Is money the right lever to retain top PDI talent?

Almost twenty one years into our democracy, we are still struggling to generate employment for the majority of our matric and university graduates.

However, the irony is that the demand for top executive PDI talent is increasingly greater than the supply.  According to the sage principles of Economics 101; when Demand is far greater than Supply, the price will inevitably rise.

The majority of Corporate South Africa has succeeded in meeting their equity targets at the lower and middle-management levels, however, most are behind the curve regarding senior roles, especially C-Suite and board executive roles. Gone are the days where equity candidates were defined broadly as “AIC, African, Indian or Coloured”. The government have recently tightened the BEE requirements and the majority of senior, consequently executive corporate vacancies are now exclusively for “PDI generic” candidates.  As a result, corporates are competing fiercely for the best PDI senior candidates, loosely defined as candidates with a good pedigree tertiary education and worked at companies with great brands.

There are a number of unintended consequences that have resulted from the government’s BEE policies in addition to the natural fierce corporate competition. Some of these may be that the salaries for top black candidates have become over-inflated and top PDI candidates are being enticed far too often, resulting in candidates accepting senior roles with large salaries. The salaries are becoming costly and more damaging; candidates are hopping jobs too frequently resulting in great candidates taking on senior, complex roles before they have enough solid tenure under their belts.

Companies are responding to the swirl of top PDI candidates by trying to lock them in with excessive variable pay and huge retention bonuses. The problem is that corporates are prepared to buy candidates out of their “lock in” and so the cycle gets fiercer and more expensive.

Surely, corporates should be looking at other creative ways to retain top PDI talent. Talented, bright executive candidates are more likely to stay at companies if the culture of the company “speaks to them”. The problem with changing culture is that it isn’t an easy fix like paying an excessive bonus; it takes a long-term deliberate view by a board that has some backbone. Some companies have initiated a mentoring program by identifying top young talent to be brought in to the company as an EA, an executive assistant or allowing young candidates to take on various roles with exposure to top management to create a development path for them to grow naturally.

Another potential retention lever is the granting of ownership of important projects or opportunities to PDI candidates with good potential. Recently, I was discussing an attractive role with a top PDI senior executive, we discussed the very attractive salary of the role and he retorted, “I get paid an exorbitant amount of money, so what difference will another good couple thousand rand make? I am looking for a challenging role that will keep me engaged and learning”. The difference is the quantum, once a candidate has the right amount of tenure, institutional knowledge and experience, he has been “cooked right through”, then he will want a challenging and engaging role, however, if a candidate is still early on in their career and are enticed every year or two to a new opportunity, they lack the deep experience, institutional knowledge and solid networks.  There will be short term gain for the respective companies and candidates, however, the candidates are at risk of taking on senior roles before they are ready and remaining “cooked on the outside but raw on the inside” for the rest of their careers.

We do need balance the tension between the strong demand for top PDI candidates which has created a frenzy in the market and the long term sustainability of the current situation. Perhaps, corporates would be better served by focusing less on money as a lever to retain their top talent and more on the real growth and development of their talent.

Written by: Gary Gilbert