Over the past two newsletters we dealt with the thorny issue of change management, especially as this pertains to start-up businesses. While it is good to be able to manage change as the leader of your business, one of the key issues during a period of extreme uncertainty is the potential to lose your good employees, those that you indeed do not want to leave the company. These are the very people that you would have probably planned your pivot around and need them to execute on the new direction you have instituted.
There are probably three main reasons for having change imposed on the business that could unnerve employees to the extent that the good people consider leaving your company. These include the dreaded cost-cutting exercise, the full or partial acquisition by an equity partner or larger organisation (accomplishment of the exit strategy), or a complete business strategy pivot that normally revolves around the company’s product offering. Any one of these events could result in deep uncertainty for most employees.
Change can be disruptive for an organisation, and competitors can be quick to scent an opportunity to poach key staff. This is especially true in countries with scarce skills in industries requiring highly-skilled resources, leading to the potential for good people to hop from one job to the next. Retaining and motivating key employees will be critical not just in managing the immediate transition but in maintaining the organisation’s performance and reputation into the future.
As we mentioned in a recent newsletter, there are several logical steps to take while undergoing change in your business. To recap, these are as follows:
- Build a case for change
- Let everyone feel they have had their voices heard
- Allocate adequate resources
- Keep implementation simple
- Ensure sustainability
While this is a solid strategy to follow during a time of change, there is a risk that your key people may feel too unnerved by the circumstances, and decide to look for other employment.
So, how do we mitigate for this high risk to the business?
Find the Gems
It is a truism that your best people will leave first as they are able to find other employment quicker than most, so a deliberate plan needs to be compiled to retain them in the company. This implies that you have a deep understanding of who are your good employees, those gems that you require to implement your new strategy. It may sound harsh, but you also therefore need to understand who you are willing to let go, as retaining staff consumes resources, both financial and time, and do not forget about the emotional energy required from you.
While McKinsey focuses mostly on large organisations, we can certainly glean some key insights into best practices and apply them to small businesses. The McKinsey Quarterly of August 2010 states the obvious by suggesting you need to find your “hidden gems” as the people you may need may not necessarily be those high-potential and senior players on the team. As a start-up it is probably highly likely that you know exactly who your gems are in the business, however, this may not be quite as obvious as identifying your star performers. Your key players in maintaining your business performance are not necessarily your top talent or your top earners.
You may have average performers that have an above-average propensity to change and social skills you may require during the period of change. You may also need them to deliver against the company’s long-term objectives. These may be those “grey” people that do not particularly stand out from the crowd but are crucial to keeping the lights on during periods of change. This could include the basic functions such as finance to ensure that the financials are maintained correctly and accurately, or the IT network guy who knows just where the coding problems lie within your CRM system. Institutional knowledge, direct relationships, or technical expertise may make their retention critical. Those fulfilling sales orders are just as important to the business as those star salespeople. In short, take extreme care in determining who, exactly, are your “hidden gems”.
Communication. Communication. Communication.
As always, one can never communicate enough with your employees, in the process alleviating the inevitable rumours that abound during times of insecurity induced by change. This principle holds true for the more stable periods of your company’s lifecycle.
Keep your people informed in a transparent manner, even if the news is not good. That way, people can make an informed decision about their future with the company. By the time the rumour-mill has birthed enough fear and uncertainty, the gems will have fled for the hills. Or the competition. People are surprisingly resilient but need to be kept in the loop of potential problems so that they know how to deal with them. Hold regular one-on-one and full team meetings and encourage employees to offer ideas and ask questions. If they feel as if they are contributing to the solution they will likely reward you with a measure of loyalty and stay with the company. Of course, this approach implies that there is a culture in the company that encourages staff to speak frankly with their leadership team without the fear of negative consequences.
