Human resources are the life-blood of any organization. Even though most of the
organizations are now a days, found to be technology driven, yet human resources are
required to run the technology. They are the most vital and dynamic resources of any
organization. With all round development in each and every area of the economy, there is
stiff competition in the market. With this development and competition, there are lots and lots
of avenues and opportunities available in the hands of the human resources. The biggest
challenge that organizations are facing today is not only managing these resources but also
Securing and retaining skilled employees plays an important role for any organization,
because employees’ knowledge and skills are central to companies’ ability to be
economically competitive. Besides, continuously satisfying the employees is another
challenge that the employers are facing today. Keeping into account the importance and
sensitivity of the issue of retention to any organization, the present study tries to review the
various available literature and research work on employee retention and the factors affecting
employee retention and job satisfaction among the employees.
Employee Retention is a method of taking measures to encourage workers to stay in
the company for the highest possible time duration. It is a process in which the workers are
motivated to stay with the completion of the particular project or long term. Employee
Retention technique is beneficial for the company as well as the worker. And it is up to the
HR department stuff.
Employee retention refers to the ability of an organization to retain its employees.
Employee retention can be represented by a simple statistic (for example, a retention rate of
80% usually indicates that an organization kept 80% of its employees in a given period).
However, many consider employee retention as relating to the efforts by which employers
attempt to retain employees in their workforce. In this sense, retention becomes the strategies
rather than the outcome.
Long-term health and success of any organization depends upon the retention of key
employees. To a great extent customer satisfaction, organizational performance in terms of
increased sales, satisfied colleagues and reporting staff, effective succession planning etc., is
dependent upon the ability to retain the best employees in any organization. Encouraging
employees to remain in the organization for a long period of time can be termed as employee
retention. It is a process in which the employees are encouraged to remain with the
organization for the maximum period of time or until the completion of the project.
A distinction should be drawn between low-performing employees and top
performers, and efforts to retain employees should be targeted at valuable, contributing
employees. Employee turnover is a symptom of deeper issues that have not been resolved,
which may include low employee morale, absence of a clear career path, lack of recognition,
poor employee-manager relationships or many other issues. A lack of satisfaction and
commitment to the organization can also cause an employee to withdraw and begin looking
for other opportunities. Pay does not always play as large a role in inducing turnover as is
In a business setting, the goal of employers is usually to decrease employee turnover, thereby
decreasing training costs, recruitment costs and loss of talent and organizational knowledge.
By implementing lessons learned from key organizational behavior concepts, employers can
improve retention rates and decrease the associated costs of high turnover. However, this isn't
always the case. Employers can seek "positive turnover" whereby they aim to maintain only
those employees whom they consider to be high performers.
An effort by a business to maintain a working environment which supports current
staff in remaining with the company. Many employee retention policies are aimed at
addressing the various needs of employees to enhance their job satisfaction and reduce the
substantial costs involved in hiring and training new staff.
DEFINITION OF TERMS
Benefits: Health care, vacation hours, sick hours, bonuses that may be part of the
employment of the position.
Communication: The internal process of passing information or data pertaining to
the work environment.
Employee Retention: Refers to the ability of an organization to retain its employees.
Industry Leaders: Management level positions within the hospitality industry.
Native American Casino: A casino business owned and operated by a federally
recognized tribe of the United States of America.
Nature of Work: Relates to all duties and tasks of the position for employment.
Promotion: The increased value of wages for a position of employment.
Performance Evaluation: Documentation during a time period on the progress or
lack of progress for a position of employment.
Wages: The hourly pay scale for an employee of a business.
Employee retention refers to the various policies and practices which let the employees stick
to an organization for a longer period of time. Every organization invests time and money to
groom a new joinee, make him a corporate ready material and bring him at par with the
existing employees. The organization is completely at loss when the employees leave their
job once they are fully trained. Employee retention takes into account the various measures
taken so that an individual stays in an organization for the maximum period of time.
Employee retention refers to the ability of an organization to retain its employees.
Employee retention can be represented by a simple statistic (for example, a retention rate of
80% usually indicates that an organization kept 80% of its employees in a given period).
IMPORTANCE OF THE STUDY
Employee Retention represents the methods employed by the management to help the
workers stay with the company for so many years. Worker retention techniques go a long
way in encouraging the workers so that they adhere to the company for the long stay and play
their employee role successfully. Honest initiatives must be taken to make sure learning and
enjoy their work for the employees in their current projects.
A company spends lots of money in developing an individual person and makes him
ready to work great and understand the corporate working culture.
When an employee resigns his job from present company, it is more likely that he/she
may join the competitors firm.
If an employee working in an organization for many years, they can understand the
particular firm’s guidelines, so thus they can adjust better.
It is an essential for the company to maintain the good working employee and his
OBJECTIVES OF THE STUDY
This study on review of literature on retention initiatives undertakes the following objectives:
I. To find out the various research works that have been done in the area of employee
II. To highlight the various factors which affect retention initiatives in an
The study is descriptive in nature and only secondary data has been used in it. The secondary
data consist of the various research journals.
EVOLUTION OF RETENTION
Employee retention may seem a relatively recent concept but actually it goes back over 20
years when the term first appeared in an academic journal in 1990. Prior to that, during the
70’s and 80’s, HR’s (or as it was then ‘personnel’s’) focus was on employee satisfaction. But
this had little or no connection with performance and was more about the employee than the
organisation or the employee’s relationship with it.
But then things started to change. Increased global competition and the from a manufacturing
economy to a service one meant employers needed to be more flexible, leaner and
competitive. Traditional industries closed or were severely cut back and employees learned
the hard way that there were no jobs for life, that to progress in their careers they too needed
to be more flexible and move to where the opportunities were.
And that’s what they did. The old contract of a job for life with a nice fat pension at the end
of it was broken. People were free – encouraged even – to move from job to job, selling their
skills and at the same time acquiring new ones courtesy of the new employer. Loyalty didn’t
come into it, or if it did it was more fleeting, more short term. So it benefited the employee
but employers soon realised that actually they were losing people they didn’t want to lose. It
was costing them money and affecting their ability to compete effectively.
THE RISE OF RETENTION
It is at this point in the story - during the noughties - that the concept of engagement matured.
Key to this was a paper published by the Institute of Employment Studies (IES) in 1990
‘From People to Profits, the HR link to the service-profit chain’ which showed how employee
attitudes and behaviour could improve customer retention and consequently sales
performance. This clear link between engagement and performance, supported by extensive
research, helped establish engagement’s importance to both HR and business performance.
The fact that the UK had become a service-based economy made the report’s findings even
more relevant and increased the focus on employees and their interaction with customers. For
service-based businesses, the old mantra that ‘staff are your greatest asset’ became ‘staff are
your only asset.’ This led to greater incentives to invest in staff as the returns were seen as
greater employee commitment, motivation, productivity and ultimately profit (or, in the case
of not-for-profits, achieving strategic objectives).
The business case for engagement was supported by another seminal study in 2002 which
also showed the link between engaged employees and profit. What had back in 1990 been
confined to predominantly academic circles was now being discussed and implemented at
practitioner level. Organisations began to see the potential that engagement had to positively
affect a whole raft of HR and business measures including employee retention, absenteeism
and turnover; sales; profitability and customer service/satisfaction scores.
