Episode #12 How To Engage And Retain High Potential Employees

The Cutting Edge Japan Business Podcast



Talented staff are hard to keep. They have options and are free agents, selling their services to the company that offers them the most attractive home. Do you have that home for them now? Want to take a peak inside to see what that home looks like?

Before we get into this week’s topic, here is what caught my attention lately.

In the latest statistics from 2014, for the 34 countries of the OECD, Japan is second last in terms of public spending on education, from primary through to tertiary, as a percentage of GDP. Denmark, Norway and Iceland are the top three. The USA is number 21 by comparison. When measured as a percentage of public spending, Korea is number one at the top and Japan is seventh off the bottom. When we look at private spending as a percentage of GDP then Japan improves to 10thoff the bottom. As a percentage of total public expenditure, Japan is at 0.5% against an OECD average of 1%. Korea is at 1.2% and the USA is 1.1%. Given the strong emphasis here on education these Japan numbers are bit surprising. What I do know is that in big cities like Tokyo, class sizes of 40 children are typical in primary school. Sending your kid off to juku or cram school is a financial burden parents pay to try to help get the kids into the right Middle Schools, High Schools and Universities. This will change though as the youth population halves over the next forty years. Already 80% of students go to private Universites and these institutions can only fill half the seats available. They need money, so entry standards will drop and cram schools will only remain relevant for those wanting to gain entry to the most prestigious pubic and private Universities.

This is episode number 12 and we are talking about How to Engage and Retain High Potential Employees.

Soredewa ikimasho, so let's get going.

In the war for talent, high potential employees are one of any organisation's most valuable resources. They have what it takes to succeed, tackle difficult projects, and eventually function as a leader within your organisation. However, if they are not engaged or properly motivated, they will oftentimes leave in search of more challenging or fulfilling opportunities. Needless to say, the loss of a high potential employee can be devastating and their replacement costly.

In Japan, the population of 14-24 year olds has halved in the last 10 years. So, we have to recognize we are going to have to do a lot better at retaining people. The reduction in the numbers of young has dealt the death blow to the junior colleges. Once upon a time there was a thriving Tandai or Junior college environment. The decline in student numbers has pushed some out of business and others to switch to a four year degree programme and become a University. We can also easily imagine that the entire juku or cram school market will be under attack as well. With 80% of students going to private universities and only 40% of the seats filled, the current severe competition to get into university will subside. If it is no longer requiring such stringent entry standards, why will parents pay the money and put their children through exam hell in the first place. Only juku catering to those who want to enter the most elite universities will survive.

So the demographic crunch is being felt already and it will spread like a contagion across industries and various sectors. This youth in demand phenomenon will influence the psychology of the young. They will realise they are in demand and will in turn become a lot more demanding. They will stop worrying about life time employment with one company, because they will have so many choices available to them.

We will hire them, train tem and then see them walk out the door. None of us will want to see are our highly trained people going across to our competitors. This is unfortunately exactly what is going to happen. The dainishinsotsuphenomenon, where new employees out of university are departing 3-4 years into the job, will potentially grow to epidemic proportions, as a bidding war erupts to secure a diminishing supply of young workers.

Recruiters will be moving people from one company to another and it will pay even though the base salaries are not so high because it will have substantial volume attached to make it attractive. Once the recruiting industry picks up that this is where there is substantial money to be made, then the poaching will really kick into gear. We need to try and make ourselves bullet proof in the face of this economic reality.

Let’s explore five ways to keep your high potentials engaged and productive.

1. Throw down a challenge. Sounds a bit trite, but think beyond the sound-bite.High potential employees are personally motivated to be better and they need to be continuously challenged. More importantly, they want to be actively involved in decisions that impact the success of the organisation. We all own the world we help to create, so let them be part of that world building construction team. High potentials embrace challenges and are ready to take them on in order to make a positive difference. Channel their natural abilities and deputise them to take the lead on difficult projects. Being given response earlier than we would consider will become important. This in turn means their managers have to become much better at delegation. Most managers in japan avoid delegating because they fear mistakes will be made and they will be the ones to get the blame. This type of management thinking will also have to be adjusted and Japan will have to learn that mistakes are how we learn and sometimes they need to be tolerated to see people grow. That will be a big mind set switch. The Darwinian landscape though will reward those who manage the transition and punish those who can’t. If you can keep your young, you will flourish and your competitor will lose because this is a zero sum game.

Don’t forget to give them praise and recognition. Often, they are highly independent and self-motivated and we think “Oh, they don’t need praise”. They don’t need it, but they want to hear it. They want to know they are being recognised for their contribution, that they are valued by the organisation and that they are special. This again will challenge leaders who were brought up in the tough love tradition. Coddling twenty somethings will be new skill they have to learn. If they don’t learn it, they will see them walk out the door to supposed greener pastures. So giving positive feedback, praising work and encouraging their young staff to go higher all require improved communication skills. Another area of challenge for the current crop of bosses. The strong silent type worked well up until this generation, so the managers now must become more loquacious.

