I haven’t seen many articles on “employee retention” in the past several years but as the economy recovers this will be a very hot topic that can cost your company a lot of talent and a loss of productivity. Additionally, the financial costs can be quite extensive as you replace or “try to replace” top talent. The US labor force has been through perhaps the greatest cutback since the great depression. Everywhere you look, homes are being lost and millions of qualified professionals are continuing to look for work. Over the past couple of years many companies have not been faced with losing top performers due to the supply/demand factors in the labor force. There are signs that this is beginning to change and the business world needs to ready.
What is the cost of losing top talent? According to several think tanks, total costs are easily 150% of the former employee’s annual compensation. In some positions such as management and sales…it could easily double. This takes into account a broad list of costs above and beyond the salary figures.
Consider some of the many additional costs that an organization absorbs when they lose qualified employees. Some of the “extra” Costs Due to a Person Leaving includes lost productivity, managerial time, and training, severance, lost customers as well as recruiting fees. Keep in mind the lost costs are not just related to the departing employee but affects many other employees of the firm as it relates to management, training, administrative etc…
So what's one of the biggest reasons people quit their jobs? "Perhaps the major reason is being dissatisfied with an immediate supervisor," says Linda Argote, a professor of organizational behavior at Tepper School of business In Pittsburgh. This was also noted in one of my earlier blogs (Humility). Since this is perhaps that biggest issue in retaining top quality people, we need to look at what can go wrong and more importantly how to fix it.
· Think about an earlier post on motivation. The causes that affect our actions are primarily from intrinsic and extrinsic factors. The Internal forces that shape our behaviors occurs when people are internally motivated to do something because it either brings them pleasure, they think it is important, or they feel that what they are learning is significant e.g. challenging work, recognition, responsibility
· External factors come into play when a employee is compelled to do something or act a certain way because of factors peripheral to him (like money, awards, trips etc, job security, salary and fringe benefits
Are you creating an environment that is open, challenging, rewarding and positive? Do you have a pulse on your business and your people? A few ideas to gain better harmony within your team:
· Get in touch with your tenured employees. Learn from them what keeps them with the organization. Ask questions such as: Why did you come to work here? Why have you stayed? Under what circumstances would you consider leaving? What are the strong points about management? What are their developmental areas? Once we have this insight, we can then begin to strengthen your employee-retention strategies.
· Develop your people. Let them know that you care and want to see them reach their goals. Speaking of goals, make sure they know that you are on the same team. A win/win situation! And give employees a clear path of advancement. Employees will become frustrated and may stop trying if they see no clear future for themselves at your company.
· Encourage open communications without any fear of retaliation. Hold regular meetings in which employees can offer ideas and ask questions. Have an open-door policy that encourages employees to speak frankly with their managers without fear of repercussion. You can use a white board and either be present or delegate someone from the group to facilitate the discussion. This way, the feedback that you get is anonymous and minimizes the fear of reprisal.
· Roll up your sleeves and get into the trenches. Require your management to have face time with their direct reports. Field Sales Management needs to spend time in the field coaching employees. Build on strengths and focus on no more than 1-2 development areas at a time. Upgrading your best talent into top tier performance and elevating others on a step by step basis. Setting the standards of performance and constantly recognizing your people for what they bring to the table.
· Tying your team’s journey into the overall organizations goals, mission will help the team feel connected each other and the various departments within the organization.
Obviously we need to make sure that we are taking care of the basics as well. We will want to ensure that we:
1. Offer a competitive benefits package that fits your employees’ needs. Providing benefits that are comparable or superior to other organizations is essential in retaining employees. But other perks, such as flextime and the option of telecommuting if practical go a long way to show employees you are willing to accommodate their outside lives.
2. Use contests and incentives to help keep workers motivated and feeling rewarded. [we will discuss some ideas on this in an upcoming blog].
3. Offer rewards for longevity. Consider offering stock options or other financial awards for employees who meet performance goals and stay for a predetermined time period, say, three, five, 15, 20, 25 etc…If possible, “honor” those individuals at a national event in front of their colleagues. Making it special so that your employees will strive for that special recognition. The “award” pin for 3 years costs little but when you “amp” it up with a story outlining those three years and the value that the individual has brought to the company….i8t can be priceless!
4. Promote communications across departments and encourage transparency.
Resources
1. "Managing Knowledge in Organizations: Creating, Retaining and Transferring Knowledge"
in Argote, L., McEvily, B., & Reagans, R. (ed.) Management Science, 49, (2003).
in Argote, L., McEvily, B., & Reagans, R. (ed.) Management Science, 49, (2003).
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