The antidote to high turnover is talent relationship
management (TRM) - the process of attracting, selecting, caring,
training, developing, and keeping a workforce to perform their jobs
in an organization.
Talent relationship management has as its ultimate
goal creating a work environment that allows good employees to stay
as long as possible...allows mismatched employees to leave sooner
or find more compatible jobs elsewhere...and allows employees to
become more productive.
Although some employees may be more vulnerable than
others-a good IT engineer may get three to four job offers each
week-every employee contributes to the bottom line. Even a customer
service person in a laundromat or a server in a restaurant is a
key employee, especially if she makes each customer's experience
as pleasant and productive as possible. Her departure would definitely
impact her customers and the success of the business. So, while
you might want to invest many more dollars in strategies for high-priced,
high-profile, hard-to-replace executives, it is important to spend
time and money on everyone. In a tight job market, recruiters and
other employers feel no shame about shopping for good people inside
your organization. If someone offers a service that another company
wants, he or she is vulnerable.
No matter what kind of job your people work in, someone
is looking to steal them away. Don't blindly believe that your employees
are happy and content. Just because you are happy and content in
your job doesn't mean everyone who works for you is. Accept the
fact that 30 to 50 percent of your workforce is considering leaving
your job for another. They maybe perfectly happy with their job
and still think about leaving. 30 percent of the respondents to
my survey answered "yes" to the question, "Are you
presently considering leaving your job for another?" Another
six percent answered "maybe."
The first and foremost reason to practice TRM is cost.
Even a small effort can save plenty of money. Studies show that
at minimum, it costs $4,000-$7,000 to replace an hourly low-wage
employee and up to $40,000 to replace a mid-level, salaried employee.
One Silicon Valley company I know estimates that the cost of replacing
the average employee is $125,000. The Saratoga Institute and Hewitt
Associates estimate that the productivity cost of replacing employees
can cost between 1 to 2.5 times of the salary of the job opening.
The annual impact of multiple departures can be staggering.
The most effective strategy is prevention. Recruiting
and replacing your workforce is much more expensive. Spending most
of your time on recruiting is like having your house burn down instead
of purchasing a smoke detector-or having your lung removed instead
of quitting smoking. Prevention is always less expensive, and wiser,
especially when it comes to replacing top performers.
Consider the economic cost of replacing these key
individuals:
• Average engineer in Silicon Valley-$200K
• Engineer at Cisco-$250K
• Top microchip product development team leader-$29 million
• Airline Pilot who makes a mistake-??
In spite of the staggering cost of turnover, Development
Dimensions International says that 54 percent of businesses do not
have a formal retention program. On my survey, 61 percent of the
respondents gave their organizations a failing grade on the question,
"How would you rate the efforts of your company to retain good
people?"
Why don't these organizations have retention programs?
• Blind acceptance that certain jobs have high turnover
• Failure to accept responsibility for retaining good people
• Responsibility for retention seen as HR's alone - not management's
• Belief that a counteroffer can prevent losing a good employee
• Unaware how much turnover really costs the bottom line
• Feel it takes too much time
• No management accountability system.
Reasons to have a TRM program
• Improve company reputation
• Reduce turnover of critical employees
• Keep competitors from stealing your workers
• Positive word-of-mouth from existing employees
• Increase productivity
• Reduce costs and time spent replacing workers
• Simplify time and effort for managers
• Knowledge stays with the company
• Good companies attracts good people
• Remove the stigma of returning to your organization if other
job doesn't work out
To find out whether you need a TRM process, write
"yes" or "no" on a separate sheet of paper for
each statement.
1. I measure the jobs in my organization that have the highest turnover.
2. I conduct post-exit interviews 30 to 90 days after the employee
leaves the organization to find out the real reason they left.
3. I hold my managers accountable for turnover in their department.
4. I reward my managers for high retention in their department.
5. A part of every meeting is dedicated to staff retention and morale.
6. We have a good orientation program for new employees.
7. We go out of our way to communicate with our employees.
If you get more than two "no's" you need to get serious
about TRM.
Costs alone won't persuade you to invest in a retention
strategy. Consider the issue of productivity.