HR or business function?
Engagement has also grown from something that was seen as being owned or ‘done’ by HR
to something that needs to be owned and driven by the CEO and senior leadership team. In
fact to be truly effective engagement needs to be owned by everybody; it needs to be part of
an organisation’s DNA. Indeed, engagement measures are often aligned to managers’
performance through KPIs – Key Performance Indicators. Engagement’s importance to a
business and its subtle move of ownership away from the HR department (who still
ultimately have responsibility for delivering the policies around it) has seen the rise not only
of roles like Head or Director of Engagement but engagement’s place around the Board table.
Engagement and the public sector
Engagement is just as relevant to the public sector. Indeed, the impact of overworked,
stressed and demotivated staff is far more serious in the health sector than in a supermarket or
call centre. A study by Aston University in 2011 showed that patient mortality rates were
approximately 2.5% lower in health trusts with high engagement levels than in those with
medium engagement levels. So next time you have to choose a hospital for treatment, ask
how engaged the staff are, not how experienced the surgeon is…
So, what is ‘engagement’?
Despite all the research, the jury is still out on a universally agreed definition. These have
evolved as our knowledge and experience of engagement has evolved but there is a strong
consensus as to what it is and isn’t.
Engagement boils down to an employee’s passion and commitment to the organisation and
their job and the drive to deliver the organisation’s objectives, going the extra mile to do so.
Engagement is not transactional - it’s about emotion, behaviours and relationships; there’s a
connect between the employee and the organisation. Engaged employees have pride in their
job and the organisation and are more likely to recommend the organisation, its products and
services to others. One of the key drivers of engagement is trust which applies at a number of
Systems & processes
THE FUTURE OF RETENTION
Retention is now firmly embedded in the collective consciousness of the HR community as
seen in the proliferation of conferences, events and LinkedIn groups dedicated to
engagement, the inclusion of a module on employee engagement in the CIPD diploma and
the large number of vendors and service provides offering surveys, consultancy, research and
training. lts inroads into the wider business community was aided by the launch of the
government-backed movement, Engage for Success, in 2011 which also nailed the evidence
for the financial benefits of engagement. Its status as ‘mainstream’ is also reflected in the
increase in searches on ‘employee engagement’ as reported by Google Trends which has
shown a continuous rise since 2006.
Google trends – the rise of searches for ‘employee engagement’
As for the future of engagement, that now seems to be more about sustaining it rather than
finding the next hot HR theory about how to attract, motivate and retain good employees. As
demographics change (Baby Boomers, Generation X , Generation Y/Millenials and now
Generation G) engagement gives organisations the tools to provide the kind of workplace that
will attract, retain and motivate its changing workforce. Engagement has reached the point in
its growth where it requires clarity and consistency of definition, delivery and measurement
and movements like the Engagement Taskforce will be instrumental in achieving this. It
would seem that there are very few businesses which are against engagement, the problem is
more about doing something about it, particularly those in the SME sector which don’t have
the same resources and infrastructure as larger organisations. The taskforce is keen to bring
the growing importance of employee engagement to investors who are starting to look at the
people side of financial metrics such as employee turnover and absence rates.
Of all the theories about what engagement is and what drives it, there seems to be agreement
(Great Place to Work®, Engage for Success) that trust is one of the key drivers. We believe
that trust is and will continue to be critical to both driving and sustaining engagement.
INDIAN SCENIRIO IN EMPLOYEE RETENTION
EMPLOYEE RETENTION STRATEGIES
For an organization to do well and earn profits it is essential that the high potential
employees stick to it for a longer duration and contribute effectively. The employees who
spend a considerable amount of time tend to be loyal and committed towards the management
and always decide in favour of the organization. When you meet someone, there is hardly any
attachment in the beginning, but as the friendship matures, a sense of loyalty and trust
develops. In the same way, when an individual spends a good amount of time in an
organization, he gets emotionally bonded to it and strives hard for furthering the brand image
of the organization.
The management can’t completely put a full stop to the process of employees quitting their
jobs but can control it to a large extent.
Let us go through some strategies to retain an individual:
An employee looks for a change when his job becomes monotonous and does not
offer anything new. It is essential for everyone to enjoy whatever he does. The
responsibilities must be delegated according to the individual’s specialization and
interests. It is the responsibility of the team leader to assign challenging work to his
team members for them to enjoy work and do not treat it as a burden. Performance
reviews are important to find out whether the employees are really happy with their
work or not.
Constant disputes among employees encourage them to go for a change. Conflicts
must be avoided to maintain the decorum of the place and avoid spreading
negativity around. Promote activities which bring the employees closer. Organize
outdoor picnics, informal get together for the employees to know each other better
and strengthen the bond among themselves. Let them make friends at the workplace
whom they can really trust. Friendship among employees is one strong factor which
helps to retain employees. Individuals who have reliable friends at the workplace
are reluctant to move on for the sake of friendship. No one likes to leave an
organization where he gets mental peace. It is essential to have a cordial
environment at the workplace.
The human resource department must ensure that it is hiring the right candidate.
Frustration crops up whenever there is a mismatch. A finance professional if is
hired for a marketing profile would definitely end up being frustrated and look for a
change. The right candidate must be hired for the right profile. While recruiting a
new candidate, one should also check his track record. An individual who has
changed his previous jobs frequently would also not stick to the present one and
thus should not be hired.
Employee recognition is one of the most important factors which go a long way in
retaining employees. Nothing works better than appreciating the employees. Their
hard work must be acknowledged. Monetary benefits such as incentives, perks, cash
prize also motivate the employees to a large extent and they prefer sticking to the
organization. The performers must have an upper edge and should get a special
treatment from the management.
Performance appraisals are also important for an employee to stay motivated and
avoid looking for a change. The salary hike should be directly proportional to the
hard work put by the employees. Partiality must be avoided as it demotivates the
talented ones and prompt them to look for a better opportunity.
The salary of the employees must be discussed at the time of the interview. The
components of the salary must be transparent and thoroughly discussed with the
individuals at the time of joining to avoid confusions later. The individuals should
be made to join only when the salary as well as other terms and conditions are
acceptable to them.
The company’s rules and regulations should be made to benefit the employees. They
should be employee friendly. Allow them to take a leave on their birthdays or come
a little late once or twice in a month. It is important for the management to
understand the employees to gain their trust and confidence. The consistent
performers must also have a say in the company’s decisions for them to feel
Why do Employees Leave ?
Research says that most of the employees leave an organization out of frustration and
constant friction with their superiors or other team members. In some cases low salary, lack
of growth prospects and motivation compel an employee to look for a change. The
management must try its level best to retain those employees who are really important for the
system and are known to be effective contributors.
It is the responsibility of the line managers as well as the management to ensure that the
employees are satisfied with their roles and responsibilities and the job is offering them a new
challenge and learning every day.
Let us understand the concept of employee retention with the help of an example:
Misha was a talented employee who delivered her best and completed all her work within the
desired time frame. Her work lacked errors and was always found to be innovative and
thought provoking. She never interfered in anybody else’s work and stayed away from
unnecessary gossips and rumours. She avoided loitering around at the workplace, was serious
about her work and no doubts her performance was always appreciable. Greg, her immediate
boss never really liked Misha and considered her as his biggest threat at the workplace. He
left no stone unturned to insult and demotivate Misha. Soon, Misha got fed up with Greg and
decided to move on.
