The “great resignation” is on everyone’s minds. For many CEOs we’ve recently interviewed, it’s their source of greatest concern. Of particular significance is senior leadership turnover. Given the impact of any Director, VP, or executive, a departure from the organization creates ripples across the company. And knowing that 40-50% of employees are actively looking for other jobs, one can assume that a similar number of senior leaders are considering moves.
We know that using development as a lever for retention works. Reid Hoffman talked about it in his HBR article “Tours of Duty.” In his recent book Workquake, Steve Cadigan discussed the paradoxical need to retain people by “building a culture that prepares people to leave” by actively developing them. Recent research by LinkedIn states that 93% of employees would stay longer if the company actively invested in their development.
The past two years of remote work have changed everything, most notably damaging the connection between leader and company. One CEO we recently interviewed said “All I have is my computer camera to build culture, align the organization and retain my leaders. It’s really hard.”
Given the tenuous relationship between companies and their leaders, it’s time to take a more active stance in keeping them. A key way to strengthen their bond to the company? Leadership development.
Why is leadership development such a powerful super magnet at this moment?
- Build connection to the company. By investing in development, employers build increased loyalty and commitment by adding value to leaders’ careers. Leaders will stay where they feel they are building their career and capabilities. One executive we’ve worked with says, “I am always trying to find ways for my team to be learning more here than they would anywhere else.” Leaders typically feel appreciative of the development opportunities afforded to them, and this translates to positive feelings about the companies they work for.
- Build connection with each other. In most cases, one of the greatest sources of value from leadership development is the relationships built with a broad base of cross-functional colleagues. This is especially critical in today’s remote work environment. Without “hallway conversations” and impromptu meetings, leaders miss the social opportunities to get to know each other and build trust. Even virtual development can create those opportunities. Developing trusting relationships is the basis for constructive collaboration.
- Build connection to purpose. Leaders are moving fast and rarely have the time to identify their leadership purpose and how it can be brought to life in the work they are currently doing. Opportunities at other organizations look tempting when leaders (and other employees) aren’t seeing the impact they can have in their current role on people and issues that are important to them. This is why a renewed sense of purpose in work is so critical for retention right now. Leaders need the opportunity to identify their purpose at work and approach their current role with renewed enthusiasm. Those companies that provide the opportunity to better define purpose will build additional loyalty and commitment.
We’ve known for many years that effective leadership development offers huge benefits to a company. A 2018 Work Institute Report found that 77% of turnover is preventable, and the #1 driver of turnover is a lack of development. Note that compensation was #5 on that list.
Given the remarkable leadership turnover we’re seeing in the market, it’s time to take a more proactive and creative approach to retain a company’s best leaders. Throwing more money or stock at top leaders is not enough these days to retain them.
Companies that realize how much more value development can provide—understanding the multi-dimensional connections it can build—will create a powerful magnetic force that will enable them to keep their top leaders.