Where will the
"Class of 2000" go now?

Two years ago many financial institutions made a significant investment recruiting the "Class of 2000". The new economy still booming, banks were no longer the employer of choice for the brightest and best college leavers. The talent that the banks recruited was in short supply and hard won. With the "Class of 2000" on board, most of these financial institutions made a further significant investment by providing a comprehensive graduate/ analyst training programme to equip the new hires with the technical tools of the trade and to hasten their time to productivity. After completing the formal training and in some cases project-based assignments or rotations between various desks and departments the new hires usually ceased to be the responsibility of the graduate recruitment team and their career development was handed over to the business.

So, two years on, with a first class training programme and some experience under their belt, will their next move be within their hiring organisation? These experienced hires are easy prey for the headhunters who call with the promise of the next rung up the career ladder and the associated financial advantages that this usually brings. Hires who have been unable to identify a suitable career path with their current employer, will often view competitor firms as the provider of the development opportunity that was not apparent in-house.

A business head at a US investment bank was bemoaning precisely this situation. A few months previously he had lost a particularly promising member of staff to a competitor, only to recently receive the feedback that the issues that had led to his decision to depart were not significantly different at the new employer. However, that realisation had come too late. By then the employee in question was busy making money for the trading floor of a competitor firm.

Much thought and investment usually goes into the initial graduate/analyst training programme, but what happens to the development of the new hires when this is over? These may not be bullish times, and it appears once again to be an employers' market, but the war for talent - the people first class organisations really want to have working for them - is still on. When an organisation invests in high- performers to feed its succession pool it cannot be complacent about them walking out of the door. So what retention strategies are likely to prove effective? According to the findings of two recent surveys, there appears to be a considerable disconnect between the rewards and development opportunities that high-performing employees value and the rewards and development opportunities that employers provide.

The fifth Annual Watson Wyatt Strategic Rewards survey found that top performers under 30 years of age said that the most effective non-monetary reward for them was the opportunity to develop their skills, followed by opportunities for promotion. However, many employers are not placing much emphasis on rewards and strategy. The same survey revealed that only 24 percent of respondents considered rewards to be a means of encouraging improved worker performance.

In their book the " War for Talent" (HBS Press) the authors, who are McKinsey and Company consultants, have based their writing on the findings of the McKinsey and Company's War for Talent 2000 Survey. The authors found that the managers in their survey regarded job experiences as the key contributor to their career development. The managers also assigned a high degree of importance to coaching, feedback and mentoring. However, when the managers were asked how well their current company delivered on the various components of development, only 39 percent said that their company was very effective at providing feedback, only 37 percent said that their company was very effective at providing mentoring and only 47 percent said that their company was very effective at advancing high performers quickly.

Why are organisations doing such a poor job with development? The McKinsey and Company authors write that they believe it is because companies "don't recognize the link between great development and business performance. Perhaps, too, it is because most managers themselves have never benefited from great development. Therefore they are ill equipped to drive it in their own organizations. Additionally, it is not expected, valued, or measured in most companies."

Many managers feel uncomfortable and ill equipped to undertake the role of a coach or mentor. In her article entitled " Making Partner" (HBR) Herminia Ibarra says, " Mentoring has always been one of the executive's most challenging responsibilities. Even in the days when the apprenticeship model was firmly in place, many managers struggled with the complicated roles of coaching and teaching, pushing and pulling, holding close and letting go. Today's economic landscape makes it much tougher. The need for mentoring hasn't disappeared - far from it - but the time available to do it has certainly dried up. Also making it hard for executives to mentor today is the fact that many have simply never been told how to do it. The exact responsibilities and boundaries of the job confuse and sometimes even scare them. As a number of prominent professional service firms have discovered, they stand to benefit from providing training to mentors on the basics of their job: helping smart people to learn."

So, how effective is your strategy for retaining high-performers? Where will your "Class of 2000" go now? Here are some key questions that organisations should be asking:

• How aligned is our retention strategy in delivering the rewards that high-performers value?
• How effective are we in connecting and engaging our high-performers with our organisation's strategy?
• Do we have a "coaching culture" and have we equipped our managers with coaching skills?
• Do all our managers regard managing talent as their responsibility?
• What are we doing to stretch and develop our high-performers through projects and assignments?

Investment in high-performers is an investment for the long term. Companies increasingly have to compete on the basis of knowledge - what they know, rather than what they make. In this "knowledge economy", it is the people and the knowledge that they create that have become an organisation's greatest competitive advantage in the market place. Building and retaining the talent in which that knowledge is created is a key strategic priority for today's businesses.