Situation 1 - The HR did not make any efforts to retain Misha and accepted her resignation.
Situation 2 - The HR immediately intervened and discussed the several issues which
prompted Misha to think for a change. They tried their level best to convince Misha and even
appointed a new boss to make the things better for her.
Situation 1 would most likely leave the organization in the lurch. It is not easy to find an
employee who gels well with the system and understands the work. Hiring an employee,
training him and making him fit to work in an organization incur huge costs and thus sincere
efforts must be made to retain the employee. Every problem has a solution and the
management must probe into the exact reasons of an employee’s displeasure. Employees
sticking to an organization for a longer time tend to know the organization better and develop
a feeling of attachment towards it. The employees who stay for a longer duration are familiar
with the company policies, guidelines as well as rules and regulations and thus can contribute
more effectively than individuals who come and go.
Employee retention techniques go a long way in motivating the employees for them to enjoy
their work and avoid changing jobs frequently.
A BALANCE BETWEEN HIRING AND RETENTION IS KEY TO HR
Hiring employees is just a start to creating a strong work force. Next, you have to keep them.
Retaining employees is an essential part of both business productivity and workforce
optimization. The issue of employee retention has surfaced as a key concern in almost all the
organizations having access to the same technology and systems, where it’s the human capital
that creates the difference in shaping the future of an organization.
Retaining the best employees in an organization ensures an organization’s improved
productivity as well as reduced costs. Employee turnover costs can be staggering for an
organization. It costs a huge amount of money when all costs involved in recruiting,
interviewing, hiring, training, reduced productivity etc., are considered. Also the replacement
costs amount to 30-50% of the annual salary of entry-level employees, 150% of middle level
employees, and up to 400% for specialized, high level employees.
Consider the real “total cost” of losing an employee:
Cost of hiring involves advertising, interviewing, screening, hiring, etc
Cost of on boarding a new person which includes training (both on the job and off the
Lost productivity where a new person may take 1-2 years to reach the productivity of
an existing person
Customer service and errors when new employees take longer and are often less adept
at solving problems
Cultural impact (whenever someone leaves others take time to ask “why?”).
A comprehensive people strategy is not at all comprehensive if it doesn’t include a proven
retention strategy for holding on to employees they have worked hard to recruit into the
company. That may sound logical, but many, if not most, small businesses overlook this
critical component in their human resources program.
The problem with most employee retention plans is they focus too much on compensation
rates, benefits, and short-term perks. It’s not that these factors are unimportant; they’re very
important. In fact, most top choice employers typically offer better pay and benefits than their
competitors. However, it is often discovered in exit-interview results, that the majority of
employees voluntarily leave their jobs for other reasons like misalignment of mutual
expectations, person-job mismatch, insufficient coaching and feedback, perception of poor
career-advancement prospects, work-life imbalance, etc
Retention is maximized in a company by creating a “win-win” situation between
management and employees, where the needs of the employee are met to the greatest extent
possible without sacrificing or losing sight of the needs and goals of the company. If a
company loses a critical employee, it is a safe bet that other people in the company are
looking out as well. So here are some tips for retaining great employees which an
organization can follow:
Communicate goals, roles and responsibilities so people know what is expected and
feel like part of the “in-crowd.”
Simply recognize hard work and celebrate the success. It can be as simple as a
handwritten thank you note or a small token of appreciation.
Engage and employ the special talents of each individual.
Involve employees in decisions that affect their jobs and the overall direction of the
company whenever possible.
Provide opportunities within the company for cross-training and career progression.
Conducting “stay” interviews. In such kind of interviews questions can be asked
like: Why did you come to work here? Why have you stayed? What would make you
leave? And what are your nonnegotiable issues? What about your managers? What
would you change or improve?
Establish a culture that encourages employees to speak freely in a respectful and
Demonstrate loyalty to your employees, as a result of which they’ll reciprocate with
commitment and loyalty to your business
People want to work for a winner. Identify and inform your employees about your
unique competitive advantage so that they are proud to work for you other than going
on your competitor’s side
Offer some small perks, stock option plans, etc along with a competitive benefits
package that fits your employees’ needs.
HR’s role today is no longer limited to a ‘facilitative role’ or ‘policy administration’ but it has
to play the role of a ‘business partner’ and share the responsibility for overall business results.
It needs to offer best solutions in the area of attracting and retaining talent, leadership
development, talent management, building a performance culture, rewarding high performers
disproportionately and, above all, driving the right culture and values.
And therefore, “Retention” may be no more than a symptom, but it’s something organizations
should take seriously. In today’s heating economy and rapid shift in demographics, they have
to compete for talent regardless of their industry and so have to make such a kind of retention
model where they have the best talent to take them where they want their mission and vision
ROLE OF MOTIVATION IN EMPLOYEE RETENTION
Employee retention involves various steps taken to retain an employee who wishes to
move on. An employee must find his job challenging and as per his interest to excel at work
and stay with the organization for a longer period of time. The management plays an
important role in retaining the talented employees who are familiar with the working
conditions of the organization and thus perform better than the employees who just come and
Motivation plays an important role in employee satisfaction and eventually employee
Nothing works better than motivation. Motivation acts as a catalyst to an individual’s
success. The team leaders and the managers must constantly motivate the employees to
extract the best out of them. If an employee has performed exceptionally well, do appreciate
him. Simple words like “Well done”,“Bravo”,“Good”,“Keep it up” actually go a long way in
motivating the employees. The top performers must be in the limelight. The employees must
feel indispensable for the organization. It is essential for the employees to be loyal towards
their organization to deliver their level best.
Does anyone spoil his personal belongings? No. The reason being we are concerned
about our own stuff. In the same way a sense of belonging at workplace is important for
better output. Ownership of work only comes through motivation. Ask the team members to
buck up so that they perform well every time and meet the expectations of the management.
The superiors should send motivational emails to their team once in a week. Display
inspirational posters, photographs on the notice board for the employees to read and stay
motivated. It is natural for an individual to feel low sometimes, but the superiors must ensure
to boost their morale and bring them back on track. No individual should be neglected or
criticized. This demotivates them. If they fail to perform once, motivate them and give them
Organize various activities and events at the workplace. Ask each one to take charge
of something or the other. Engage the employees in productive tasks necessary for their
overall development. The management must show its care and concern for all the staff
members. The employees must feel secure at the workplace for them to stay motivated.
Whenever any company policy is to be formulated, the opinion of each and every
employee should be taken into consideration.
Invite all of them on a common platform and ask for their suggestions as well.
Freedom of expression is must. Every employee must have a say in the organization’s
guidelines as they are made only to benefit them.
Incentives, perks, cash prizes are a good way to motivate the employees. The
employees who have performed well consistently should be felicitated in front of all the staff
members as well as the management. Give them trophies or badges to flaunt. Ask the
audience to give a loud applause to the employees who have performed well. This is a good
way to motivate the employees for them to remain happy and work with dedication for a
longer duration. Others who have not performed up to the mark also gear up for future.
The names of the top performers must be put on the company’s main notice board or
bulletin board for everyone to see.