2. Put learning to immediate use. Develop a system where your high potential employees learn new skills in small chunks and then immediately apply them in real world situations. Japan encourages everyone to stay firmly in the very epicenter of their comfort zone.We need to educate these young people to be confident to come out of that zone and push hard for innovation. This is where small successes encourage them to take larger strides. It should be encouraged by specific feedback. Not the critique that Japan typically loves but something more helpful. We need to tell them and everyone else by the way, what they are doing right. Often we are not even aware we are doing something particularly well. Once we know it we are going to keep doing that. We also tell them how they could do it better. This has a “critique light” aspect to it, where the listener is more likely to correct themselves and not resist. High potentials learn most effectively by doing, and this will ensure they retain the information and skills they learned. Knowledge unapplied is a waste. We all watch the TED videos, read the magazine articles, buy the business books, attend the seminars etc. The key though is how much of that new information and knowledge actually gets translated into outcomes and output. I buy many more books than I have time to read. Somehow I expect to absorb the goodies from these tomes by osmosis. A bit like one of those Buddhist prayer wheels that when you spin and you are saved from the tedious task of reading all the sutras to get the knowledge. This will not work. We need to transfer knowledge and insight into results. So, linking the learning process with the production process is a win-win for everyone. The team feel they are making progress, as they see the fruit of their input implemented, as they learn new skills and the organisation benefits because we are growing the team’s full power.

3. Promote collaboration. Create a series of "innovation team projects" comprised entirely of high potentials and assign members to have the opportunity to lead one of the teams. Set the expectation that each high potential innovation team leader will facilitate the discussions and that their teams will offer at least one new idea, process improvement, or recommendation. This engages high potentials in the coaching and development of all employees. This also creates a sense of competition, which will motivate others with as yet untapped potential to work harder, to be included in this elite group.The ability to work in teams is the currency of future advancement. The lone wolf will never have enough specialized functional ability because business and technology is too complex today. We will need to draw on the power of the whole group and what a great place to start teaching the upwardly mobile how to succeed in the firm. The solo aspect of large complex organisations is always a problem as it creates barriers to sharing ideas and hinders communication. Companies need all the brains working together in harmony rather than being isolated from each other. We need these young people to start their careers with the idea that the whole is greater than the parts. We want them to think whole of firm rather than in terms of work group.

4. Offer rotational assignments. Enable your high potentials to gain functional experience across a wide range of areas within your organisation. Allow them to learn a variety of different skills and see how each contributes to the success of the organisation. High potentials can bring a fresh set of eyes to each new challenge and can oftentimes provide a new perspective to a challenging situation.Challenge them to report at the end of their rotation, what they will do differently now, as a result of that learning experience. Japan already has a version of this rotation system in place, but we need to look at how much more juice we can squeeze out of this arrangement. The new arrival in the section is not thought to have any good ideas and their place at meetings is to sit there silently and listen to what their seniors have to say. This is as it has always been, but it is not good enough anymore. Often the youngest person at the table has the best view of the customer, because they are closer in age and outlook than any of their older supposedly wiser colleagues. Asking “sacred cow” type questions has a lot of value. There was a famous story of a group of visitors to the palace of the Russian Czar. Inside the castle there was an internal garden with a guard posted there. One of the visitors thought that a bit strange and asked why this guard was placed there. Nobody actually knew so they investigated the reason. It turned out that a few hundred years earlier Catherine the Great Czarina of Russia has been walking through that garden and admired a flower growing there and ordered that no one pick it. Hence a guard was posted and two hundred years later the flower was gone but the guard was still there. This tells us that having people challenge accepted wisdom is a good thing at times. The younger generation are just the ticket for this type of role, because they don’t know enough to have entrenched view yet.

5. Provide virtual learning options. By bringing a dispersed group of high potentials together through technology, they are able to collaborate to work on critical projects. Create opportunities for them to work with each other and get face time with executives to maximize productivity and engagement. Create connections between leaders within your organization, regardless of distance, and track their progress on challenging projects or problems. The technology today is amazing.We can hold training classes where no one is in the same room and yet the feeling is as if we all were. Our live on line training has people go into breakout rooms to discuss and report back, just as we would in a real life classroom, except it is all done in the virtual environment. So the ability to conduct business across regions and time zones is powerful. companies are still doing webinars for instruction or telephone conferences and occasionally video conferences. Instead they could be meeting live on line and have so much more interactivity. This is a good practice to use with these young people because they are more accepting of technology. We can create the sense of “you are part of a bigger world”. This is particularly helpful in a country often suffering from the Galapagos Syndrome. This syndrome is that somehow Japan can be a separate entity in a connected world, isolated like the Galapagos Island’s flora an fauna. Japan had the iMode app system before there were iPhones and apps as we have them today. They failed to take it world wide, kept it in little Japan and saw Steve Jobs at Apple crash the party and make the iMode an interesting historical artifact.

We have five ideas here for us to ponder when thinking about how to keep our young talent with us rather than seeing them poached buy other companies. We have spent the time, treasure and effort to train them and the last thing we want to see is them disappearing out the door to a competitor. If we take these steps and really work on educating their supervisors on how to lead them then we will be safe. If we don’t then it will be pain, pain, pain going forward.

How are things at your company? Are you confident your managers can keep these young people? Are they good enough communicators? Can they give praise in a meaningful, believable way? It might be a good idea to do an audit of your current capability and see where there are holes that need filling. Better to do it now than be on the back foot later, when you have missed the boat. Start early and feel more confident you can recruit and retain the latent you need for the future survival of the business.

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