executive retention: getting your best to stay · the individual level as a key part of their human...

Executive retention: Getting yourbest to stayRohan Carr | Mar 22, 2016

What is it that keeps senior employees engaged in their current

organisation? What makes them stay despite other

opportunities that might come their way? Is it the organisation’s

culture, the people, money or something else? A

comprehensive study of Australian executives was conducted

as part of IRC Australia director Rohan Carr’s doctoral thesis.

Retention of talent is one of the most significant business challenges of the 21st century.

For many organisations, particularly those in knowledge-intensive industries, human

capital is fundamental to competitive advantage. Nevertheless, as a result of increased

mobility and greater employment choice, employers around the world report difficulty in

retaining key staff.

Failure to retain executive talent can be costly in terms of the expense of replacement

(assuming the executive can be readily replaced) and also results in a loss of

organisational knowledge, experience and relationships. It may damage organisational

morale and lead to external reputation cost. Furthermore, there may be costs (not

necessarily financial) associated with retention failure, borne by the departing employee.

Findings of the study

The research findings reveal key motivators, influencers and circumstances underlying

the retention decision. The research found that the opportunity and challenge

perceived to exist within the executive’s organisation, combined with the

personal relationships developed, particularly upward, are the most

significant retention factors.

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Responses such as, “It is the personal challenge that keeps me here”, and “Organisations

retain me when I feel personally fulfilled” were common and related particularly to issues

of individual growth, contribution and experience. Equally, more than two thirds of the

research subjects felt the connectedness with others in their organisation was a crucial

part of retention. There were many comments along the lines of, “A key reason I have

stayed is the relationship I have with my Chairman” and, “My upward loyalty has been a

strong retention factor in my recent jobs.”

The research found that while culture, reward and lifestyle-balance factors contributed to

retention, their impact was neither significant nor uniform across the research subjects.

A number of interesting themes emerged from the study:

• The retention decision is centred at an individual rather than organisational level.

This means that rather than the organisation’s actions, it was the personal or

subjective attitude, reaction or response by the executive that determined the

retention decision. “At a senior level, retention is all about personal relationships

and personal factors, but organisations don’t often recognise this – they think they

drive it,” one executive noted.

• The engagement or connectedness the executive felt with the organisation was

important to retention and this was impacted largely by personal relationships. “A

key part of retention decision-making is the extent to which I feel a personal and

sympathetic relationship with my employer. This is principally manifested in my

relationship with individuals,” another executive said.

• The concept of a ‘natural lifecycle’ influenced retention. Once executives had been

with an organisation more than five-to-seven years, retention, regardless of other

factors, became a challenge.

• Personal and organisational change was also a determinant of retention.


Some surprising results

Despite the varied backgrounds of research subjects, there was a commonality and

consistency to the themes that emerged. The emphasis on the ‘challenge and opportunity’

factor, while not a surprise in terms of its importance, was surprising in terms of the

consistency with which it was cited.

The length of an executive’s tenure had some influence on retention. Cultural fit and

identification with organisational values was more important the longer an individual

remained with an organisation. The research also suggests that ‘fun’ and ‘happiness’

factors were more significant the longer an executive had been with an employer.

The gender of research subjects did not appear to influence retention. No retention

theme or concept appeared to be more or less dominant with either males or females, nor

did attitudes about retention or its importance vary depending on gender.

Equally, age did not play a significant role in determining or influencing retention

drivers or motivators. While the personal factors that influenced retention changed


during the individual’s career, with the exception of work-life balance, which was more

important for older executives, retention drivers did not vary according to career

maturity.

Implications for organisations

Organisations need effective executive retention strategies. Our research suggests that

these should be centred on the opportunity and challenge that the executive’s role can

provide him or her. This necessitates that the organisation firstly understand the

aspirations, interests and goals of individual executives, rather than assuming all

executives are alike.

Individual and organisational expectations also need to be aligned. This requires open

and honest communication between the executive and the organisation, something that

is not always easy to encourage. By establishing an effective internal communication

strategy, an organisation will improve its chances of retaining key talent.

Organisations, particularly those in the professional services sector, must promote and

facilitate the development of strong personal relationships within the senior executive

team. These relationships can be critical to the decision of an executive to stay with an

organisation. Conversely, the breakdown of relationships at the top may lead to reduced

retention success despite, for instance, the presence of significant challenges and

opportunities.

In particular, the upward reporting relationship between subordinate and superior is

considered by many executives to be their key relational link with the organisation and as

such may require greater recognition. Internal relationship management should be a

measured KPI and professional development may be needed, particularly as executives

are increasingly required to manage across generations. While many organisations

encourage internal competitiveness at a senior executive level in an attempt to improve

corporate performance, any positive short-term gain may be achieved at the longer term

expense of retention.

Impact of change

Retention factors, drivers and motivators change during an individual’s career and,

hence, during their tenure with an organisation. Organisations must therefore recognise

the evolving nature of the organisational structure, as well as individual needs and

expectations. While the core retention drivers of ‘opportunity and challenge’ and

‘personal relationships’ are fundamental, our research indicates that the importance of


other retention factors may vary at difficult stages of an executive’s career and based on

personal circumstances.

Any major structural change within the organisation needs to be reviewed to determine

how it may affect the senior executive team. Discussions about expectations and

opportunity will warn the organisation of potential problems and signal to the individual

that there is genuine concern for their impact.

Remuneration

The research cautions against using remuneration as a core element of a retention

strategy as in isolation it is not the key driver of an executive’s decision to stay. “Other

issue are more important,” was the consistent response when discussing remuneration

and retention with research subjects. The equity and transparency of reward setting and

achievement-based reward participation are more important, the research suggests.

Recruit on values and focus on early years

Retention factors are individually determined and driven, and hence form part of an

individual’s profile. They can therefore potentially be identified at the time an executive

joins an organisation. By recruiting individuals who share the organisation’s value set,

greater long-term retention success is likely.


If, as suggested by this research, the ‘natural tenure’ of an executive is on average five to

seven years, it could be assumed that a failure to retain for this period is primarily

driven, for example, by the absence of perceived challenge or a breakdown in

relationships. As a consequence, the greatest returns from retention strategies will occur

if they are particularly aimed at executives in the early years of his or her tenure.

Are smaller organisations better at retention?

A theme that emerged from the research was the apparent perception among executives

that smaller organisations are ‘better at retention’. “I think the easiest way to improve

executive retention is to make bigger organisations more like smaller ones. Those large

ones that ‘do retention well’ in my experience have a small company feel about them,”

one executive noted. Large organisations concerned about starter retention should

therefore consider adopting structures and behaviours that enable them to mimic their

smaller counterparts. This might include operating along divisional lines, dividing into

autonomous subsidiaries or encouraging deeper relational links within their executive

teams.

The attraction of talent is vital for an organisation to compete within a knowledge-

intensive world. Equally important is the retention of that talent. Research into executive

retention is still relatively nascent, however some key themes are becoming clear.

Organisations should focus on a number of key motivators and influencers of retention at

the individual level as a key part of their human resource strategy. Aligning values from

the outset, encouraging open communication and cultivating relational ties in the early

years of an executive’s tenure will contribute to maximising an organisation’s ability to

retain key talent.

Retaining Key Executives – 8 Tips for Organisations:

1. Perceived opportunities and challenges are key drivers of executive retention

2. Equally important is the presence of strong internal relationships

3. Culture, remuneration and lifestyle balance should not be ignored but are not

central to retention

4. Change at the individual and organisational level can impact on retention drivers

5. Key focus of retention activities should be on early years to be most effective

6. Structure an executive retention strategy specifically at the individual level

7. Recruit executives with values sets aligned to the organisation to foster retention

8. Larger organisations should aim to emulate the traits of smaller organisations to

encourage retention


Rohan Carr

Rohan has a background of more than twenty years in the executive search industry

and held earlier positions in the financial services and corporate advisory sectors.

Rohan commenced his executive search career at The Insight Group as an

Associate before joining the international executive search firm Heidrick & Struggles

where he spent three years as a Consultant. In 2002, Rohan returned to The Insight

Group as a Director, where he consults to a range of private and public organisations

across a variety of industry sectors at senior executive and Board level.

Rohan has particular expertise in the education sector working with universities,

research institutes, schools, colleges and other organisations. He has deep

experience at senior levels including appointments to academic and executive/

management positions and working with governing bodies and on specialist

international search assignments.

Rohan holds a Bachelor of Commerce from the University of Melbourne and an MBA

from Monash University. He also has a Graduate Diploma in Applied Finance and

Investment from the Financial Services Institute of Australasia. Additionally, Rohan

completed his Doctorate in Business Administration at RMIT University in 2005.

In addition to a number of industry Board roles, Rohan is President of the Board of

IRC Global Executive Search Partners and also leads IRCs Education Practice

globally.

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