At the beginning of this year when the markets were not being kind to our financial services clients, we admit we were concerned that the crisis would relegate spending on innovation programs for relatively junior employees to the long list of “necessary” cuts. It didn’t. In fact, our clients have expanded the number of programs they run. Their reasoning is sound though it may not be obvious.
Much has been written this year about the importance of innovation in a downturn. Those firms that continue to invest in strategic innovation position themselves to emerge stronger as competitors falter. Our clients are aware of that and they have high expectations for the proposals that our program generates. But their primary motivation is talent retention. These programs offer them a way to recognize and reward their top talent when they can’t afford to do so with traditional compensation.
Research shows a positive relationship between layoffs and voluntary turnover. When people are being laid off, more people also choose to leave. A May 2008 article in Harvard Business Review found that as little as a 1% layoff of employees triggered, on average, a 31% increase in voluntary turnover. And the people who choose to leave are often those the firm can least afford to lose. They are the ones capable of taking on the additional work. They are the ones responsible for continuing revenue. And they know it.
In our programs, the participants have all been designated as “high potential.” They were receiving offers from competitors when times were good and smart competitors continue to try to pick them off. They are constantly evaluating not just the security of their job like most people but also the soundness of the firm and whether opportunities will continue to evolve for them.
When we give them an opportunity to develop their own idea and then pitch it directly to senior management, it sends an unequivocal message that they are valued, that their ideas are valued and that the opportunity does exist for them to take a more visible role and influence the direction of the firm.
More important, joining a cohort of the best and brightest from across a large organization is typically a big eye opener for relatively junior people who have developed tremendous knowledge and expertise within their area but have had little opportunity or encouragement to look beyond their silo. Participants routinely tell us that the most valuable aspect of participating was discovering that their firm has so many people with whom they would like to work. For many that makes the difference for them between staying and leaving.