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And They Lived Happily Ever After...

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And They Lived Happily Ever After…

Is Longevity Possible in the Corporate World?

"No one ever told me it was not my business."
A Long Term Employee

The main results of this survey were published in an abridged version by the Harvard Business Review Russia, April 2011, under the title the 'Pragmatics of Loyalty'.

Any organization is always in need of good people. And the good people we are lucky to have may leave one day, so we must do everything to make them want to stay, or as human resources slang goes, to retain them. But how can we do it? Is there some 'golden rule' or a fail proof recipe to bond the best and the brightest to your company? Or is it something about their psychological profile that makes all the difference?

With more than 20 years of experience in the Russian market, Slava Executive Search and Selection has examined this challenge both from inside, as part of the HR function in major international companies, and from the outside as an executive headhunting agency dedicated to providing the best management talent for our business clients.

Almost every organization we know has been trying to do its best to prevent its top performers from leaving. Yet these people still leave. Companies try to make them stay, sometimes using simple methods based on intuition and common sense; more often employing sophisticated retention plans and policies. But still, the very people they want to keep, leave. However, there is a big difference between the companies. In some of them people simply come and go, rarely staying for more than a year or two. In others, high potential talent tends to work successfully for quite a number of years. What could be the reason behind this?

There is another important aspect to this problem – is it a good or a bad thing to work for the same organization for a long time? According to statistics, the average term of employment in Russia is about two to three years. Some believe this is an achievement for the Russia as it shows the economy is dynamic; others are convinced it is a real plague for the business sector because two to three years is too short to truly achieve within an organization. A popular belief is that a person stays with one company for a considerable number of years only because he or she is some sort of 'conservative' and it is in his or her nature to never seek greener pastures. But is this true?

We selected a group of top managers who have spent eight or more years with one employer - major multinationals operating in Russia. In total there were 63 participants, almost exactly half men, half women. We developed a questionnaire designed to reveal both their psychological profiles and the factors which prove to be critical for their long term loyalty.

Interestingly, the results confirmed two basic assumptions we had drawn from our own professional experience.

This first finding, though not a complete surprise for us, still exceeded our expectations in that there were hardly any exceptions from this rule in our 'long termers' group. Practically each and every participant proved to be open to new experiences and will wither if the atmosphere in the company is that of stagnation. They make new contacts easily, are ready to experiment and see their future in constant growth and development, be it their career, professional qualifications or personal relations and passions. A far cry from a conservative personality which constantly seeks stability and predictability in work and private life.

The presumption that long termers are loyal only because they are certain that they will not find anything better, fear any change and are afraid to lose what they have, proved to be completely false. Long termers are a completely different breed to short termers. They are dynamic and interesting people. They are mobile, easy going and, moreover, they realistically assess their company’s perspectives and advantages compared to other employers on the market, as well as their own career opportunities.

Here are just a few examples: Only one out of 63 never changed their employer, 24 had held two to three jobs, while 38 changed their place of work more than three times. Some 84% get regular job offers from different companies. And they do not rule out the possibility that at some point they may accept one! Some 63% keep their CVs constantly updated and ready to send out to a potential employer.

Most are open to new professional and other contacts and are ready to share their personal information. 53% are on Facebook, Linkedin, Odnoklassniki (A Russian language social network for former classmates) and other social networks.

Most respondents are mobile and open to change: 43% moved from one property to another within the city one to two times, while 56% had moved more than three times. 35% moved one to two times from one city to another, while 41% had done this three times or more. Some 44% had lived abroad at some point in their career.

We found no indication of conservatism in their personal life either. Some 54% had gone through a divorce and started new families. Their habits are also far from rigidly set: 46% often and rather radically change their business dress according to their mood while 43% usually feel like taking a risk and ordering something new and exotic in a restaurant.

So why had then these people stayed with one company for eight years or more?

The Secret of Success

The second finding confirmed that attempts to keep a high performer by offering him or her certain personal benefits, no matter how sophisticated and expensive, are useless. More over, if special retention plans for a selected number of key employees are not grounded in a strong and healthy company culture, they are bound to do more harm than good to company business, as these perks spoil those entitled to them while serving as a strong demotivating factor for the rest of the team. A person conditioned by such atmosphere becomes an easy target for other companies to buy out, so in this case it’s hard to speak about any real loyalty or commitment to company goals.

So on what does the fate of a long termer depend?

First and foremost, the company must (1) trust the person, (2) provide ample opportunities for career growth and professional development, for which it needs (3) to be constantly moving towards new goals and to set complex and inspiring targets in attaining which the person would realize his or her potential, as well as (4) to introduce and adhere to rules of fair play across the whole field, and not only for a select few.

As for material reward including salary levels, the research showed that unbiased and adequate evaluation of performance (a comprehensive performance management system that ensures that fair play principle is strictly adhered to) is of paramount importance (see Table 1). It is this approach that demonstrates that the company values its employee, not formalized employee recognition systems, such as corporate awards. These together with employee parties and personal PR found themselves at the bottom of the priorities list.

