Successful Retention Strategies (Part 4 of 4): Organizational Design
It’s finally here – the end of 2022. What a wild and crazy ride it has been. As business leaders, we have had a lot to contend with and still do. Our work is far from over. More layoffs have been announced beyond the FAANG companies and broader tech sector, inflation persists at uncomfortably high levels, and the labor market remains the tightest in recorded history. Finding top talent is still more challenging than ever. Quit rates remain high, and ghosting by candidates continues. November’s labor statistics reflected continued increases in employee compensation over the 5% mark on average squeezing company budgets and frustrating employer hiring decisions. What is the secret to reducing the harmful impact of all of these challenges, you ask? RETENTION STRATEGIES. The previous articles in this series addressed the role that Onboarding, Recruitment, and Total Rewards play in retention. This article will explore Organizational Design and Development strategies, specifically internal mobility, that will help reflect the vision of the future and the career path for the long-term success of your people. With concerns of a potential recession in 2023 looming large, we will also touch on retention when restructuring your company includes a reduction in force (RIF). Defining the job Not every business can build robust tiered structures for all roles, functions, and departments. For example, many small companies often have departments of just one person. For the medium and larger business, it may seem easier for them to structure tiers for employees and chart a career path. Still, they often run into pay compression and bottlenecks leading to too much bulk in the middle, a reverse hourglass that is thin at the top and bottom but nice and plump in the center. It is easy to see that this is a complicated issue with different challenges facing companies of various sizes. But there are still commonalities that businesses of all sizes can implement, which will aid in retaining top talent. The best place to start, regardless of the company size, is defining the job. What do you want them to do? I know some leaders are disappointed in the obviousness of this but bear with me. This is about more than building an effective and compliant job description. That is part of it, but defining a job begins with understanding your company’s strategic plan. It starts with asking, “how does this role fit?” and “how will it help achieve my business strategy?” These questions get right to the heart of necessity. Sometimes, a role is created not because it advances the business strategy but because it is convenient for someone, a way to shift responsibility onto someone else. While that could be helpful to business strategy, it may not be. However, defining the role in terms of business strategy rather than convenience is critical to ensuring strategic alignment. It’s also important to remember that you are hiring human beings. People. Again, some may roll their eyes and think, “um… yeah…” but keep in mind that as business leaders at organizations of many different sizes, it is easy to get caught up in the daily grind, the strategic struggle, and even the business viability worry and forget that we employ people. They have hopes, dreams, and desires. Employees support their families, contribute to their communities, and most genuinely care about the company’s success. When hiring people, some may be very content doing the same job the same way and producing the same result. Many more are happy to do this job now but want to know what comes next. This is a KEY driver for the great resignation. The old saying, “people don’t quit businesses, they quit managers,” is typically a true statement. But people with internal mobility will often find ways to leave the managers they want to quit and remain with the company. So, you have to have options internally to retain top talent. Here is where we inevitably receive pushback from many small business leaders. Addressing the elephant in the room, yes, only some small businesses will be able to create the same level of mobility as medium and large companies. Every small business, however, will be able to generate SOME mobility. And for mid-sized and larger companies, internal mobility is KING at retaining top talent. Many books have been written demonstrating that investment in the training and development of people, creating lateral and vertical growth as well as realigning responsibilities to expand a role’s sphere of influence and strategic importance leads to employee retention and outperformance of competition no matter the industry or market in which they exist. This could only be accomplished if you first define the role in terms of your business strategy. Up, Left-Right, Hold, Down When talking with leaders about career advancement, nearly 100% latch onto the word “advancement” and take only two of the Webster’s Dictionary definitions of the word literally— “promotion or elevation to a higher rank or position” and “progression to a higher stage of development.” In addition, nearly all forget there is a third definition -“an improved feature: IMPROVEMENT.” Improving someone in your organization is perhaps the greatest advancement any business leader can aspire to achieve with their employees. And this is something that can be done at organizations of every size. Some people want vertical advancement. Ask them, and they will speak in terms of moving up from an individual contributor to a supervisor, manager, director, VP, and into the C-suite of a company. Small family-owned businesses may have the greatest challenge here, with limited structure and family owners filling the highest positions. Larger companies may have more layers, but every business has bottlenecks at the top. While there are limits, there is still opportunity. Evaluating your business growth and regularly reviewing your strategic plan may reveal the point where a new level/layer of management is appropriate or necessary. Even in small businesses, upward mobility happens. However, if employees are frustrated by a lack of upward mobility, share with them alternative mobility