The importance of culture to talent retention
April 19, 2022
With the demand for talent on the rise and business competition growing year on year, companies are looking to adapt their remuneration and people strategies with the vision of becoming an attractive and competitive option for their workforce and the talent they wish to recruit and retain. But what exactly does it take to be competitive and to retain talent?
Our research among companies listed on the London Stock Exchange shows that ‘Collective Investment’ businesses have the highest level of executive retention, followed closely by Investment Banking. This may not be particularly surprising bearing in mind that investment banks typically tend to reward executives and other employees highly for their service. However, not all companies are able to compete with financial services sector remuneration packages. How can companies in other sectors recruit the talent they need to sustain and develop their businesses?
During the COVID-19 pandemic, people have had the chance and have taken the opportunity, to think about what they want from their job, and many have considered and re-assessed the qualities they value and their aspirations.
When it comes to job-hunting and recruitment, company culture and policies on diversity and climate change are playing a fundamental role. Does the company treat its employees, customers and suppliers well? Does it care about operating in an environmentally responsible way? Does the company have a good record and reputation for diversity, quality and inclusion?
The ESG umbrella can be unfurled to cover many of the qualities potential recruits seek in a new employer. However, a factor that is often talked about but which does not seem to have attracted an equal level of detailed attention is management culture. If asked, can employees provide a succinct statement about the culture of the company by which they are employed? This is not the same as trotting out a list of corporate values.
A company’s culture stems from its CEO. It can be identified in the actions and statements emanating from the board and also in the way the workforce as a whole communicates and acts, internally and externally, in connection with the business of the company. Thus, the words and deeds of every employee represent the company’s culture to the outside world. It is important, therefore, that management engage with the workforce, customers, suppliers and investors to gauge the extent to which their desired management culture lives and breathes throughout the firm. Employee engagement plays an important role in retaining talent.
So, there is more to retention than high pay. That said, pay can play a major role in helping a company retain the talent it needs. Encouraging executives and employees to acquire and hold shares is a retention tool used by many companies. Adding a shareholding requirement aligns executives’ and employees’ interests with those of shareholders and creates an incentive for employees to do what they can to add value to the company’s shares. Incentives which reward people for the things over which they have a degree of control tend to work best.
When people feel valued and recognised, they are more likely to perform better and stay with the company. They are also more likely to be pro-active and engage with management in developing an effectual corporate culture for the business.
Retaining talent is not straightforward. It requires a more subtle approach than paying higher salaries than the competition. At a time when potential recruits have taken the opportunity to re-assess their values and aspirations, management culture is playing an increasingly important role in decisions both to join and stay with an employer.
For more information, please contact George Edwards.