It’s hard to find an organizational mission statement that doesn’t include some reference to people. People are our most important asset. Our most important customers are our people. Yet, reliable surveys like Gallup show that employees frequently don’t feel the love. Organizational leaders grumble that talent management practices don’t deliver results. Why do these stubborn gaps persist through good and bad economic times?
Many variables go into the employer/employee relationship- far too many to cover in a single blog post. My focus will be on just one: Context is everything in people practices. “One size fits all” strategies – the kind many in global organizations find attractive because they are easier to manage – are frequently trumped by culture.
Examine talent retention strategies as an example. Assume that the organizations that discuss people as their most important asset really mean their strongest performing people are their most important asset. It’s not unfair. The twin goals of 1) retain and optimize top performers and 2) replace poor performers with better performers are at the heart of many talent management strategies.
Research shows that turnover and performance follow a “U” shaped relationship. Most voluntary turnover occurs at the twin peaks of high performers and low performers. Voluntary turnover is lowest among average performers- at the bottom of the “U”. Why? High performers are more attractive to alternative employers and, as a result, have more options. Low performers are often more doubtful about their ability to succeed in their organization, and are often more dissatisfied with their job. The “U” shaped turnover pattern relates to well known talent management strategies, e.g. forced ranking and pay for performance schemes.
What’s the Problem?
Talent management solutions focused on retaining top performers and upgrading poor performers have mixed results, particularly in global organizations. Interesting research recently out of Cornell University helps to explain why. Most talent research is based on the 5% of the global workforce in the U.S. and, as a result, has a Western bias. Sturman, Shao and Katz offer that the bias in turnover and retention research misses the cultural context so often at the root of “stay or go” decisions by employees. While they agree that the principal of the “U” shaped relationship between performance and retention is generally true across cultures, the details are very different. Think of it this way: a global organization wants to keep the top performer in New York and the top performer in Mumbai. But the cultural factors that influence the “stay or go” decision of each are quite different.
Beyond the Carrot and the Stick
Sturman, Shao and Katz examined data from a large multi national corporation to show how culture can trump intent of global talent management solutions based on North American cultural values. A few examples follow:
Pay for Performance compensation schemes that over- reward high performers and takes away rewards from low performers works best in individualist, performance-oriented cultures, like the U.S. It works far less well to retain high performers or encourage turnover in low performers in collectivist cultures, like India, with a strong orientation that group effort gets results so rewards should be shared.
Senority is a critical factor in cultures with a high power difference orientation, frequently found in emerging markets Brazil and Russia. High or low performers with significant seniority may be more reluctant to change employers because in doing so they surrender the authority and deference provided by tenure. Seniority is less a factor in turnover decisions in cultures with low power difference orientations, often found in Canada and the U.S.
Voluntary turnover is discouraged in cultures where uncertainty avoidance is valued, such as the Nordic countries and Singapore. High performing employees find it difficult to gain a return on movement and lower performing employees are more difficult to identify, so the overall performance- turnover relationship becomes weaker.
Why Does This Matter?
We tend to think that what’s true for us is true for everyone. In organizations, it’s easier to think what works here will work everywhere. And, if we just explain it often enough, “they” will get it.
We can agree on many things that work across cultures. One is that people truly are an organization’s most important asset. It’s difficult to have that promise come to life when practices fail to recognize that people do not exist in isolation from their culture. It comes to work with them. Human resources and talent management practices flexible enough to compliment cultures, instead of work against them, have a far greater chance for success.
Sturman, M.C., Shao, L., Katz, J.H. (2012). The Effect of Culture on the Curvilinear Relationship Between Performance and Turnover. Journal of Applied Psychology, Jan, 2012. Vol. 97, pg 46-62.