The Coming Retention Crisis

Storm On The Horizon, or Opportunity?

This so-called “Great Recession” we’re in these days will be the fourth major economic crisis that we’ve worked through during our years in business. And, we see the same cyclical patterns repeating this time as each of the last.

When economies downturn, the on-the-ground reality is that wealth-producing commercial enterprises (and, eventually also their dependent service-providers and governments) are forced to cut-back resource deployments: reduce their workforce, reduce investments, and reduce expenses.

Sustained economic downturns cut deeper into workforce reductions, into the realm of top-performers that missed cutbacks in earlier rounds. These downturns also reduce competitors, and reduce customer service levels of the surviving enterprises.

This chain of events sets up more on-the-ground bad news for unprepared enterprises when market/sector players start their inevitable, cyclical, rebound (even if the general economy continues to lag in places). Like a rapidly ascending shark that hasn’t yet breached the ocean’s surface, many competitors begin their ramp-up and resurgence unseen by their rivals, gathering up speed to seize back and reacquire the top-performing workforce and high-value customers made vulnerable by the prior downturn.

Retaining downturn-exhausted “get me outta here” workforce top-performers and previously-optionless newly-curious service-starved “there’s gotta be something better now, right?” high-value customers then becomes the Fight of a Lifetime for unready organizations: a twin-barreled Retention Crisis.

Many presume that workforce members that kept their jobs during economic downturns are unscathed by the carnage that occurred around them, when the reality is that many suffer from something akin to post-traumatic stress syndrome or survivor shock. Many of those “survivors” had to adapt to much more demanding post-cutback job responsibilities and crisis-level productivity expectations; expectations unlikely to be dialed-back post-downturn. Many are, in their own internalized career path management, long overdue for the kind of job transition they’d long planned.

These reasons add up to a single conclusion: as soon as your remaining, presumed higher-value higher-performing, workforce members have a chance to leave you, they will. And, your competitors are angling to enable them.

This is a strategic risk because these remaining workforce members are the holders of your remaining collective knowledge, accumulated expertise, customer relationships, and legacy and current strategy-to-execution business process proficiencies.

As far as customers are concerned, the more re-emerging competitors, the greater your risks of “now is not the best time for this to happen” customer attrition. This is a strategic risk because these are the consumers who pay you money for what you create and sell.

Why are your competitors after your top workforce members and customers? Because it is the fastest and most profit-effective way for them to re-establish their market position, at your expense. That is also why you should care.

So, how do you preserve your top-performing workforce members, and your most-valuable customers?

First, basic risk management strategies should drive an accelerated initiative to formally define and document standard enterprise business processes, automating them wherever possible; create an automated knowledge-base that liberates information and insights that are genuinely the relationship property of your organization; and, creating virtual and actual “back-ups” of specific relationship details now held by your workforce about your customers.

Second, it might be obvious to say (though we don’t see it actualized enough) that you have to learn Who are your high-risk-for-loss workforce members and customers. You have to determine their relative Value based on future potential-looking, opportunity-focused metrics (not downturn-irrelevant historical-based measures). These metrics derive a Retention Risk Index/Score, and a Relationship Value Potential Index/Score, that quantify your workforce management and customer service priorities.

Third, you need to engage your key workforce members and customers in face-to-face dialogue, prioritization, and resource-planning about how you (your organization) and they will optimally re-re-define (not a typo) your relationship to reflect their realigning post-downturn expectations.

With these quantified Retention Risk and Relationship Potential values, and refreshed insights into future workforce/customer expectations, you need to develop and execute specific tactical actions to link and align your top performers with your top customers. This will certainly mean realigning your channels of sales, distribution, and service; modifying work expectations; making your performance planning and evaluation more precise, timely and relevant; and, enhancing the mix and relevance of fixed and variable workforce compensation.

Some will say: “Of course, easier said than done”. We’ll reply by asking, “If you’re not doing these things, first, how long do you think it will be until your re-emerging competitors are executing against your workforce and customers, at your expense? And, second, once you are finally aware that it is already happening and begin your response, will it be too late to stem the critical mass of your losses?”

Market shifts, competitive wins and losses, happen on-the-ground, day-by-day, one key workforce member at a time, one key customer at a time. Neglecting retention/attrition threats can be a game-ender for battle-fatigued, un-focused and slow-to-respond competitors, or a hyper-leap to reestablished market leadership for strategy-executing workforce- and customer-focused enterprises.

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