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Retention Do’s and Don’t’s
By Richard Hadden and Bill Catlette
One of the top questions we get from business leaders is "How can we do a better job of retaining our talented workers?"
Even in a tough economy with high national unemployment, several industries, and lots of companies are experiencing crippling turnover. And regardless of the job market, talented people won’t put up with a lousy workplace, dead-end jobs, or bosses who are jerks.
While far too many employers think, naively, that money is the answer, employees tell us that compensation is only one of several important factors they use to determine where to sell their labor.
We think that's because a person's need for compensation varies inversely with that person's "misery index". You can't possibly pay someone enough to be happy working in miserable conditions; but put them in a place they enjoy working, and suddenly the same salary seems much easier to live with.
It's interesting that companies known for being great places to work aren't necessarily those that pay the most. And yet, these same companies save millions of dollars a year in recruiting, training, unemployment insurance, and other direct turnover costs. They also make, according to a study we conducted, tons more money than competitors not known as employers of choice.
So, obviously, the first, and most fundamental "DO", for keeping great employees, is to create a great place to work. Toward that end, "DO" and "DON'T" the following:
DO:
1. Provide career development opportunities. One of the top reasons professionals leave their employers and seek work in a similar field is that they feel their employer has not provided sufficient opportunity for career development. In exit interviews, most of those who leave say their manager has never even discussed what development opportunities are available, let alone how they might pursue some of those opportunities. Some managers say they're afraid of investing too much in training, only to have their newly trained employees take those skills to another employer. They worry, "What if I train them and they leave?" That's a valid fear. What would scare me even more is "What if I don't and they stay?"
2. Before embarking on an expensive and dubious "Employee Retention Program", simply ask your employees what would make them more satisfied in their jobs. Duh. Most managers avoid this question, because they're afraid of what they'll hear. Talk to people individually and in groups. If you can get them to talk honestly with you, you might be surprised that what they want doesn't involve spending a lot of money.
3. Keep performance and hiring standards high. Start dealing with those "dogs that just won't hunt." Either coach them to acceptable performance levels, or help them find another job... preferably with a competitor. Abandoning performance standards often provides the first and most visible clue to your strong performers that they are no longer part of an elite, winning team. These folks, the ones you really want to retain, don't want to hang around with losers.
4. Create an environment that provides meaningful work. Take strident measures to broaden responsibility, authority, and yes, accountability. People want suitable challenges and the freedom to pursue them.
5. Give people a clear sense of purpose. Your people want to read mysteries, not live them. So make absolutely, positively sure they are getting timely, relevant, and truthful information about where the ship is headed, how it intends to get there, and what is required of everyone onboard.
6. Provide incentives based on productivity, profitability, and demonstration of the company's values. Don't just arbitrarily raise the ante. It's a game you can never win.
DON'T'S
1. Don't ignore the problem of rising turnover. An increase in your turnover rate signals a change in the internal environment, the external environment (the job market in your area), or both. Check it out.
2. Don't get into a bidding war to keep certain employees. This is one of the biggest mistakes employers make in trying to keep a talented individual. They never give retention any thought until a valued employee tenders a resignation. That's when they pull out the "corporate goodie bag" in a last minute effort to entice the person to stay.
I've been guilty of it myself. Once, I got wind of a critical employee's wandering eyes, and foolishly starting bidding against his prospective employer. I won, in the short run, but eventually (and inevitably) lost when my company could no longer match another rival's pocket depth.
Even if the person stays, a potentially destructive (not to mention expensive) practice has now been established. The following e-mail to Working Wounded author Bob Rosner makes the point: "If only my boss knew that I'd already turned down that other job offer before he gave me the big raise."
3. Don't throw "programs" at your people. Some companies, in a retention effort that runs a mile wide and an inch deep, think it's effective to adopt all the frilly little fad of the week programs. Somehow they can manage to have Friday afternoon beer busts, allow employees to bring their pets to work, "empower" their people by entrusting them with menu selections for the company picnic, and call everyone an "associate", but when it comes to taking serious steps to deal with managers who run roughshod over people, hiring enough people to actually serve their customers, or getting rid of ridiculous policies and procedures, their knees buckle.
Meaningful family-oriented policies can be a huge retaining factor, if a good proportion in your workforce values them. But we know of one local company that was known as a horrible, draconian workplace, a sweatshop, complete with 70-hour workweeks, destructive politics...and a wonderful child care center. The company was consumed by a more profitable one a couple of years ago.
I recently had dinner with the former CEO of a company with a national reputation for being a great place to work. He and his family had sold their very successful business the previous year. While the new owners had changed none of the "programs" (benefits, employee perks, and worker-friendly policies) the company had so skillfully developed over the years, employees said that after the buyout, the company just wasn't the same anymore.
None of the "programs" had changed, but something was missing.
Remember, money is not the big thing. The big thing is all the little things. When they're neglected, you can't possibly pay talented people to put up with conditions that make them miserable.
You're never going to retain 100% of your employees, and you probably wouldn't want to. But start by hiring the right ones to begin with, and then provide them with a reason to stay in this age of full employment - reasons that go far beyond money - and you'll keep your turnover cost down and help push profits up.
Please print the following attribution for this article: Bill Catlette and Richard Hadden, co-authors of Contented Cows Give Better Milk, help clients clobber the competition by having a focused, fired up, and capably led workforce. They deliver powerful conference keynotes and leadership training. They can be reached at 800-940-7006 (+1-904-720-0870 from outside North America) or www.ContentedCows.com.