Appraisals are also an important way to motivate the employees. The salaries of the
performers must be appraised at regular intervals- an effective way to retain the employees.
Career growth is an important way to retain the talented employees. Give them power to take
some decisions on their own but the management must have a close watch on them so that
they do not misuse their power.
Without motivation, it is not fair to expect the best out of the employees. No individual likes
to leave an organization where he is being treated well.
ROLE OF HR IN EMPLOYEE RETENTION
An organization can’t survive if the top performers quit. It needs employees who are loyal
and work hard with full dedication to achieve the organization’s objective. It is essential for
the management to retain its valuable employees who think in favour of the organization and
contribute their level best. An employee who spends a longer duration at any particular
organization is familiar with the rules, guidelines and policies of the organization and thus
can adjust better.
The Human Resource team plays an important role in employee retention. Let us find out
their role in the same:
Whenever an employee resigns from his current assignments, it is the responsibility of
the HR to intervene immediately to find out the reasons which prompted the
employee to resign. No one leaves an organization without a reason. There has to be
one and the human resource team must probe into it. There can be innumerable
reasons for an employee to leave his current job. The major ones being conflict with
the superiors, lesser salary, lack of growth, negative ambience and so on.
It is the duty of the HR to sit with the employee and discuss the various issues face to
face. Understand his problems and listen to his side of the story as well. Remember
the HR should not focus on conducting exit interviews, rather more emphasis
should be laid on retaining the employees.
1. Try to provide a solution to his problem. Hiring is a tedious process and it is
really very difficult to recruit the right candidate and train him once again.
Do check the track record of the employee who wishes to move on. It is
really essential for the management to retain those employees who have the
potential and are really indispensable for the organization. If they leave and
join the competitors; the organization would be at loss. If one feels that the
employee is not very happy with his team leader, try to shift him to a new
team. If the employee feels his salary is not justified, try to give him a hike
but make sure he is worth it and you don’t end up upsetting others.
The HR person must ensure that he is recruiting the right employee who actually fits
into the role. A right person doing the wrong job would never find his job
interesting and certainly look for a change. Make sure every individual has been
assigned responsibilities according to his specialization and interest. The employees
must be clear with their KRAs from the very beginning. Every individual works for
money and the HR must quote a justified salary acceptable to the other person.
Don’t compel anyone to join at a lesser salary. He might join at that moment but
would most likely quit after sometime. The hike should be on the present salary and
must match the market trends and the expectations of the individual.
The human resource department must conduct motivational activities at the
workplace. Organize various internal as well as external trainings which help the
employees to learn something extra apart from their routine work. Make them
participate in extracurricular activities important for their overall development.
Encourage them to interact with each other so that the comfort level increases.
The HR must launch various incentive schemes for the top performers to motivate
them. This way the employees feel important for the organization and strive hard to
perform even better the next time. The employees who show promise should be
awarded with cash prizes, lucrative perks and certificates to make the individual
stand apart from the crowd. Send a mail wishing the employees on their birthdays
or congratulating them when they perform exceptionally well or come out with
something innovative. Arrange a small bouquet for them as a gift from the
organization’s side. This way the employees feel attached to the organization and
are reluctant to look for a change. A friendly atmosphere is essential for the
employees to feel safe and secure. Make them participate in various management
Performance reviews are a must. The HR along with the respective team leaders must
monitor their team member’s performance to ensure whether they are enjoying the
work or not. The employees look for a change only when their job becomes
monotonous and does not offer any growth or learning. Job rotation can be one of
the effective ways to retain employees.
The HR professional must try his level best to motivate the employees, make them feel
special in the organization so that they do not look for a change.
EMPLOYEE RETENTION: HOW TO DO THINGS BETTER
Employee Retention: How to do things better. We all know that it is expensive to replace
employees. How do we keep our employees in our respective companies?
The typical employment tenure is now less than five years. What are people looking for in a
new engagement and why are they disheartened with their current employer. While everyone
enjoys a bump in their base pay, more people are putting other measurements above just
dollars and cents.
In a Forbes study, they cite results from executive advisory firm CEB’s quarterly Global
Labor Market research in 2012, involving 50,000 employees. The number one thing
employees are looking for in newjobs? Stability. CEB reps say this signals a change from
wanting to work for the “next big thing” to work for a more mature, established company—a
business with a plan. Here are the top 5 reasons why employees leave their perch.
I think that the above list could also be re-arranged depending on the age of the worker.
There are things more important to a working parent than there may be with a person whose
kids are grown and gone (or at least grown).
We should all strive to create a corporate culture that resonates not only with our employees
but with the industry that we are serving. This will help with the retention and voluntary
attrition rates within our organizations. It will also help with your brand recognition within
the industry to drive more candidates into your recruitment pool as opportunities arise.
Hire for the company – not for the engagement: One of the biggest mistakes that companies
make is that they hire an individual based on the needs of the contract. What we should be
doing is recruiting and hiring people for the betterment of the company. What is good for
the individual contracts or projects will derive from this practice. A lot of companies will
hire an individual based on the needs of the project. While this solves the short term
problem, the contract eventually ends and you now have to figure out what to do with the
employee. If you are hiring an individual for the contributions that they can make for the
company, the contract will end, but you will have their next assignment ready for them when
they roll off of the engagement.
Move Business Development to the Left: While it seems to be common sense, there are
several organizations who are responding to “Just In Time” procurements. Meaning, you see
a contract announcement being let on your favourite portal and you put in a response and
hope for the best. If you spend some time researching organizations and establishing
contacts within the procuring agency you will have a better PWIN. Get to know your
potential clients and their challenges so you are better prepared to provide them with a
solution. This activity will help you provide a stable pipeline of business within your
organization and a means to reallocate under-utilized resources.
How much is that career in the window? Be prepared to compensate your employees at fair
and equitable rates within your company. If you are paying JAVA developers less than the
market rate the quality of your deliverables will decline and your chances for winning follow
on work or even new work at jeopardy. By providing your employees fair pay and also a
means to move up the ladder within the company will keep them engaged and interested in
the solutions you are providing to your clients.
Employees are People 1st and Resources 2nd: Follow the Golden Rule… Do unto others as
you would like them to do unto you. Whether you are dealing with a documentation
specialist with 2 yrs of experience or a solutions architect with 22 years of experience,
everyone just wants a little R-E-S-P-E-C-T. Be considerate of peoples time and schedule
meetings that make effective use of their time. Make sure you show appreciation for their
work on a regular basis. Everyone likes to have some positive reinforcement from all levels
of management to reaffirm that they are a valued member of the team.
HealthCare and Benefits: HealthCare and other benefits are also a factor in providing our
employees a stable environment to thrive in. You may find depending on the demographic
of the employee that this may rank higher with certain demographics than others. But at the
end of the day – having Personal Time Off (PTO) and adequate and affordable Healthcare
options available to your employees is an absolute necessity.
