In Insight one of this series, I gave the new definition of human resources—human retention. In part two, I discussed how effectively managing human capital is an important part of human retention.
I’ve spent the last few weeks looking very closely at the business environment—inside and out—with business owners, and I can’t even explain how many times they have come to me saying they “can’t afford to hire new people under a hiring freeze” or they “had to lay off a bunch of people last week and now need help writing release letters, and building programs around severance packages,” etc.
This is when I recommend business owners take a step back and re-educate themselves in HR101 or turn to an HR outsourcing company for help.
Here’s an example:
The other day, I received a call from an executive within a business, who said to me: “Matt, we have a real tough decision to make regarding where we need to focus some of our capital resources. We have found that we need some help communicating to our sales organization that the times are tough enough in the world today that the normal budget we allocate them every year is not going to be the same this year by a 10 percent deficit, and that’s a difficult communication for us to make.”
I immediately took the executive back to HR101—there are some basic metrics that would allow the company to communicate a little more clearly to their sales team.
Being aware of their metrics, I knew that retention had been a little tough for this company, running at a consistent 30 percent year-over-year, as had building incentive plans that actually improve the retention rates, so I knew I could help. The company also wanted to communicate to their sales organization that they wanted to get rolling on a training program that would give them an opportunity to get through these tough times, while building upon the future leadership of the company.
Together the executive and I took the opportunity to communicate to their sales organization that, while their budgeting will look different for the year, if they re-focused some of the company’s human capital strategies around training their people and building better incentives, the retention rates would go up and turnover would reduce in the area of 6 percent to 8 percent for the year.
Therefore, 6 percent to 8 percent of the business costs recovered from reduced turnover would free up the remaining capital to help recruit and attract additional employees as well as supplement any reduced departmental budgets. This was a win-win way to deal with a difficult problem.
Human Retention is a Very Important Part of Future Success
I hope the new definition of human resources—human retention—sticks in the mind of business owners long beyond the tough times of doing business.
The basis of business that we, as Americans, have come to know and love, is changing. The talent pool is shrinking, whether business is good or bad. A number of talented, management-level employees are retiring, and this number will continue to grow over the next 10 years, not to mention that the qualified and properly educated backfill for those roles is even smaller than it’s ever been in history.
If you look out seven to 15 years, the talent pool that will run the future of your business is considerably smaller than the North American market has ever seen in our lifetime, so the development of the resources you already have under your roof as well as identifying a source of young, trainable talent will be the difference of your success beyond the next 20 years. We have also seen a number of organizations focusing new programs on retaining more experienced employees past normal retirement years to supplement this shortage.
This is very important to take note of because managing that talent pool—whether we would like it to be or not—is like turning the Titanic. It’s not going to change for the short-term, and until we figure out better long-term educational, entrepreneurial, and emerging growth opportunities to incorporate with entrepreneurial training programs along with more advanced educational systems in the United States, we will have difficulty backfilling the wonderful successes that the current retiring management groups have brought to the North American market.
In the meantime then, as well as in the future, human retention becomes vital to business survival.