure to meet aggressive revenue goals. 

In the absence of this data, the organization would have increased salaries and executed an improved talent acquisition process, which would have resulted in hiring and training high-potential bankers – at a higher cost – only to lose them within the first year through the back door. The result would have been millions of dollars in lost revenues and significantly higher costs to recruit and train replacements.

The decision was to immediately assess branch managers relative to their leadership skills, retrain and re-assign as necessary, and implement periodic 360° feedback surveys – while implementing the new recruiting and selection strategy and process. The result: lower turnover, higher employee satisfaction and significantly lower total cost.

This kind of story is all too common. The cause is often linked to silos in the human resources organization. A piece-meal approach to talent-management virtually assures investing more money to lose the best people – and hang-on to under-performers. An engaged team with excellent leadership – and willingness to challenge the status-quo – can successfully transform the end-to-end talent process. It’s the highest-payoff transformation an organization can undertake.

 

CONTACT US. We’re ready to listen.

We encourage you to share this article with your colleagues. To receive our semi-monthly Leadership Newsletter, Subscribe here. 

© copyright 2013-2014  Marilou Myrick, The Stage®/ Masters Among Us, Inc. All rights reserved.

, , , , , , ,

No comments yet.

Leave a Reply