Work-Life Balance: How many forty hours weeks have you worked this year? If the answer
is “I only work 40 hour weeks”, you are one of the lucky ones. I cannot remember the last
forty hour week I have worked. There are always late client meetings, development sprints
that need to be handled, or other operational issues within a project or corporate environment
that makes it a necessity to work more than the “standard” 40 hour work week. Whether you
are working 45 or 55 hours a week, we as managers need to be sure that our employees are
getting the appropriate work-life balance. People will only work so many 65 hour weeks
before they get burned out and start looking for a less stressful engagement. While above
normal burns are sometimes necessary we don’t want to make them the norm
STRATEGIES FOR ENGAGEMENT AND RETENTION
In this uncertain economy it is important that we understand the historical engagement
and retention trends that paint who we are, the existing trends that mold our behavior, and the
expected trends of the future that shape our plans. Settling for complacency within our
workforce should no longer be an option.
TalentKeepers’ annual Talent Engagement & Retention Trends 2012 survey, including
results from 430 organizations, provides us a comprehensive overview of today’s employee
talent, engagement, and retention trends.
The overwhelming majority, 81 percent of organizations agree (33 percent strongly agree, 30
percent agree and, 18 percent slightly agree) employee engagement is a strategic priority, so
we challenge organizations everywhere to push employee engagement to the next level.
Employee engagement is your employees' ability and willingness to contribute to
organizational success, especially their willingness to give "discretionary effort", going
beyond what is typically required in their position to make the organization successful. This
can be accomplished through four main drivers of engagement:
3. job/career satisfaction
4. a high performing organization.
TalentKeepers’ research and client results show that higher levels of employee engagement
are linked to employee commitment, a high performing workforce, satisfied and loyal
customers, and a productive and profitable organization.
Figure 1: Engaged Workforce Model
When considering the factors that are impacted by lack of engagement, we typically think of
the people factors like lowered employee morale and more stress. Because disengagement
and attrition directly align with organizational effectiveness, these can also have a great
impact on operational factors such as lost productivity, which was cited by 66 percent of
organizations surveyed and lost organizational knowledge affecting 54 percent of
organization surveyed. The operational costs associated with disengaged employees often far
exceed the costs of turnover.
Strategies for Engagement and Retention
Push employee engagement and retention to the next level by implementing a systematic
Begin with senior leadership engagement. Nearly half (48 percent) of organizations surveyed
reported that diminished trust and loyalty has eroded employee engagement over the past
year. Of the organizations with diminished trust and loyalty, the largest decrease has been
between employees and senior managers. Senior leaders need to “keep employees in the
know” as much as possible, they need to be visible, share the organization’s vision, breed
openness for employees to communicate about concerns and suggestions, and they need to
produce a culture of appreciation and recognition.
Since starting work as a part time employee, at a supermarket at sixteen, I have worked in a
number of businesses, sections and work groups. As a result I have experienced a range of
working environments where morale has ranged from high to low and turnover has varied
just as much.
For years now I have looked at companies such as Virgin where, from an external
perspective, there is a high level of morale and low turnover. Over the same timeframe I have
also spoken with staff who have worked for companies where the exact opposite is true.
As I so often do, I began to wonder what causes the difference, which led me to developing
the metric at the beginning of this post. Now, nothing as compact as this table can capture all
the issues, but I hope it can bring clarification.
EMPLOYEE RETENTION NOW A BIG ISSUE: WHY THE TIDE HAS
What does Retention Mean?
Nearly all companies measure turnover. In some industries (retail, customer service,
hospitality) turnover rates of 30-40% are common and sometimes even accepted. I had a
conversation with one HR manager who told me "we design our organization around high-
turnover: we make sure jobs are easy to learn so we can rapidly assimilate new people."
While this may be a reality in many companies, our research shows that it's not a sound
strategy. Regardless of the role they play, tenured employees drive far greater value than
those who are "cycling through" the business.
Many studies show that the total cost of losing an employee can range from tens of thousands
of dollars to 1.5-2X annual salary.
Consider the real "total cost" of losing an employee:
Cost of hiring a new person (advertising, interviewing, screening, hiring)
Cost of on boarding a new person (training, management time)
Lost productivity (a new person may take 1-2 years to reach the productivity of an
Lost engagement (other employees who see high turnover disengage and lose
Customer service and errors (new employees take longer and are often less adept at
solving problems). In healthcare this may result in much higher error rates, illness, and
other very expensive costs (which are not seen by HR)
Training cost (over 2-3 years you likely invest 10-20% of an employee's salary or more
in training, that is gone)
Cultural impact (whenever someone leaves others take time to ask "why?").
And most importantly of all, we have to remember that people are what we call an
"appreciating asset." The longer we stay with an organization the more productive we get -
we learn the systems, we learn the products, and we learn how to work together.The
Economic Value of Employees over Time
Consider the following simple chart. It simply shows that initially most employees are a
"cost" to the organization, and that over time, with the right talent practices, they become
more and more valuable. Our job in HR is to attract the "right people" and move them up this
curve as rapidly and effectively as possible.
ECONOMIC VALUE OF AN EMPLOYEE TO THE ORGANIZATION OVER TIME.
Obviously for us as employees, we see this same effect. Early in our days in a new job we
feel somewhat unproductive and often search for ways to add more value. But in the right
environment (on boarding, coaching, training, teamwork) we rapidly "find our place" and
start to add more and more value.
A New Model to Drive Retention: Your Talent "System"
Right now retention has become an important topic for many reasons. The economy is
picking up; young employees want more career growth; the work environment in companies
has not kept up with the outside world; management doesn't always understand how to
motivate younger people; and in developing economies the workforce is simply in great
demand and the competition for talent is fierce. Added to this, of course, tools like LinkedIn
now make it easier than ever for you to look for a new job (or get poached).
And we know that high-performing companies have loyal employees. I can't quote statistics
on this topic, but it's well understood that high-performing companies serve their employees
just as well as they serve their customers. One of the most important studies on this was done
by Harvard many years ago and it proves that only by making your employees happy can you
ultimately make your customers happy.
Other research by Wayne Cascio called "Lay off the Layoffs" similarly shows that companies
that push layoffs on their employees create long term problems which often take years to fix.
The reason? Layoffs, like retention problems, create low levels of employee commitment
which in turn move employees back down the value curve. Covey's wonderful book "The
Speed of Trust" clearly explains this in ways that leaders can understand.
So how do we "improve" or "fix" our retention issues?
Much common wisdom over the years blames first line management. Over and over I hear
the words "people don't leave companies they leave managers." Of course there is much truth
to this - nobody wants to work for an uncaring, difficult manager. But our research shows that
the real "retention model" in companies is far more complex.
When we look at retention (Deloitte has both a "retention diagnostic" as well as a "retention
analytics" model) we find that each company has its own unique "retention model."
Typically the model involves a whole variety of factors, and these factors take on different
weights depending on the age, demographic, and role of the employee. So your goal is not to
simply do one thing, but to understand your own company's "retention drivers" by role.
Some of the interesting things to consider:
Compensation plays a role, but not as much as you may think. All the experience we
have shows that for mid-performing people compensation is a "hygiene" factor - too
little money will definitely create high churn, but over compensating people won't
make up for a poor work environment.
Of course in sales and other highly competitive positions compensation is critically
important, but it is by no means the only driver.
Job fit is critically important. For years companies have talked about the "employee
value proposition." In reality there is a "job value proposition." Are you attracting the
"right people" for each job? Some jobs are particularly demanding (ie. consulting roles
where travel is intense). If you honestly explain these roles and their positives and
negatives you will attract people that "fit." If you over-sell the job you'll suffer high
Career opportunities matter. Today most companies are going through a "crew shift" as
boomer generation employees retire and millenials and young people enter
management and high value positions. Younger folks are motivated by growth, career
opportunity, and meaning. Our research several years ago showed that while young
people want the same types of benefits and work-life balance as older people, they are
particularly focused on fun, collaboration, and the ability to be with others they enjoy.
