Retention strategies
that work
Retaining skilled employees is one of the most difficult
challenges facing organizations today. Turnover is extremely costly; it
is estimated the cost of turnover is anywhere from 50% to 150% of an employee’s
annual salary. In addition to the hard costs associated with turnover, there
are the soft costs – lack of productivity of the departing employee
and new employee, the “drag effect” on other employees, the
impact on customer/vendor/client relationships and so forth. Furthermore,
attrition can be contagious, multiplying costs rapidly.
According to the Gallup Organization, there are three primary reasons why
people leave their jobs:
1. Fit – The job was not as expected and/or the
employee did not perform as expected. This usually occurs in the first
six months of employment and is a result of a poor hiring process or the
wrong choice.
2. Career advancement – It is important to create
career ladders in the organization. Even if there are not opportunities
for advancement, give employees the opportunity to be more valuable in
the job they are doing. People want to feel good about what they are doing
and feel they are contributing.
3. Relationship with boss – More than any other
single reason, people leave because of the relationship they have with
their immediate manager. “People leave managers, not companies,”
state Gallop study authors Marcus Buckingham and Curt Coffman. “So
much money has been thrown at the challenge of keeping good people –
in the form of better pay, better perks and better training – when
in the end, turnover is mostly a manager issue.”
What does it take to keep employees? Our strategic partner, HR That Works!
offers the following suggestions:
1. Design different strategies for different employees
While there are common elements of successful retention policies, the most
effective policies recognize the needs and expectations of their employees
will vary by age and level of responsibility. Low wages earners are focused
on economic survival – a wage above competitors and a system of recognition
can be an effective retention strategy. High earning executives focused
on self-actualization will want to see a clear career path, have the opportunity
to increase their value to the marketplace and be part of a leadership team.
2. Orientation process
A large percentage of turnover occurs within the first months of employment.
Use the orientation process to build workplace relationships and make new
employees “feel at home.” Assign employees a mentor, pay for
lunches with co-employees, and involve them early on in employee activities.
3. Survey your employees
Ask your employees what it will take to keep them. For new employees, survey
them 60 days after they start. Have a regular schedule – monthly,
bi-annual or annual to get input and feedback from your employees.
4. Train your managers and employees: create a
culture of pride
Pride of workmanship is a top retention strategy. Managers need to communicate
expectations, instill confidence, and recognize and reward employees who
do a job well. Good managers must know not only how to manage but also how
to value employees. Engage employees and managers in career planning, so
that they understand the potential for growth.
5. Know how competitive your salaries and wages
are
When a workforce is paid above the norm, compensation falls by the wayside
as an important retention factor. If you want to hire the top 10% of the
available workforce, you may have to pay in the top 10% of compensation
as well.
6. Nurture your top quality employees
The energies of management are often focused on the 20% of the workforce
who cause problems. Be sure that your managers are attuned to changes that
might signal discontent from your top employees. Consider offering retention
or referral bonuses.
7. Conduct exit interviews
An exit interview can be an invaluable source of information, even if you
have to pay the departing employee to take it. Don’t assume the reasons
are known. Often managers will compartmentalize what they believe vs. what
the employee feels.
The concept of loyalty continues to lose ground. Businesses can no longer
offer the job security they once did and younger generations are not motivated
by loyalty. The motivation focus continues to move away from the employer
and towards the individual. Understanding what motivates the individual
employee, training managers to create effective relationships and value
employees, and offering opportunities for growth are the foundations for
an effective retention strategy. |