Retention in a Changing World

Recently, clients from more technologically advanced sectors have brought a new concern to our discussions: companies from other countries have started hiring some of their employees with critical know-how. According to these clients, the pandemic has accelerated the realization that various activities can be performed without the need for physical presence or proximity to the office.

This change is bringing additional challenges for these companies: in addition to losing individuals with essential knowledge, there are costs associated with recruitment processes, onboarding, and the development of new employees, as well as impacts on team composition and dynamics. Gallup estimated in 2019 that the costs of new hires could amount to 1.5 to 2 times the annual salary, particularly when it involves individuals who solve problems in especially efficient, innovative ways and have significant customer connections.

In our view, the acceleration of this trend that has been emerging over the last few years makes it increasingly urgent to rethink how work relationships are managed and what is expected of a team.

In the past, I had the opportunity to meet a leader who invested deeply in team development, knowing in advance that she would "lose" those people. The organization where she worked offered below-average salaries, and the opportunities for advancement were quite limited. Despite knowing that people would likely leave in the long run, she embraced the development of each individual as a central part of her mission. 

One of the most interesting things to observe was her delight each time someone moved on to a new project. These individuals made a difference in the places they went to. Even today, these people maintain a strong connection with each other and foster a network of knowledge, support, and mutual development that sustains their performance. Looking back, I believe this leader recognized that the quality of the relationship she established with these individuals was what she could influence, that she could "benefit" from them regardless of their work location, and that the support she provided was a condition for mutual development, generating value for herself, for those individuals, and for the organization. Her investment in individual development created a "virtuous" dynamic within the team, allowing people to challenge and support each other in their performance.

Perhaps this is the first question to consider now: how can we maximize the value and contributions of people, knowing that their tenure in the team/company may be short? How can we respond to a market where turnover is very high without entering an unsustainable spiral of salary increases?

It is clear that salary aspects are very significant in decisions to change jobs. However, we have long known that other types of rewards can carry considerable weight in the decision to leave or stay. One client shared exactly this: a person who was enticed with an extraordinary salary opted to stay with a much lower increase. The care and respect with which people are treated in the company were factors she considered in her decision. She had already experienced other organizations with what she considered very destructive work environments and did not want to repeat that experience.

We can thus question ourselves: to what extent will organizational culture, mutual trust and psychological safety be strong enough factors for individuals enticed by competitors to see these aspects as an important counterbalance to a significant salary increase?

Teresa Oliveira