Watch CBSN Live

Attracting and Retaining Talented Employees

Just as businesses have changed dramatically over the last 20 years, so have people's attitudes about their employers—and the attitudes of the most talented people are no exception. Also, knowledge is more important than ever before—and a major source of competitive advantage—making it imperative for business to find, attract, and retain people who can operate effectively within this environment. For any business, this is a challenge that requires:

  • understanding the characteristics of talent-intensive businesses
  • choosing the best ways to attract, recruit, and retain the most talented people
  • building the right work environment and culture.
What You Need to KnowWhat are the characteristics of talent-intensive organizations?

For these organizations:

  • their principal assets—talented people—do not appear on the balance sheet (although they are, or should be, the main determinants of the company's market valuation).
  • these key assets are mobile, as talented people can move easily to other employers.
  • the creativity and imagination of employees is critical to company success.
  • their success criteria stretch beyond the numerical bottom line. For example, winning an award for innovation may mean more than profit or cash-flow.
What to DoSource the Best People

Don't assume that finding top talent will be expensive or lengthy. It need not be, even for the most senior appointments. If you have a vacancy, first of all ask your current team if they know anyone who might be a good candidate. Because they understand you, the role, and the business, they are best placed to find the right person. (But don't neglect looking more widely as well.) There may be other people in your company's network who could suggest a candidate: shareholders, suppliers, customers, and professional advisers.

Time pressures and isolation are two key factors that can lead managers to make appointments that are flawed. Make sure you allocate adequate time to the search and selection and be sure to give key people in the business the opportunity to meet and assess candidates.

Recruit Effectively

The shorter-term approach is attracting people whose talent has already been established and recognized elsewhere. This can be called the "transplanting" type of recruiting, equivalent to digging up and repositioning a mature tree or shrub in the quest for an instant garden.

Longer term is the "seed bed" or "nursery" approach, recruiting young people straight from school, nurturing or developing their emerging talents, and bringing them to fruition. This approach risks that a good academic performer will not do well in the real workplace, or that you'll do all of the nurturing, only to see the talent jump ship. Less risky is finding and nurturing talent among existing employees. Assuming they've been employed for some time, a well-designed appraisal and development procedure can be a good way of finding promising candidates.

Retain the Best People

Regularly ask yourself these key questions:

  • Who are my key people?
  • What makes them exceptional?
  • How are they feeling now? Positive (stimulated, challenged, valued) or negative (under pressure, concerned, struggling to perform at their best)?
  • Are their working environment and terms and conditions of employment competitive?
  • Do they know how much I value them?
  • What are their aspirations and are they realistic? If so, what am I doing to support them? Do they know I'm doing this?

In addition to these personal factors, pay remains important for most people, if not for its own sake, then for the sense of recognition that it brings to the individual.

Build a Culture That Nurtures Talent

While adequate pay remains important, what makes the real difference in retaining talented employees is the extent to which the company provides them with a working environment favorable to creativity, self-expression, and the exercise of initiative. Small businesses have an advantage over larger organizations here, as bigger companies tend to be more hierarchical, bureaucratic, and conformist in order to achieve efficiency and uniformity.

The chief characteristics of a culture that nurtures talent are:

  • effective teams
  • authority residing in expertise and competence rather than rank or status
  • talented people respecting and recognizing the contribution of the colleagues who support them
  • respected leadership—talented people know when the emperor has no clothes
  • freedom, autonomy, space, and flexibility
  • openness and trust
  • encouragement of risk-taking.
What to AvoidYou Assume That Money Is Everything

Companies often make the mistake of assuming that cash is the most important factor in attracting or retaining talent, which often makes small businesses believe themselves to be at a disadvantage. An outstanding performer in any field is unlikely to move from one business to another if it involves a drop in pay. But such people often consider other factors. Is the company at the leading edge? Does it set the pace for its industry? Does the individual feel flattered by being approached? Building a reputation for your business is a key element in recruiting strategy.

You Fail To Not Distinguish Between Recruiting and Finding Talent

Sometimes a business looks outside for new talent when the potential for outstanding performance already exists unnoticed among the current team. Make sure you evaluate the potential of your existing employees, as well as looking outside.

Where to Learn MoreBooks:

Berger, Lance A., and Dorothy R. Berger. The Talent Management Handbook: Creating Organizational Excellence by Identifying, Developing, and Promoting Your Best People. McGraw-Hill, 2003.

Byham, William C., Audrey B. Smith, Matthew J. Paese. Grow Your Own Leaders: How to Identify, Develop, and Retain Leadership Talent. FT Press, 2002.

Podmoroff, Dianna. How to Hire, Train & Keep the Best Employees for Your Small Business. Atlantic Publishing, 2004.

Journal Articles:

Dalgaard, Lars. "Winning the Talent Wars."BusinessWeek, February 7, 2007:

Tynan, Dan. "Executive order: Attract and retain top IT talent."InfoWorld, September 18, 2006:

Westcott, Scott. "Scenes from the Talent Wars."Inc. Magazine, January 2006:

View CBS News In