Employee Retention between Silicon Valley and the Bologna Business School
What is the secret to loyal employees? How do you prevent them leaving the company for the competition?
The In-recruiting team tried to answer a few months ago when we were invited by the prestigious Bologna Business School to speak to the Master in Human Resources students on “How Innovation Changes Talent Management”.
Talking about Human Resource Innovation, we presented our Application Tracking System (In-recruiting) explaining how new recruiting software has greatly simplified the work of the recruiter, allowing you to complete multiple tasks in less time and speed up recruitment processes. In the middle of our speech, however, we presented a problem to the audience that surprised the HR managers and the students quite a bit.
The question was as follows: The best recruitment technologies are able to identify the most promising candidates faster and more accurately than traditional methods, but this effort is likely to be out of date if the company does not have an employee retention strategy. The risk is in hiring the best talent, but not being able to keep them in the company.
How has the job market changed?
Many studies have shown that the economic factor is not important for employee retention: on the one hand it is crucial for attracting candidates, on the other hand, it does not guarantee loyalty. The general level of trust between an employee and the company or between an employee and their line manager has turned out to be a much more important element for employee retention.
How to create and maintain trust in the company to retain the best employees? In our speech we presented a strong argument that is also presented in the book “The Alliance: Managing Talent in the Age of Networking”, written by Reid Hoffman (LinkedIn Founder) and Ben Casnocha and published by Aegean.
The text describes how today the relationship between employer and employee is compromised because of a historical change in the labour market. On one side the old model of a guaranteed job for life has popped (in the US as in Italy as the latest labour law reforms show), but the popping of the old model was not replaced by any credible alternative that effectively redefines the relationship between employer and employee.
This phase has been characterised (above all in the US) by an increase in flexible and short term working, much more similar to a collaboration with a freelancer than with a classic employee relationship.
This situation has provided companies with a high degree of flexibility in the workforce but has pushed many employees (often the best) to behave as ‘free batsmen’, always ready to move to the best bidder.
Retention: the serious consequences of the collapse of trust
In this context there is a collapse of trust between employer and employee, and this, unfortunately, is not without consequences. Hoffman and Casnocha recall that “A company without loyalty is a company without a long term vision. A company without a long term vision is a company that is unable to invest in the future. A company that is unable to invest in the future is a company that has one foot in the grave.”
The reasons for this crisis are often powered by the fact that both parties are knowingly ignoring the transformation in the labour market, pretending that the problem doesn’t exist: employees often see a ‘family’ in the company to take care of them; the company (in the figure of the line manager) doesn’t have the courage to set open lines of communication from the beginning, promising long term commitment, even in the absence of any assumptions.
A new model for employee retention: the Alliance
Is there a solution? The authors argue that to get out of this impasse it is necessary to put aside obsolete talent management models and build a new one on a different basis. The proposed model is called ‘the Alliance’ and represents a conceptual framework in which trust and commitment between employers and employees can be maintained, even in a highly flexible context.
This model was applied for the first time in Silicon Valley companies like LinkedIn, and then progressively found in companies with more traditional talent management models. At the basis of its operation there is a presupposition, namely the recognition by the employer and the employee, that their goals are in contrast but also complementary. For the employer the goal is that the employee transforms the company; the employee would like that the company experience transforms their career.
To complement these two goals a covenant of Alliance is needed that builds an honest relationship based on mutual trust, mutual investment, and mutual benefits.
The four pillars of the Alliance Model for talent management
The proposed model is based on four pillars:
1) Definition of a task or set of assignments (a tour of duty, according to the author’s description) with clear objectives and times from the beginning of the employment relationship
2) A frank summary of what will happen at the end of the assignment, whether there will be a new business assignment or a transition to another party in the company (a premediated exit strategy)
3) Using the company’s employee network in a strategic and systematic way
4) Creating a business alumni network to maintain beneficial relationships with the former employees of the company.
What are the benefits of such an approach?
The advantages of such an approach are many: specific attention can be paid to the achievement of working goals, not just doing tasks. With the premeditated exit strategy both the company and the employee are free to co-design the transition to the next assignment, without pretending to be linked to a lifelong relationship.
In such a structured environment the company will naturally attract more talent (who will have an entrepreneurial mindset) and will gain a competitive advantage over competitors.
In addition, thanks to the premeditated exit strategy and the alumni network, employees and former employees will become ambassadors of the company by promoting its Employer Branding even after leaving the company, with obvious benefits in terms of savings in the recruiting process.