Productivity and retention go hand in hand. Improve one, and you
improve the other. Why?
Many traditional, hierarchical-based organizations
restrict the free exchange of ideas and discourage individual initiative
and motivation. After all, ideas and initiative create change-and
many systems simply don't want to. They protect themselves with
complex bureaucracy and unwieldy procedures that become obstacles
to productivity. Workers become slaves of the system. They end up
feeling blocked, unchallenged, and little more than robots waiting
for the next command.
Constant reorganizations, a stultifying routine, co-workers
with bad attitudes, micromanagement, suspicious management, no authority
to fix errors or implement ideas, people who play the "who
can stay latest" game-all these are impediments to productivity
as well as an incentive to leave. No one really wants to work-or
can-in this kind of environment!
Retention means nothing if workers merely take up
space. In a survey conducted by the Public Agenda Foundation in
New York, 50 percent of the respondents said they fail to put effort
into their job over and beyond what is required. Three out of four
people said they had the capability of becoming more effective than
they were.
In a high-retention work environment, employees can
become more effective. If you pay people well and provide good leadership
- create a sense of belonging and purpose and eliminate the frustration
of constant reorganization that drives people out the door - then
it's possible to transform average or even poor performers into
highly productive people.
In fact, while top performers are important, I think
it's a bad idea to focus exclusively on them. "A" students
may be top performers in school, but that doesn't necessarily mean
they are going to be successful, hold a job, and make good decisions.
If you invest in programs that improve the work environment
and raise the performance bar, you can help everyone become a top
performer. And performance is a prerequisite for building a productive,
competitive organization. Together, performance and productivity
are the gold standard of today's business climate. If your company
is not productive, it will be overwhelmed and perhaps eliminated
by a younger, more athletic company whose work environment does
promote productivity and performance for all.
Leadership is the most critical factor in determining
whether a company invests in creating a high-retention culture.
I called my company "Chart Your Course"
because I believe businesses, like sailing ships, need a captain
to keep them on course. It's up to the captain to keep his or her
eye on the destination and direct the crew to carefully trim the
sails for maximum performance, speed, and direction.
Leaders are more than just figureheads. In carrying out their responsibility
of setting the direction, speed and performance of the individuals
within a company, they are ever present: touching, motivating, talking,
and checking, barrier removing, training, preparing, breathing,
active, moving about, and creating change. Responsibility for setting
direction can't be delegated or left to a computer. Businesses that
have replaced their leaders with technicians, their brains with
a hard drive, are in for a rude surprise.
Leadership is responsible for everything the organization
does or fails to do. It's up to leaders to scan the horizon for
challenges, obstacles, and catalysts for change. They also need
to look below the surface for problems within the ship. Leadership
needs to listen to the crew below the deck, for they usually have
the best ideas and solutions.
It's also up to leaders to keep an organization from
becoming rigid, inflexible, and difficult to steer towards change.
Course changes happen quickly. Leaders need to encourage the kind
of communication that lets information flow freely to everyone on
all decks, so that everyone knows what to do if a sudden course
correction is required.
My nautical theme may sound old fashioned, but it's
very pertinent today. A strong, effective leader is a prerequisite
for a successful retention program. In fact, it can't be created
without one. When the captain is invested in TRM, the crew will
follow suit.
There are many ways to create a TRM culture. In my
years as a consultant, I have identified eight basic elements that
are essential. While each one, like the sails of a ship, can harness
the power of the wind, all eight are needed to transform an organization.
A sail that is not properly set or is missing hinders the ship and
causes frustration among the crewmembers.
1. A Clear Sense of Direction and Purpose
People want to be part of an organization that stands for something
and gives them personal fulfillment and meaning. When an organization
means something, people are willing to give more. That's why people
work for non-profit organizations, or spend their off-work hours
leading scout troops and building houses for Habitat for Humanity.
Employers can create meaning and purpose, align employees with its
mission, and nurture a more dedicated, productive, and profitable
crew.
2. Caring Management
Interpersonal skills are an essential element of the TRM culture.
People want to feel that management cares and is concerned for them
as individuals, yet poor "soft skills" are one of the
biggest factors that drive people away. Leaders must create an environment
that values relationships and people.