So the prospect of a "career" is more than just advancement (which was the way I was
raised).These "non-compensation" and "non-job" factors are bigger than ever now.
We're going to be launching new research on the employee value proposition in the
coming quarters and all evidence shows that we have to think about our organizations
as a "system" which engages employees. The CEO sets the tone and leadership plays a
role, but so do all these other cultural and human aspects of the workplace.
Is your organization suffering from a retention challenge? Are you feeling
"disconnected" or perhaps unrewarded in your job? If the answer is yes, I'd suggest that
your CHRO or CEO needs to be thinking about retention in a more strategic way.
Ultimately the most successful and enduring organizations in business are those that have a
common sense of mission, a deep respect for their employees (and customers of course), and
put time, energy, and money into building a highly engaging environment. They carefully
select the "right people" with lots of hard work, and once people join they take the time to
make sure they have development opportunities to move up the value curve.
"Retention" may be no more than a symptom, but it's something you should take seriously. In
today's heating economy and rapid shift in demographics, you'll be competing for talent
regardless of your industry.
WAYS OF IMPROVING EMPLOYEE RETENTION
Employee retention is a critical issue facing today's enterprises as they compete for
talent in a recovering economy. As Josh Bersin, principal at Deloitte and founder of Bersin
by Deloitte, spells out,the costs of employee turnover are increasingly high, as much as 1.5 to
2 times an employee's salary. There are also other, soft costs, such as lowered productivity
and a decrease in employee morale. These all add up to big trouble for businesses that aren't
investing in their human capital.
If you wait until a valued employee's exit interview to find out why he or she decided to
move on, you've missed out on keeping a productive member of your team. And if they aren't
forthcoming about why they are leaving, you also miss a golden opportunity to identify
obstacles and challenges within your organization and fix them before you lose others.
So, how can you increase retention rates? CIO.com reached out to technology and business
leaders to find out how to better retain your precious investment.
RETENTION STARTS WITH RECRUITING
"Retention starts from the application process to screening applicants to choosing who to
interview. It starts with identifying what aspects of culture and strategy you want to
emphasize, and then seeking those out in your candidates," says Dan Pickett, CEO of
Nfrastructure, an infrastructure, managed services and network services firm.
Infrastructure currently employs about 400 people and a retention rate of 97 percent - almost
unheard of in the IT industry -- or any industry, for that matter. It's a statistic each member of
the company works hard to maintain.
"It's an increasing returns model; the longer someone's with your company, the more
productive they become over time. You have to look at this as a long game, and take steps to
ensure you're doing it right by making sure each employee is completely engaged with and
part of the company's ongoing success," says Pickett.
So how can you choose candidates that are more likely to stay? There are some key indicators
right on their resume, according to Pickett.
STUDY JOB HISTORIES
One of the first items to look for is how long candidates were at their previous positions. Job-
hoppers are something of a gamble. "While they might just be looking for the right place to
land, a candidate who has had, say, 10 jobs in 12 years is going to be really difficult to retain
for any company, "says Pickett. Choosing people with longevity at their previous jobs
increases the odds in your favor.
"You're looking beyond what's written on the resume. Have they worked at a company for
many years through ups and downs? That speaks to loyalty, perseverance and engagement,
CLEAR PATHS TO ADVANCEMENT
According to the Wall Street Journal, organizations should promote from within whenever
possible. Doing so will not only provide a clear, forward-looking path to greater
compensation and responsibility, but will also help employees feel that they're valued and a
crucial part of the company's success as a whole.
PROVIDE ONGOING EDUCATION
Employee development and education is also critical. Whether by providing training for new
skills or tuition reimbursement for outside courses, "furthering your employees' education can
help them feel valued, important and invested in the company," says Picke If you wait until a
valued employee's exit interview to find out why he or she decided to move on, you've
missed out on keeping a productive member of your team. And if they aren't forthcoming
about why they are leaving, you also miss a golden opportunity to identify obstacles and
challenges within your organization and fix them before you lose others.
So, how can you increase retention rates? CIO.com reached out to technology and business
leaders to find out how to better retain your precious investment.
OFFER THE RIGHT BENEFITS
Benefits and perks also play a large role in keeping employees engaged and happy. But
benefits should go beyond healthcare coverage and paid sick leave.
For example, consider offering stock options or other financial awards for employees who
exceed performance goals or who stay with you for a certain time period. Or consider
offering flexible work schedules or the opportunity to work remotely.
Generous paid leave policies also go a long way toward helping employees feel they are
valued well beyond what they contribute at the workplace. For example, Change.org, an
online social change platform, recently announced it will offer employees up to 18 weeks of
paid parental leave, and it is encouraging other organizations to do the same.
If employees are not offered leave, or are forced to return to work because they cannot afford
unpaid leave, they may become "distracted and resentful," says David Hanrahan,
Change.org's global head of Human Resources. That distraction and resentment can build,
and can often drive an otherwise satisfied employee to consider other options.
BE TRANSPARENT AND OPEN
Creating open communication between employees and management can help foster a sense of
community and a shared purpose. By holding regular meetings in which employees can offer
ideas and ask questions, as well as having an open-door policy that encourages employees to
speak frankly with their managers without fear of repercussion, helps employees feel that
they are valued and that their input will be heard.
GET EMPLOYEE FEEDBACK
Another way to measure employee satisfaction is to periodically survey them. You can do
this by using an employee polling tool, like TINYpulse, which sends out a single question to
a company's workforce at pre-set intervals and then tallies results anonymously.
"Everyone knows that the business changes more than once a year, and so do people," says
David Niu, the founder of TINYpulse and TINYHR. "You don't check on your finances or
your business strategy once a year. So why do you think you can do that with your people?"
Using a strategy like sending out a brief questionnaire, or single question to employees - such
as "What is one process that, if eliminated, could make you more productive?" - can help HR
identify issues early on and rectify them.
"The fact that the employees are being heard, that they are being listened to, is important and
can improve retention, even if there's no way the company can address their challenges at the
moment," says Niu.
SOMETIMES GOOD EMPLOYEES LEAVE
Of course, sometimes turnover is inevitable. People move. They change careers. They get a
better offer someplace else.
"It's difficult when we lose someone who's a rock star, but that's one of the things you have to
be prepared for," says Pickett. "Especially in the IT industry, which is so competitive. But it's
also healthy," he says. "You don't want someone who doesn't want to be there anymore."
RETENTION AND THE BOTTOM LINE
If your employees feel valued and excited about working at your organization, and fairly
compensated, they will not want to go elsewhere. Moreover, their commitment and
enthusiasm will be evident to your customers, says Pickett "That enthusiasm, that excitement
and that investment comes through in every interaction."
THE CHALLENGE OF RETAINING TOP TALENT:
THE WORKFORCE ATTRITION CRISIS
It is no wonder that in today's aggressive business environment, the challenge of sustaining a
competitive advantage preoccupies the minds of many business leaders. Corporate customers
and individual consumers have more providers to choose from than ever before. Furthermore,
they often perceive that what they are purchasing is, for all practical purposes, a commodity
that can be easily obtained from other companies if need be.
