Working with CFOs and Heads of HR, I rarely find alignment on critical issues between these two disparate functions.  But a growing awareness that we’re facing a possible retention volcano – that is, pent-up desire and intent to leave the company – has brought them together to address what is becoming a serious risk to business strategy.

The signs of disengagement that are bubbling up should be a call to action across the company:

• Engagement and discretionary effort, leading indicators of talent retention risk, have dropped by 50% in the last two years.
• 1 in 4 high-potential employees say they will leave once they have mobility.
• Only 27% of companies believe they’ve maintained a compelling Employment Value Proposition (EVP) – the basket of reasons people want to come and stay at a company.
• As noted in a recent Harvard Business Review article penned by our sister practice CLC Human Resources, “12% of all the high potentials in the companies we studied said they were actively searching for a new job.”

Where There’s Smoke, There’s Risk

The moment it hit me that this below-the-surface-risk was imminent was in our recent CFO meeting “A Return to Growth”. For our clients in the room, we listed six critical, changing business assumptions facing our companies. To our surprise, CFOs overwhelmingly picked talent risk as one they needed to know more about. It seems that many were sensing a seismic shift in their organizations. As if to punctuate the point, immediately following this discussion, one of our CFOs in the room had a key direct report quit on the spot.

To be sure, talent retention has been on the corporate radar screen since the recovery took hold:

• Our Audit Directors cited HR issues as the third of their top five Hot Spots for 2010.
• Talent risk has been listed in the top five of all risks facing our executives in every month of 2010.
• In the most recent CFO-Duke survey, CFOs ranked talent risk as their third-highest internal concern.

Now, as the economy returns to growth, talent risk is moving from dashboards to boardrooms. Our clients tell us their boards are demanding documented strategies to retain critical talent.

Assessing the Seismic Range of Employee Disengagement

To understand the true extent of the problem, you have to go back to 2008 and 2009 when companies were just trying to stay afloat and slashed jobs, salaries, merit increases, bonuses and resources.  As one of our Heads of HR put it, “We broke the trust with our workforces.  Some of our key players have already mentally quit, they’re just waiting for the right opportunity to come along.  We call this quitting in place.”

What that means for us in 2010 is that as the job market opens up, our critical talent is vulnerable, and in some cases, already looking to get out. This latent retention issue is widespread across the industries we work with; many of our clients think we could be looking at a giant game of job musical chairs for top talent.

What this means from a business perspective is that just as our companies are pressing for new growth and trying to hold on to key customers, talent flight could undermine those plans.

That’s why we’re bringing CFOs and Heads of HR together for a virtual CFO-HR Talent Summit on May 25^th from 12:00 pm-2:00 pm EDT, where our CFOs and Chief HR Officers are collaborating to solve what, as it seems everyone agrees, is now a pressing business risk.

Concerned? Join us at our Executive Talent Summit on May 25

In the upcoming Part II, The Retention Volcano: You Have To Re-Recruit Your Key People, I’ll share how our clients are focusing their efforts to rebuild trust and drive their people to recommit to their organizations.