Recently, I did a strategic planning retreat for a client in Kansas City. As usual, on the first night of our retreat, I had dinner with the team. We visited a restaurant on the plaza for our evening of conversation and good food together. Our first drink order took somewhere between 30 and 45 minutes. I am trying not to exaggerate the amount of time as I didn't start the clock running until it was obvious it had been some time since our order.
Needless to say, once the meal was over, we didn't linger any longer for dessert. With ordering only one drink and no dessert, that is definitely going to hit the restaurant's bottom line, which is usually already operating with pretty thin margins. The restaurant was full of people, there were just not enough servers and workers to service everyone.
We are smack-dab in the middle of what is being called "The Great Resignation," when many of the labor force have decided to do one of the following:
Continue to stay home for themselves or for the family
Change industry careers
Change companies within the same career or industry
Leave for a job with the ability to work remotely
Or other options or combinations of these options.
This has created a real disruption in the available workforce. So, many businesses who didn't really make many changes while America stayed home during the pandemic now face a compounded and complex problem because while they were sitting out, they operated under the assumption that the same workers who stayed home would come back to the same job in the same company for the same compensation under the same cultural rules. We now know that in large part, that was not only a false assumption, it was a bad and costly one.
Not only as your organization continues to grow and the complexity of it increases because of adding more available employees, it’s harder and harder for leaders to communicate, execute and ensure all employees feel valued. It becomes virtually impossible to interact with all employees the way you once could. This is why CEOs and executive leaders must stay on top of how managers of departments are aligning people and their performance to organizational goals. This is more difficult than you might imagine.
Then, there is the easy part of this equation. The easy part is for employees to become disengaged. This can be because they are not feeling valued and the grass begins to look greener someplace else. When you, as CEO, lose really good employees, whether they leave on their own, they are let go or you can't find their replacement, it can cause disruption in services or product delivery as in my restaurant story at the start of this article. The high cost of losing key employees is not new, the cost of lost expertise can cause a large slowdown in how the organization responds to customers, produces products or competes in the marketplace.
Some of the associated costs to lost expertise can include:
Replacement, recruiting and administrative costs
Cost of onboarding and training new employees
Cost of severance packages
Cost of disengagement prior to leaving
Increased unemployment insurance costs
And many, many others
Some critical questions you may want to ask yourself regarding lost expertise:
What is your current process of capturing intellectual capital?
Do most of your employees have a back-up person who can do their job in an emergency?
How do you identify current process and ensure they are followed?
How is collaboration encouraged and rewarded?
How are employees rewarded for innovation and new knowledge acquired?
What adjustments do you need to make in your thinking and mindset about how things are now expected to be done both by employees and customers?
Losing employees is disruptive to your company. It’s critical that you are thinking about what would happen if each one of your employees would leave. This exercise is critical for you and your management team because it forces you to think proactively.
It’s also obvious there could be a financial hit if someone left and for instance, if critical processes were not in place and customer deadlines were impacted and you lost customers. You should consider the expertise of each employee and how you and the company would operate if you were to lose any of your current staff.
Another catalyst for this disengagement occurs when you hire people who come from well-defined cultures and well-defined processes and roles, and perhaps yours are not so well defined. This goes against the grain of what they’ve been accustomed to and can be quite unsettling. This kind of situation needs to be addressed on the front end prior to a hiring agreement so the employee understands what to expect and what their role will be. They need to be educated on what their new role will be. This post commonly occurs in turnarounds but can be in (supposedly) well-established companies as well.
The bottom line is that lost expertise in your organization can cost you dearly. Analyze and strategize on the best way to handle this business challenge and as always, we are here to help with guidance and ideas for you!
Tony Richards is an Organizational and Executive Development expert and CEO of Clear Vision Development Group, a leadership and strategy firm in Columbia. He is one of INC Magazine’s Top 100 leadership speakers and thinkers. His firm’s website is www.clearvisiondevelopment.com. Follow Tony on Twitter @tonyrichards4.
This article originally appeared on Columbia Daily Tribune: The challenge and cost of lost expertise