So how does a corporation distinguish itself in a highly commoditized and competitive
market? Today's businesses are more dependent than ever before on their top performers to
innovate and provide services that differentiate a company from its fierce competitors. In
other words, corporations are reliant upon their human assets to survive and thrive.
However, with unemployment now running at less than 6%, many corporations and
government agencies are struggling to find and keep these valued employees. Changing work
force demographics, such as the shrinking of the most desirable labor pool (25-34 year olds)
and the negative impact downsizing has had on employee loyalty, have led corporate
America to search for answers to recruiting and retaining the strategic asset of the twenty-first
century: talented people.
Retaining top talent was less of an issue in the past, but the shifting tides of the unspoken
employee/employer contract have created new currents in the workplace. The old contract
asked employees to:
give their all
In return, they would have:
a job for life
a home away from home
regular salary increases
a good chance for a promotion
The new contract is substantially different. It states that employees must now work harder,
doing not only their jobs, but the jobs of their former co-workers who were "right-sized." In
return, job security is extinct, promotions are scarce, salary increases are modest at best, and
the constant uncertainty of change is almost guaranteed. Is it any wonder that employee
loyalty is on the demise and talented individual contributors and managers feel less bonded to
their organizations.Because the increased flow of defecting employees plagued our clients,
Integral Talent Systems, Inc., a national consulting and training firm and Bruce Fern, an
expert in the field of retention, engaged in an aggressive endeavor to tackle the attrition
dilemma. As part of this project, we conducted attrition and retention research with our
clients (1), and substantiated our findings by reviewing industry practices and the behavioral
science literature. We uncovered a number of critical findings, seven of which are described
in this article.
1. THE COSTS OF ATTRITION CAN BE STAGGERING, BUT OFTEN
What does it cost an organization when a talented employee defects to the competition? Some
of the cost factors are obvious, such as productivity losses due to a vacant position. However,
there are often unseen costs, like the reduced productivity from thedeparting employee who is
inevitably distracted during his or her job search and therefore contributes less during this
time period (sometimes called "short-timer’s disease").
Using conservative calculations, one technical company in California's Silicon Valley
estimates that it costs them an average of $125,000 when just one employee leaves. Other
companies calculate that attrition costs them annual productivity losses of 65-75%in the
position the employee departs.
Another of our clients with a national sales force of hundreds estimates that they have to
scramble to make up for over a million dollars of potentially lost sales when just one
salesperson leaves. To add insult to injury, this does not even take into consideration the
departed employee's attempts to woo his or her past customers over to his or her new
employer. Multiply these costs by the number of employees who leave in one year, and the
financial impact is dramatic.
2. THE REASONS EMPLOYEESSTAYARE NOT THE SAME AS WHY
Most organizations do not have a handle on the actual reasons why employees stay, as well as
the actual reasons why they depart. Many organizations attempt to capture the causes of
attrition through exit interviews. Unfortunately, traditional exit interviews just scratch the
surface of the causes for attrition. They inevitably fail to differentiate between factors that
make the new job attractive to the departing employee, versus the reasons why the employee
was prompted to consider leaving his or her current job in the first place.
For example, many employees report "better compensation" as one of their main reasons for
leaving. In many cases, our research revealed that these same employees were not, in fact,
originally dissatisfied with their compensation. Instead, other reasons prompted them to
consider leaving their current job, such as the absence of professional development
opportunities. However, they often do not report these negative reasons associated with
their old job (possibly from fear of retribution), but instead report what is attractive in
thenew job. Because of this phenomenon, organizational data from typical exit interviews
fails to surface the real causes of an organization's attrition problems.
This is just as true when an employee is actively recruited by the competition. Our work in
retention shows that attractive candidates receive calls from recruiters all the time! What
causes the sudden shift that makes an employee act on a recruiter's call at a particular point in
time? We consistently found in these circumstances that something deteriorated in their work
situations that caused them to take the current recruiter's call more seriously.
Obviously, when organizations unknowingly misdiagnose the situation and fail to surface the
most critical factors that contribute to attrition, their solutions to correct the problem fall short
of the mark. The result is a bad diagnosis leading to improper prescriptions.
3. THE MANAGER'S ROLE IN ATTRITION IS PARAMOUNT BUT
Most managers we interviewed as part of our research in retention lamented the loss of
talented contributors. However, when asked to diagnose the reasons for an employee's
departure, the average manager pointed to a variety of external organizational factors as the
causes of attrition, failing to take any personal responsibility for the situation. They typically
did not acknowledge any factors within their control that contributed to the employee's
For example, managers often attributed attrition problems to such factors as compensation.
Certain factors that are the responsibility of "the overall corporation" can certainly aggravate
attrition if they are not in order, such as inequitable pay scales or excessively rigid policies
that dilute employee autonomy. However, we discovered that a large number of factors
contributing to employee retention are within the manager's circle of influence.
Therefore, the results of any attrition intervention are dependent upon the organization's
ability to provide managers with an awareness of those factors, as well as tools to help them
meet their personal accountability in retaining top talent.
Furthermore, managers need this guidance more than ever before. Managers' span of control
has been widening in most companies over the past several years, and the number of times
the manager "touches" the employee is therefore less frequent. Each contact must maximize
any opportunity to influence employee motivation and commitment.
4. PREVENTION IS THE BEST MEDICINE
The loss of key employees, even in small numbers, can be devastating to a company. (This
points to the importance of tracking not just overall attrition ratios, but also tracking the level
of performers leaving.)
Consequently, we were interested in determining the degree to which managers rank
retention as a high on-going priority. Not surprisingly, we found that the only time the
average manager thinks about retention is when she or he receives a resignation from an
employee. We also found that most managers predictably attempt to talk departing employees
out of leaving, trying to convince them that they are making a mistake.
However, also predictably, we found that the vast majority of the time, these employees leave
their resignations on the table, resisting attempts to persuade them to stay. And, in the
infrequent situation when a manager successfully persuades the employee to remain, he or
she often leaves within six to nine months anyway. (The exception is when there is a clear
salary inequity which is remedied, and the employee is satisfied with everything else about
the work situation.)
Clearly, the solution lies in tying retention to critical business activities so that managers do
not think about retention after the fact, when it is too late, but rather see it as integral to
business success and survival. Treating retention as an on-going priority enables the manager
to focus on proactive measures to sustain long term employee commitment, rather than on
reactive attempts to reverse surprise resignations.
5. RETENTION HAS AN OFTEN UNRECOGNIZED IMPACT ON THE
Managers are well aware of the impact on their function when a valued employee leaves.
However, even managers of customer contact functions, such as sales or customer service,
often fail to demonstrate a sensitivity to the impact attrition has on customers.
When key employees leave customer contact functions, customers often experience:
a discontinuity in the relationship
a negative impact on their own productivity
time wasted reorienting the new employee to their operation and the way they work
When the relationship represents a value-added partnership, the change in account managers
or service providers can set the relationship back months and give competitors a weighty
advantage. This is especially true if the transition to new account personnel is not well
managed. At a certain point, regular changes in account personnel can send a message of
organizational instability and create the impression that the organization does not care about
the account relationship.