What was key? The company trusts me, my performance gets a fair appraisal, I am promoted based on my achievements, I am justly paid and I never feel deprived or mistreated, even if my salary is not higher (and in fact sometimes even lower) than the market average.

Based on these findings we can say with full confidence that the most active and enterprising (you could call them 'self-guided') employees make the best long termers becoming the company’s 'gold reserve', provided it in turn offers them opportunities for realizing their potential and professional growth. The crucial point here is that both – employee and company - should be heading in the same direction!

Is there really a recipe for longevity?

How can one use these findings in designing retention plans for companies' top performers? Of course, one can expend a lot of effort trying to devise a precise 'trust measurement' system and endlessly assessing each top performer’s pay level, career and development path, coming up with some index of loyalty. Yet we firmly believe that such an approach will prove of little use if not even harmful if all the above efforts are not an integral part of a company-wide management system and culture.

If we trust a particular person while mistrusting the rest of the team, if career development plans are designed for the selected few only, if just a small group of “key” managers and professionals are paid on a fair basis while other employees are subject to will and whim of their bosses, people’s pervading resistance and a feeling of inner protest will hardly help new high performers to appear inside the company for whom such plans and programs would be demanded.

We would also like to remind those managers who hesitate to invest both money and effort in their employees because they think that by doing this they would be cultivating future candidates for leaving, as the higher the level in the organization, the less number of positions it has. True, but if a company itself is constantly growing (and sustainable growth requires a strong and dedicated team), so is the number of career opportunities. Besides investing in its employees’ development, the company also ensures that it always has a solid bench and for almost any vacancy, should a key manager leave, it has a ready successor.

For example, a couple of years ago a Russian branch of a major multinational company lost almost all middle level marketing managers. They all left for various Russian and international business who at the time had an urgent need for marketing specialists. With their new employers they had taken positions one or even more steps above the one they held in their former company. One might have thought that such a dramatic blow would badly hurt company’s business. Yet nothing of the sort happened. All newly vacant positions were immediately filled with high potentials from the lower management level. This was possible because company culture was, and is still, focused on constant employee development: a highly structured selection process ensures that the right people are hired from the very start, while an important part of any manager’s performance appraisal is his or her ability to develop and promote their subordinates. These management practices make it possible for the company to retain its high performers providing them with ample opportunities for growth and development as well as to benefit from a smooth succession process, successfully breaching any staffing gaps.

And, finally, we strongly believe that when a company is considering different approaches towards retaining its best and brightest employees, it should start by accepting the fact that rotation is inevitable (and even look into the benefits it holds for the organization), and shift from blind resistance to losing talent towards a skillful and effective management of all the elements in this important process.

HR’s View

We have asked several heads of HR functions at major multinational companies to comment on the study’s outcomes and to share their personal experience in dealing with retention issues.

Elena Pavlova, Danonå
Group Learning Programs Director
(IT/IS, SSD, SC, Quality & Manufacturing functions)
Groupe Danone HQ

If a person lacks the inner impetus for constant development, if he or she believes that the future is not in someone else’s rather than their own hands, then no career development system, no matter how comprehensive and elaborate, will stop them from leaving sooner or later, as the feeling of dissatisfaction with oneself and burn out take their toll, sending them to seek their fortune elsewhere – the grass is always greener over the fence. Yet if in their professional life they are driven from the inside, they will be grabbing any opportunity that the existing system can offer. To make it work, both sides should be putting effort, yet I firmly believe that it is the individual’s mature attitude that is really crucial for success. Its most important aspects are:

  • The ability to perceive business and the organization as they really are, and not “as they might have been” or “should be”.
  • A more or less adequate self assessment which implies knowing one’s strong and weak points and realistically tailoring one’s career aspirations.

It doesn’t take much time for a person who thinks of himself as an unrecognized genius and believes that everyone owes him something to get disappointed in one employer after the other. The more opportunities for professional and personal development the organization can offer, the more chances that a valuable employee will stay until there is nothing more he or she can get from it.

The second finding is especially interesting for me as an HR professional. If we create a certain restricted group in our company, we actually feed the fire of confrontation in our team. It doesn’t take too much to realize, that “If I’m not 'your kind' of person and you do not value my talent and achievements, I’ll go where I will be appreciated.” Isn’t that what we all are thinking when we learn about the salary levels of our peer expatriate directors?

The most trying task for me as the HR Director is to ensure that both the company and the employee are heading in the same direction. It makes sense to act on the so-called principle of biological organization which implies that everything that has a right to live will survive and grow because it will be getting people’s support. (Although it would be incorrect to say that I myself apply this principle in my work, as in essence it is a feature deeply rooted in the company culture, to which dozens of various factors and efforts are contributing.)

It is hard to ensure that the vectors of motion coincide between the company and the employee |through introducing some specially designed practices, as this would require a lot of effort while the outcome would not be significant. You are lucky if these vectors coincide naturally, and even then you must make sure that individuals ideas are taken into consideration, and not simply dismissed, as it often happens. And we should always remember that at some point these vectors may part – this is life, and there’s nothing wrong about it. By the way, in Danone we quite often see people coming back after having left for another company. And this gets support from the management, as the person not only knows the company well, but has also gained outside experience and will be implementing his or her new skills for the company’s benefit.

Sergei Nazarov
HR Director, Saint-Gobain

The first finding indeed seems surprising, at least at the first glance. Yet if we review the Russian market of the past 10 years, we see that most companies were growing rapidly and people had ample opportunity to grow with them, taking on new, often quite demanding tasks. And this is the most crucial prerequisite for an employee to stay motivated, provided his or her basic needs (such as competitive salary, social benefits, etc.) have been taken care of. One may ask, what about the economic crisis? I don’t see much difference. The tasks are still, if not even more, demanding, and it is only the focus that has changed from managing growth to managing costs.

Now, to the second finding – when employees’ basic needs are satisfied (and for multinational companies which were the subject of the study this is usually true), the most important things for an individual are trust, professional development, career growth and so on. And this is quite natural, as companies already at the hiring stage are usually choosing ambitious candidates focused on professional development and growth.

Let’s hear what the long-termers are saying:

Mikhail Sakhnov
Production Director for Central Europe, Kraft Foods

“I am not afraid of change and have made radical moves in my career, yet I choose to stay with Kraft Foods because here I have found a combination of core values and company culture which I share, as well as the highest levels of professionalism among my colleagues, the ability to do what I like doing, and do it according to the best international industry standards.”

Ludmila Fateeva
Development Director, Microsoft
“I believe that my previous job with Hewlett Packard where I spent 13 years, as well my current job, which I have been holding for over seven years, have been the best parts of my professional life. I’m quite serious! I would never work for a company where decisions are taken upon one person’s (that is company owner’s) whim or disposition, where positions are created to suit certain people, and not people are chosen to fill in positions, where an individual is a mere screw in the corporate machine.”

Evgeny Krapovnitsky,
Logistics and Client Services Director, Unilever

“The tasks I’m working on are quite varied, so I am constantly growing, both as a professional and as an individual. I would have certainly left if the company only came up with catchy statements regarding its employees and not 'walked the talk', be it employee motivation programs or training and development policy for all staff levels.”

Research Data Samples

About our research

Total number of participants – 63

By function:
General Managers/Directors – 19
Sales Directors – 12
HR Directors – 12
Supply Chain Directors – 7
Marketing Directors – 7
Finance Directors – 6

By industry:
FMCG - 35
Heavy industry - 14
IT - 6
Pharmaceuticals - 5

Table 1

Which of Company’s efforts and opportunities provided demonstrated that it does not want you to leave?

1 - not important, 10 - extremely important

  • Opportunity to take part in new important projects and Company initiatives: 8,06
  • Involvement in decision making process on issues that were to shape Company’s future: 7,3
  • Regular promotions: 7,19
  • Professional training and development programs: 6,55
  • Regular salary rises: 6,74
  • Participation in global projects as part of an international team: 6.15
  • Clear vision of professional growth and career path: 5,5
  • Adequate and comprehensive Performance Management Process: 4,76
  • Trainee experience in Company’s offices abroad: 4,6
  • Employee Recognition programs: 4,39
  • Secondment to a Company’s office abroad: 3,96
  • The feeling of being part of the "corporate elite" eligible for special treatment and benefits: 3,57
  • Long term training and education programs (such as MBA): 3,41
  • Personal development opportunities: 3,39
  • “Above the market” salary: 3,3
  • Internal and external personal PR: 2,8
  • Corporate awards and titles: 2,6
  • Leisure options (vacation tours, fitness club membership, etc): 1,69

 

Which factors proved to be the most crucial in forming your positive attitude towards the Company and a desire to continue working in it?

1 – not important, 10 – extremely important

  • Dynamic growth of Company business which provided ample opportunities for professional development and career growth: 8,56
  • A chance to realize your potential: 7,58
  • “Fair play” rules in business: 7,2
  • Globally established brand and Company world-wide reputation: 7,11
  • Highly ethical treatment of employees, respect for the individual and his/her contribution: 6,9
  • Established brand and Company reputation in Russia: 6,67
  • A formulated set of clear and honest management rules and HR policies (fair play): 6,48
  • High salary: 6,12
  • United and professional team: 6
  • Company openness to new ideas and employee suggestions: 5,66
  • Company openness to outside world, lack of barriers for professional networking: 4,9
  • I have many friends working with me: 3,48
  • My status allows me to be part of the “VIP Club": 2,64

About the authors

Slava (Viacheslav) Volkov is the founder and Managing Partner of Slava Executive Search & Selection.

Irina Novash is Organization and Management Development Consultant and Partner at BlueRidge Consulting Center LLC.

*The main results of this survey were published by Harvard Business Review Russia, April 2011, under the title “Pragmatics of Loyalty”.

Slava Search Partners
Global Executive Search