3. Flexible Benefits and Schedules Adapted
to the Needs of the Individual
In today's workplace, flexibility rules. One-size-fits-all approaches
to benefits have long since lost their effectiveness. Workers will
migrate to companies whose benefit packages and schedules help them
meet the demands of their lives, whether they are single parents,
adults who care for aging parents, older workers, younger workers,
part-time workers, and telecommuters.
4. Open Communication
In our technological age, people have a large appetite for information,
and they want it instantly. TRM workplaces place high priority on
delivering the right information to the right people at the right
time using the right methodology. Companies that leave employees
in the dark risk damaging morale and motivation-not to mention compromising
their ability to make a quick course change in the marketplace.
5. A Charged Work Environment
People want to enjoy their work. They shun boring, bureaucratic,
lifeless work environments. That's why high-retention workplaces
don't bother with the traditional ways of doing things. They find
new ways to make work mentally engaging and physically energizing.
They also ask for, listen to, and implement the ideas and suggestions
of those who work for them.
6. Performance Management
It is becoming increasing more difficult finding competent, motivated
workers who have good attitudes and work ethics. Because of this
knowing how to manage performance is much more important in creating
a TRM workplace. Performance management includes a series of tools,
techniques and processes that can help align an individual and his
or her behavior with the goals of the business enterprise.
7. Reward and Recognition
All humans need to feel appreciated. Reward and recognition programs
help meet that need. A positive workplace that rewards and recognizes
people builds higher productivity and loyalty and can create consequences
for desired behavior that leads to organizational success.
8. Training and Development
Today's workers want opportunity. They want to develop their skills
and potential and enhance their ability to contribute and succeed.
Training and development gives people greater control and ownership
over their jobs, making them more capable of taking care of customers
and creating better management-employee relationships.
An example of an organization that provides a holistic
work environment is SAS Institute Inc., located in North Carolina's
Research Triangle Park.
SAS resembles a college campus more than a software
development company. Everything from the baby grand piano in the
company cafeteria to the giant outdoor chess board gives clear indication
that this is a world apart. Fortune magazine lists it as one of
the "Top 100 Best Places to Work," and employees agree.
Turnover hovers around 3.7 percent and has never exceeded 5 percent
in its twenty years of existence. The national average for most
industries is 15-20%. Many employees have loyalty stronger than
any glue seen. One graphic designer routinely turns down job offers
from Silicon Valley for as much as 40 percent more money.
Many people say working at SAS is like working with
your family. Their 5,400 employees find a nurturing environment
and in some cases is the closest thing to a real family than many
people have experienced. The benefits and perks go beyond what most
businesses are willing to do for their employees including:
• Unlimited sick leave: There is no limit to how much sick
leave employees can use. Bob Goodnight, SAS President, PhD and billionaire
believes if you treat adults like adults they will act as adults.
Whether you are out sick for six days or six months it is not a
problem.
• On Site Daycare: For $250 a month, employees can place their
children in the day-care facility. Parents are encouraged to eat
lunch and dinner with their children. The company cafeteria is equipped
with highchairs.
• Free Family Healthcare: In lieu of health insurance SAS
staffs a medical clinic 24 hours a day for employees and their family
members. This saves the company $300,000 a year in health insurance
costs.
• Equal Pay for Equal Work: Many businesses run off good employees
because new hires are able to start making higher salaries than
the "old" employees. Not at SAS. If SAS has to hire new
employees and pay them more, all employees with the same skills
levels receive the same pay raise. The average salary is $50,000
a year.
• 35-Hour Workweeks: All employees work five seven-hour workdays.
Everything closes up at 5 p.m.
• Break Areas & Free Food: Each floor has its own break
area stocked with complimentary refreshments, including all the
M & M's employees can eat. SAS spends $45,000 annually on 22
tons of the little chocolate candies.
Loyalty can't be bought by benefits and perks, but
SAS appears to have created a workplace where employees know they
are cared for, trusted and treated like adults.
Gregory P. Smith's websites are www.ChartCourse.com
and www.HighRetention.com.
Reprinted from Brass
Ring
©2002 TABIC.
All rights reserved.
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