The first benefit of working in retained executive search is that we get to talk to smart, accomplished and insightful people all day long. Part of our conversation is why they are interested in working with our client and why they consider leaving their current role. We want to share the most voiced reason why they would leave, with the hopes that employers out there may think about how they can improve and consequently improve their retention of key talent.
Before we jump in, please know that the talent we talk to share with us that they are getting several calls per week about career opportunities, be it from recruiters, companies or their own network. The demand is very strong for top talent that can help a company accelerate growth in addition to managing through all the challenges the pandemic has created.
When the only next step in the organization is to replace their own boss, talent with such aspirations is likely to defect. A flat organization led by a young executive with a high number of direct reports is a recipe for talent loss. A lack of training and skills development will contribute to the sense of being stuck.
The adage of “people don’t leave their company; they leave their boss” still holds true, but it is not the leading cause for leaving in the conversations we are having. A “bad” executive causes people to question the entire organization’s purpose and direction in the short term, causes brain-drain in the medium term and overall under-performance in the long term.
Growth-oriented talent will flee an organization that turns from growth and expansion to a defensive stance of cost-cutting and pull-backs. It is a culture and mindset they don’t agree with and an environment where they do not see growth opportunities for themselves.
This is a big bucket that is mostly made up of the fundamental values and culture of an organization. Talent flees these places because of micro-managing and overly burdensome processes and administration. We also hear about a focus on finding fault in people vs. finding ways to succeed. Risk-taking and failures are eliminated, and talent feels their loyalty to the company is not reciprocated.
This is low in the list of reasons driving a desire to leave a company. Various legislation prevents recruiters from asking about current compensation. While this is designed to root out discriminatory practices, it also forces companies to decide what an executive in a certain role is worth to them and simply offer that to the chosen candidate, regardless of compensation history. The “fair market value” is often higher than what an executive is making where they are and consequently offers some incentive to make a change. Our calibration and launch of a search project include market research of “fair market value” for a role. We often find that compensation consultants and other guidelines are misleading. Like the value of a company reflects assets and expected future earnings, executive talent is an asset with future earnings potential. Long-term employees seldom see loyalty or future earnings potential reflected in their compensation packages.
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