Most relationship problems start with a “perception-gap”, namely what one party expects of the other that is not conducted in accordance with those expectations. This may be particularly pertinent in smaller companies, where staff tend to conduct a wide breadth of tasks and are held responsible for issues “above their pay-grade”. They therefore need to know exactly what you require of them so that they can perform to your standards and expectations. With the probable reduction in employees, jobs filled by others need to be done by those that remain. Ensure that all the potential gaps are covered so that important tasks do not fall through the cracks, leading to a dip in staff morale.
Being a leader is sometimes hard. Be that leader that shares both the good and the bad news regardless of your popularity stakes. Communicating the vision of the company should be a given, irrespective of whether the company is undergoing radical change. This aspect relates to the “Why” of you starting the business, and where you ultimately wish to take it. This could be the exit strategy mentioned above that is the very reason contributing to the current period of instability. If your employees were informed of this strategy initially they should be empowered to cope better with the pending transformation. Being aware of and aligned with your vision for the company should keep them mentally and emotionally aligned to the long-term view.
Conduct “Stay Interviews”
While you should always conduct exit interviews to establish why your employees leave you, consider discussing with your veterans why it is that they stay with your company. This, of course, comes with the caveat that you need to hold the discussion with those employees whose opinions you would value. Open-ended questions relating to why they chose to work for you in the first place, why have they stayed, what would make them leave, what changes they would like to see, your leadership style, and their non-negotiable issues should lead to key insights into what needs to be done to keep your “gems”.
Besides the positive issues, you also need to establish the specifics of what is frustrating them about their job or the company. You need to learn about them so that when the company undergoes deep and radical change you are fore-armed with the information you will need to hold onto your key people in the organisation. This is not an issue to be discussed in a social environment, over drinks, for example. That way only the general complaints will be raised where you need to get to the specifics of your employees’ hot buttons and for them to gain insight into their growth path in the company.
These one-on-one, loosely structured meetings with your best people should be conducted fairly regularly, at least quarterly, to ensure you stay abreast of your people’s deeply-seated concerns. Do not assume you know what matters to them.
Walk the Talk
This is a leadership issue. Understanding the underlying motivators for your employees to deliver superior work is a crucial EQ requirement for the leader of a present-day start-up business. As an example, employees in the technical space probably require visible and constant recognition for their unique skill sets.
An Entrepreneur article (https://www.entrepreneur.com/article/76456) remarks that retention strategies fall within the ambit of leadership acumen where the manager has to understand the elements of the human psyche that drive actions and attitudes that make employees feel successful, secure and appreciated. These are certainly the “softer” issues of leadership that require far more of the manager than establishing the optimum pay grades and good quality coffee for the workforce. The article mentions that true loyalty is not an enforced requirement but an earned response to the trust, respect and commitment shown to the individuals in your company. When you demonstrate loyalty to your employees, they will reciprocate with commitment and loyalty to your business. Understand that people do not begin their employment with you as loyal employees, but will develop loyalty to you in equal measure that they are trusted, respected and appreciated by you.
Or, in other words, do unto others as to yourself….
Besides the soft skills discussed in this article, you can also some wacky and creative start-up things to create a culture unique to your company that will help to retain your “hidden gems” for the long haul. These could include small, relatively inexpensive perks, time off, contests, incentives, new job skills and do not underestimate the value of arranging mentoring for your key people.
Let us not ever forget that people leave organisations because of people, normally their direct manager. One only has to Google “reasons why people leave organisations” and the famous first page returned by Google reflects this fact: “People do not leave companies, they leave managers.”
Cosack S., Guthridge M., Lawson E., McKinsey Quarterly, Aug 2010. Retaining Key Employees in Times of Change. Accessed 20 April 2016 from:http://www.mckinsey.com/business-functions/organization/our-insights/retaining-key-employees-in-times-of-change
Staff Writers. Entrepreneur Media. 2005. Accessed 20 April 2016 from: https://www.entrepreneur.com/article/76456
Silveri,T,. 2000. Retaining High-Performance Employees during Organizational Change. Accessed 20 April 2016 from: