Midmarket Leaders, How Do You Retain Talent? Develop It

The National Center for the Middle Market reported in their Q3 2015 Middle Market Indicator that midmarket CEO's regard staffing/employment concerns as their top internal long-term challenge. Given that 36% of middle market companies expect to add jobs over the next 12 months, it's imperative that midmarket leaders assess -- and in some cases, overhaul -- how they manage the talent lifecycle.

The competition for talent has heated up in recent years, leaving companies of all sizes with longer recruitment cycles to back-fill key roles, potentially slowing growth (they key external challenge named by CEO's in that Q3 report). According to a 2012 report from the Center for American Progress, companies spend on average 20% of a worker's annual salary to replace them when they leave -- on a $50,000-salary, that's $10,000. In their 2014 State of the Industry Report, ATD noted that the average company spends just over $1,200-per-employee annually on learning and development. That gap between replacement and retention costs, then, makes a compelling case for investing in developing the skills not just that your employees need today, but more importantly, the skills they need for where midmarket leaders want to take the businesses in 3 to 5 years.

Where do you begin? 

First, be sure your performance management process is exactly that -- an ongoing process, and not just an annual event. Done right, you should be providing coaching and feedback throughout the year. That said, your employees should have a clear sense of their career path in the business, and what they need to do in order to advance. One simple way to do that is to provide an Individual Development Plan (IDP) that outlines an agreement between you and your direct reports on their role in the business strategy and what steps they can take to grow.

The following infographic from Harvard Business Publishing's "Developing Employees" module of the Harvard ManageMentor (HMM) program shows a simple, 4-step process for driving toward an IDP. IDP's should be simple, and easy to understand. It should include no more than 3 goals, and have clear objectives, measures, and milestones. Identify which skills and behaviors require formal training vs. those that can be developed through on-the-job exercises (and strive for the latter whenever possible), as well as identify what support your employees will need to complete their development assignments. Last, agree on how you'll monitor progress and when the development needs to be completed. Working together, you may be able to foster a more engaged workforce that turns over less frequently and allows your midmarket firm to win in the war for talent.

Stop Micromanaging!

In his 2009 book "Hidden Champions of the Twenty-First Century," Hermann Simon wrote that if he had to pick a single explanation for sustained success in middle market companies, "it would without a doubt be the personalities at the top." Indeed, many midmarket success stories are punctuated by the single-minded determination of the organization's founder. As entrepreneurs just starting out, they wear all the hats, from the strategic, to the tactical, and occasionally to the mundane. As their businesses scale they need to shed some of those hats, but as Simon wrote, "the strength and long tenure of the leaders sometimes get in the way of handling the succession problem sensibly."

Even before the question of succession arises, midmarket leaders must ensure they're enabling  growth by moving out of the "chief cook and bottle-washer" role and into that of a true leader -- and that requires an ability to trust; to set aside authoritarian tendencies and delegate decisions -- in essence, to stop micromanaging. But as Rebecca Knight points out in a recent HBR article, "How to Stop Micromanaging Your Team," that can be a hard to do. Among her suggestions to stop micromanaging, Knight offers that you should take time to reflect on why you need that control and then re-prioritize your to-do list to what you really need to handle, and delegate the rest. Scott Liebs, in an Inc. article from last year, additionally suggests that when deciding whom to delegate to, follow a rule of thumb that if you have an employee who can manage the task 80 percent as well as you can, let them do it.

Strong midmarket leaders know how important their time spent on creating and communicating vision and strategy are to building the type of growth champions that Simon lifts up in his book -- and they prioritize their work in a way that scales their time and the business by trusting their top talent.