It's payback time for NZ's top talent

With the labour market opening up again, and Australia's continuing economic success beckoning New Zealanders, retaining top staff should be top of the agenda for New Zealand companies.

Leading financial commentator, Bernard Hickey, founder and editor of interest.co.nz, told the Robert Half business briefing in Auckland: "The challenge for New Zealand businesses will be how to retain talent in an indebted future where labour markets are mobile, taxes are high and spending growth is weak. The risk is that we will have a hollowed-out economy, full of retirees, farmers, beneficiaries and children."

Megan Alexander, general manager of Robert Half International New Zealand, agrees businesses will need to do more to retain key talent as the domestic economy returns to growth. "Australia is booming and the lure of that creates gaps and wage pressure here. We can't compete with such a powerhouse economy with a huge wealth of natural resources - but we do need to convince people to stay."

Alexander points out that after the recession, people are starting to look around. "The market is still tight and there's a lot of uncertainty still - but people have been sitting tight for a while and they're getting frustrated."

She says that at this point it's about the money. "Companies have kept costs tight and people have been reasonably accepting of that - but the time for that is coming to an end. Other perks and opportunities are not cutting it any more - something's got to give. People need to feel valued - and they do that through salaries and perks."

She says businesses have to accept labour costs are going to go up. "There's value in keeping your best people because they are the best and have institutional knowledge. However, it's not bad for a business to lose a certain number of people.

"There's a natural churn and it's good not to stay static - but losing too many staff can have a negative effect on your company - your business is only as good as its people."

She says it's good to note that good people are highly sought-after and not easy to find. "Quantity you can find. Quality is much harder. Businesses have to start paying to attract and retain good people."

Dr Dianne Gardner, senior lecturer, School of Psychology Massey University, says a lot of organisations made bad mistakes when shedding people in the recession. "Some of those made redundant were important to the organisation, while others were made to feel worried about their jobs - something that can interfere with productivity and commitment."

Gardner says New Zealand did not go as deeply into recession as some expected, but staff trust in their employers was often eroded - and morale is something that's difficult to recover.

"Now we're post recession, a lot of employers may be wishing that they had a time machine so they could have really assessed the extent of the recession, as a lot about keeping staff now depends on how they behaved then. Employees who felt looked-after are more likely to stay the distance. Those who felt they were staying by the skin of their teeth have lost trust, and are likely looking to move on. Nothing can change this.

Gardner says that if employers want to retain staff, they need to plan that as soon as a vacancy arises. "They need to tell people what the job will offer to make them want to stay. What are the training opportunities, why is this company a good place to work?

"You want to attract people you want to keep."

Gardner suggests casting the net wide - and not forgetting internet job sites such as seek.co.nz. "You need to look internationally, there are Kiwis in Australia who may want to come home - but remember, they would want to come back only for a good, stable job - not just a one-year contract."

She suggests employers go through a thorough selection process that is standardised, and even consider psychometric testing.

"Once someone is in the job, you need to set goals together and agree to a long-term plan. What opportunities can the employee subscribe to?

"If your organisation's hierarchy is flat and there are few opportunities for promotion, be creative with skills development and role development. Give your staff a reason to stay."

Other things to consider are scholarships or training - be open to new ideas.

But be sure to give opportunities to people who have earned them. Have an intelligent system of performance management - often the best employees are not the ones who blow their own trumpets, but the ones who quietly get on with things.

Appreciate good, solid work. Also, be culturally sensitive - that's something that staff of different cultures really appreciate.

Also, she says, make sure there are no secrets in your plans for employees. They need to know. There will be people who don't want promotion, and just want more interesting work. Talk about it. If a person misses out on an opportunity - give feedback. Manage it and be honest - show the organisation cares."

Gardner says: "Firstly it's about attracting people, and then it's about them feeling that you care about their future." She makes the point that you won't retain all staff in this way, but some who leave may even choose to return, and you'll get the reputation of being a good company to work for, which is important when it comes to attracting talent.

Gardner does not agree salary is all-important for staff retention: "If people feel they are being paid poorly, it leads to dissatisfaction. If they feel their pay is adequate, it's taken for granted ... too high a salary can actually demotivate an employee.

"Research shows people may leave because they're overpaid. You need to get it right, and remuneration must be consistent and fair. People want to feel they're being paid what they're truly worth."