In the case of development or support functions, we also found a general lack of awareness
on the manager's part of the negative impact the departing employee has on internal
customers. The departure of a top performing employee can therefore have a "ripple effect"
on the organization and its clients that creates problems for months.
6. MISGUIDED THINKING: "ATTRITION IS INEVITABLE"
It is true that some level of attrition is unavoidable. In fact, a certain degree of attrition is
desirable in order to compensate for poor hiring decisions. However, human resource and
senior line managers often question whether they can really increase their retention ratios.
The answer is definitively yes, with evidence to support it. In one of our client organizations,
the attrition rate for one of their divisions in 1995 prior to our intervention was 18.5%, with
25% attrition in one of the most critical occupation groups. After working with us in 1996
and making retention a priority for every manager, the attrition rate dropped to 11.7% overall
and 15% in the critical group.
One might predict that other factors contributed to this outcome. In fact, it should be noted
that there were actually reductions in employee compensation during this time, which should
have increased attrition. Nevertheless, we still saw an increase in retention rates.
Another of our clients asked that we conduct a retention risk analysis and intervention in a
critical technical division because the organization feared that attrition would rise in the near
future. Two interesting findings emerged from our research with this group. The first was that
this division was already following a number of the retention prescriptions we provide our
clients (one of the few divisions in the entire company to do so). More striking, however, was
the fact that as a result of following these prescriptions, this group's retention rates were over
10% higher than the rest of the company's, thus validating the efficacy of our model.
Another company in the Northwest began with an attrition rate of 17%. After following the
same prescriptions (2), they reduced their attrition rate to 3%, bringing their retention rate up
to 97%. As the evidence suggests, attrition is not an unbeatable foe. Instead, it is a challenge
that can be overcome with the right strategies and tools.
7. WORLD CLASS RETENTION REFLECTS A MULTI-FACTORED
The scenario in many organizations is the same. Someone, such as a senior line manager or
HR professional who is tied to the business, raises the red flag of attrition, recognizing its
potentially devastating impact on the company's strategic position. Then, someone scrambles
to pull some sort of training or tools together which focuses on only a few (but not all) of the
factors that are required to reduce attrition. The result is the organization experiences
mediocre results, or no results at all.
This multi-factored retention solution is like the story of the blind men and the elephant.
Never having seen an elephant, three blind men were brought over to a young elephant to let
them experience it. Each man touched a part of the elephant. The first one touched a leg and
said, "Now I understand. An elephant is like a tree trunk." The second man touched the tail
and said, "No. You are wrong. An elephant is like a snake." The third man touched an ear and
said, "You are both quite mistaken. An elephant is like the leaf of a big palm tree."
If any of the men wanted to control the elephant, they would have found themselves
incapable of doing so, because their understanding of the elephant was only partial. This is
also true of many organizations that try to tackle only one factor of the attrition dilemma.
One piece of anecdotal evidence comes from a report made by one of the nation's leading
financial services companies. In an attempt to stem the outflow of critical managers and
individual contributors, they contracted with a reputable training firm with whom they had
worked successfully in the past. While the firm admitted they were not experts in employee
retention, they nevertheless conducted sessions for senior managers, hoping to help their
client to deal effectively with the problem.
Unfortunately, but also predictably, the firm addressed only a fragment of the retention
solution. The kick-back from the managers was strong, since they intuitively sensed this was
only a partial solution and it would not effectively address their issues. Therefore, one litmus
test for a retention solution is to assess its scope and depth. Any solution that is
unidimensional is bound to fail.
Our research surfaced six dimensions that are most critical to influencing retention. These
dimensions must be infused into three major components that must be in place and aligned
for an organization to achieve world class retention:
1. MANAGER RETENTION PRACTICES
Our research consistently validated the reality that the manager plays a significant role in
influencing the employee's commitment level and retention. There are a number of manager
retention practices which increase the probability that an employee will remain committed to
an organization over time.
These retention practices represent the manager's actual behaviors on the job. This often has
little to do with the amount of classroom training they have received. Furthermore, the best
retention practices are not the same as the standard menu for good organizational
management. Most organizations ask their managers to place productivity as the highest
priority, underscored by pressures to fulfill "our obligations to our investors."
Good retention practices focus not only on what the employee is contributing to the company,
but also focus on how the manager can create a climate so that the employee is retained and
committed on a long term basis. While enlightened leaders balance the needs of the
organization with the needs of the employee, the truth is that these leaders are rare. Though
managers play a very crucial role in retention, they do not control all of the factors that can
affect attrition. Therefore, the second component represents the organization's responsibility
in the retention equation.
2. ORGANIZATIONAL RETENTION SYSTEMS
There are a number of organizational systems and processes that influence retention. Some of
them are evident, such as equity of pay scales. Other systems are less obvious, and their
impact on retention is often unrecognized. For example, there is evidence that an
organization's recruiting systems and processes can significantly impact retention ratios.
These systems support the Manager Retention Practices, but they also increase the likelihood
that employees are committed on a long term basis and are performing at their best.
3. MEASUREMENT AND ACCOUNTABILITY
Closely linked to the other components, this component ensures that retention becomes an
on-going priority. Many organizations do not even know what their attrition rates are. And
those that do often lack enough data to pinpoint where the problem is most severe, or to
uncover the specific causes of attrition.
For example, those organizations that measure attrition sometimes do not track it by length of
service. The tenure patterns of the departing employees can reveal valuable information
concerning the potential causes for attrition. Additionally, many organizations do not track
attrition by occupational group other than by "manager" or "non-manager." This simple
segmentation is often a crude one that does not provide the organization the refined
information it needs.
Measurement goes hand in hand with accountability. Organizations must hold their managers
personally accountable for retention. Likewise, they must hold their corporate staff
accountable for developing, maintaining, and upgrading their retention systems. When
retention is relegated the status of being a "HR issue," it often falls to the bottom of the
priority list for managers. When it becomes one of their business goals, it takes on a new
One example comes from one of the world's top hardware manufacturers. In a recent
meeting, the new director of the telephone technical support group presented the following
four new business goals to his management team. The first three were:
1. Fulfill Technical Support Contract Obligations
2. Maintain the Highest Level of Customer Satisfaction
3. Manage Costs Aggressively
The fourth goal was to retain employees! After some discussion, the entire management team
observed that they would not achieve the other goals if they could not achieve their retention
goals. In another division of the same company, the senior managers' personal bonuses are
calculated on the basis of their success at retaining their best people. When managers are held
accountable in this fashion, it ensures that the motivation to examine and enhance their
personal retention practices is ever present.
Foster an environment of teamwork. It takes effort to build an effective team, but the result is
greater productivity, better use of resources, imporved customer service and increased
morale. Here are a few ideas to foster a team environment in your department:
Make sure everyone understands the department’s purpose, mission or goal.
Encourage discussion, participation and the sharing of ideas.
Rotate leadership responsibilities depending on employees abilities and the needs of
Involve employees in decisions; ask them to help make decisions through consensus
Make room for fun. Celebrate successes and recognize when milestones are reached.
Write a mission statement every department. Everyone wants to feel that they are
working toward a meaningful, worthwhile goal. Work with staff to develop a
departmental mission statement, and then publicly post it for everyone to see.
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