· 5 min read · Features

How can you retain and engage your employees to keep them with your organisation?

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Keeping employees happy when the opportunities for internal promotion are limited by the economic situation is tricky for HR directors.

Miniscule economic growth (just 0.2% according to the latest GDP figures), plus employees opting for the safer option of staying put in their jobs rarely equals good prospects for advancement. The normal openings staff rely on have remained stubbornly shut, as figures just published by Hay Group back up - 88% of 1,000 staff at the UK's largest firms have not received any promotion in the past 12 months - so those who believe they deserve advancement will be feeling extremely frustrated right now.

While the recession and a slower than-expected recovery are to blame, Hay Group associate director Russell Hobby believes the pressure this is creating is becoming acute because companies now have 'holding pens' of talented people they cannot progress. "Organisations must slowly start freeing up the promotion process and moving people around to create roles," says Hobby. "Even communicating to staff that things will begin moving in a few months' time is crucial now to ensure HRDs hold on to good staff."

HR consultancy Chiumento believes this adds up to there being a population of 'corporate prisoners' - those who feel trapped in their workplace; something flattened corporate structures have not helped. Director Ian Gooden has identified six types of 'corporate prisoner'. They include 'the 'escaper', who is looking to leave as soon as there is a better job to go to; and 'the visiting star' - the too-good-to-be-true candidate that only arrived at the organisation to ride out the recession.

"Most employers do not even know how many corporate prisoners they have," says Gooden. "They must revisit their plans for talent management and restructuring now."

How do you do this, though? Talent management specialist StepStone believes companies have already lost half the battle before they start. A global survey of managers it recently undertook shows cut-backs during the recession have severely undermined trust in the workplace. Nearly one third of respondents said employee engagement was low and 41% admitted they have talent shortages. StepStone group managing director Matthew Parker says its Economist Intelligence Unit-produced report shows companies with skill shortages will need to rely even more on their remaining staff's commitment, but that their emotional commitment has faltered.

"People could certainly start voting with their feet because there can be a huge discrepancy between employee engagement and trust," says Parker. "Only 16% of line managers said staff were fully engaged with the business, yet this is not recognised in boardrooms, with 38% of CEOs believing trust is 'high'."

To restore trust employers need to set new and realistic expectations for their organisation and for individual employees. E-learning technology provider ThirdForce has a talent development division called MindLeaders and its head, Taylor Vaughan, says executives are wrong to think if they have nothing good to say they shouldn't say anything. "Staff need to know now how their roles might change once the economy picks up," he says.

Internal promotions will be crucial over the next few months. Talent management specialist Taleo says its study of 1,000 people at companies with at least 1,600 staff reveals only half had leaders who were promoted from within. Taleo's VP of international marketing, Chris Phillips, says this can send out a negative message to those employees weighing up their career prospects. He claims 76% of workers are more committed to a company if they can see clear job opportunities: "People want to see internal people winning roles, even if they themselves are unsuccessful."

Bob Ferneyhough is HR director at Henkel, the company behind a diverse range of brands, from Loctite and Sellotape to Right Guard deodorant. He has organised development round-tables to discover who the high performers are within his organisation and who has the potential to be one in the future. "We need a consensus on who these people are and then we can work out what opportunities we need to give them if the usual routes of promotion are not there," says Ferneyhough.

Henkel assesses the competencies of all its managers annually against 12 development areas, including soft skills such as presenting, which will be crucial to communicate the company's key messages internally and externally as the recovery takes hold. "A lot of people are moderate-to-strong in most competency areas so the task is really how to make their jobs more challenging," adds Ferneyhough. "One answer is to get employees involved in one-off projects that really stretch them. Within the HR team we have put people on projects running across western Europe. One group had to devise a staff survey to help with staff engagement."

At outsourcing specialist Capgemini UK, Ann Brown, HR director, says lack of personal development and career progression is increasingly mentioned by staff at exit interviews as their reason for leaving. Capgemini workers usually progress through a series of career grades and Brown says there is less demand for rapid promotions than before the downturn. She accepts, however, that many employees still measure their success by how fast they progress. "We have set out clear competencies for each grade and now tell people how they are doing and if they are on track. It is important to be honest with workers about their chances of promotion," she says.

Some organisations are still promoting people internally because they see it as a way to help them reach business objectives more quickly as the economy improves. The strategy adopted by Telecoms company Telefonica O2, for instance, has included appointing more of its talented people as general managers. HRD Ann Pickering says this improves the employee's breadth of knowledge and is helping the company as it moves into new areas such as financial services and broadband.

Pickering claims O2 retained 89% of its high-performers last year and she disputes any suggestion that many good 'prisoners' will want to escape once they feel confident enough to do so. "The O2 brand is very strong and this helps us when it comes to recruitment and retention," she says.

The strength of an organisation's brand can certainly go some way to retaining good staff but it is not enough on its own. A strategy must be in place to reassure those people who want to stay and progress internally before they become disillusioned and move on.

PERKS INSTEAD OF PROMOTION?

With new jobs and promotions harder to come by, many staff could be kept happy with an extra perk or two.

Research by PricewaterhouseCoopers reveals employers are dishing out everything from iPods, free drinks and extra holiday as an alternative to a pay rise or a promotion. In a survey of about 950 people at the end of last year respondents were asked to rate how highly they valued different rewards. A £100 cash bonus for working on a particular project was valued by 90% of people, with gift vouchers and extra holiday close behind (89%). These rewards were actually welcomed more than access to internal training (62%).

Of course, promotion is still a major ambition for many - 67% of workers appreciated an opportunity to be fast-tracked up the corporate ladder. However, only 37% valued a promotion without a pay rise - also known as a 'no-motion'.

Jon Terry, partner and head of reward at PwC, says organisations must find lower-cost and more tailored ways to show staff that good performance is appreciated: "One-off rewards for particularly successful projects work very well, particularly if employers are flexible in terms of what they offer staff," says Terry. "However, managers do need to know who does what role and who the top performers actually are."

THE RETURN OF THE ABSURD JOB TITLE?

With fewer real promotions for staff, could we see a return to ridiculous job titles, just to give employees the illusion of a better job or better prospects? Last month a council swimming pool was the butt of humour when it advertised for 'wet sports technicians' (swimming guards). But, according to The Plain English Campaign, upgrading job titles is becoming more popular in a bid to keep staff happy. Recent examples include 'ambient replenishment controllers' (shelf stackers), 'revenue protection officers' (ticket collectors), and a 'dispatch services facilitator' (post-room worker).

Adding the word 'manager' to someone's job title can certainly help an individual to feel more appreciated, but ultimately it can lead to accusations that an organisation is too top heavy.

At the end of March, Government figures revealed that the number of 'managers' in the NHS has increased by 4,748 in the past year, There are now 44,661 managers in the NHS with titles such as NHS clinical service delivery manager, clinical risk manager, service improvement manager and even social marketing campaign manager.

Of course, job titles play an important role in whether employees feel that there is fairness in the workplace. They can also affect someone's wellbeing at work by making them feel more appreciated.