Retention of staff starts early: even before an initial interview, according to some commentators. A company’s image and reputation will not only determine how attractive it is to potential employees, but is also a good measure of whether it will have a staff retention problem.

It is certainly an issue that needs to be considered at the interview stage. “People will move on if promises are not fulfilled, and the ‘psychological contract’, the forming of a bond, is begun during the interview,” says Shaun O’Hara, director of Tiro Associates, a recruitment consultancy.

Some companies raise expectations too high during recruitment, in order to fill vacancies with well-qualified people. But it is a policy that will backfire, according to the Chartered Institute of Personnel and Development’s 2007 Recruitment, Retention and Turnover survey. “It leads to costly, avoidable turnover and the development of a poor reputation in local labour markets,” says the report.

But keeping staff is not easy. Jonathan Austin, founder and chief executive of Best Companies Ltd, has been carrying out the research for the annual Sunday Times Best Companies to Work For awards since 2001. He says: “People think it’s all about money, but pay is not the driving force, hence charities often score well.”

The promise of lavish bonuses or a great package of perks and benefits is not the only key to attracting, retaining and engaging talented employees.

“Bonuses can be like a warm bath – they get cold quickly,” Austin explains. “You start to get people working for themselves, not the organisation’s best interest.”

What staff want is to be led well and managed well, he says. “People want to work for organisations that invest in them as an individual. Training programmes are hugely important, not only because people want to grow and develop but also because they realise that there are no jobs for life any more, so they have to keep their skills and employability high.”

Sabri Challah, who heads up the 7,500-strong global capital practice at the professional services firm Deloitte, says that in every company he talks to the question of how to keep the best people – “the people who will have disproportionate impact on the growth of the business” – is a key concern.

“It is an issue that needs to be tackled holistically rather than being about one or two strategies such as offering them career breaks or courses at Harvard or London Business School,” he advises. “You have to look at the entire experience of an employee and manage that consistently. You have to offer a clear promise of what the job is and deliver it. That is at the heart of retaining people: customised individual career plans are what people want,” he says.

And for the younger generations, those labelled Generations X (born between 1966-79) and Y (born after 1980), this is even more important, he believes. “These generations believe that work is an opportunity for their continuous development.” And because they are used to using social networking sites like Facebook in their private lives, firms need to offer them the same opportunities at work, with Deloitte taking the lead with its creation of D Street, a company-wide network that reinforces employees’ connection to the workplace while also building a sense of camaraderie.

At Deloitte about one in five UK staff (18-19%) leave every year, a turnover that Sharon Fraser, managing partner for talent, says is “reasonably standard across professional firms.” The figure has fallen from about 20% in recent years and Fraser wants to see it reduced to 15% by 2011.

Counter-intuitively, she links the attrition rate partly to the “fantastic” success of the company’s training and development programmes. “Our graduates are very high quality,” she explains. “If you recruit the best people and develop them well they will be targets for other organisations.”

Deloitte, which employs about 11,000 staff in the UK, recruited 1,400 graduates last year, many into the auditing and tax divisions. When, after three years’ training, they qualify as chartered accountants, some “see this as a natural break point where they consider their options,” says Fraser.

Deloitte has adopted various means to improve retention, such as advertising openings throughout the company including the possibility of overseas secondments. “There are lots of opportunities. We have set up an internal mobility structure to help people see what these are. That has improved retention across the firm.”

There is also a push to retain more women – especially at senior levels. Four out of 10 recruits to the firm are female yet the percentage at partner level is only 13%. In America, across comparable firms, the equivalent figure is 25%, a goal Deloitte wants to reach.

“In each business we want heads to think what percentage of female directors they should have in five years’ time and how they will reach this target. If they don’t reach the targets, business leaders will be held accountable,” says Fraser.

One way of retaining female staff is to offer flexible working – particularly at the point when they start or are raising a young family. But at Deloitte flexible working is not confined to staff with childcare issues. Amy Haworth, for instance, has negotiated a three-day week as a manager for Deloitte in London, enabling her to juggle her financial career with her commitments as a professional classical singer.

“In our audit department we have been putting stories out of people working flexibly, so staff realise that these things can be done,” says Fraser.

And those who think that companies will stop agonising about how to keep their staff when the recession bites, need to reconsider. Even when companies start laying people off, predicts Challah, “the retention of their most able people will remain a very high priority for all of them.”

Entries are invited for the 2009 Best Companies contests. To register your organisation, visit bestcompanies.co.uk. Additional reporting: Sian Griffiths

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