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Employee retention

T.Y.B.M.S. “B”
ROLL NO. B-...
Modern organizations are operating in an unprecedented, highly competitive and
turbulent business environment...
2. Lack of challenge
3. Lack of autonomy
4. Not enough money
5. Work environment issues
• Summary of general reasons why p...
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Employee retention

  2. 2. INTRODUCTION Modern organizations are operating in an unprecedented, highly competitive and turbulent business environment which is characterized by the globalization of business. Further today’s global workforce is more mobile than ever before. As a result we are witnessing a ‘war for talent’ in the marketplace. It is becoming increasingly clear that employee attrition is a reality and organizations need to adopt a market driven approach in dealing with growing attrition. Dave Ulrich says that ‘Successful firms will be those adept in attracting, developing and retaining individuals with the skills, perspectives and experience necessary to drive a global business’. It is an organizations ability not only to recruit but also to cultivate and retain, the talent that will ultimately determine its longevity. Employee Retention Why employees leave? Why do people leave a job for a better job? People often lie in exit interviews about why they are leaving. Managers should, of course, know in advance who is leaving and why. A comprehensive list like this is of little value unless you use it as a guide to gather your own information as to why your workers are leaving. Top Reasons why people leave their jobs (research results): • Harvard Business Review: 1. Job content 2. Level of responsibility 3. Company culture 4. Caliber of Colleagues 5. Salary • California Strategic HR Partnership (CSHRP) Result: 1. Low growth potential
  3. 3. 2. Lack of challenge 3. Lack of autonomy 4. Not enough money 5. Work environment issues • Summary of general reasons why people decide to leave their jobs: Suggested action items are listed after each reason 1. No one asked them to stay. (Lack of “per”sonal "suasion") -- Talk to them one-on-one or No one asked them what motivates them. Talk to them one-on-one. 2. They feel isolated and "in the dark" -- Increase communications with your employees. 3. They are unhappy with the mix of their job responsibilities -- Change job responsibilities / and increase their job challenges. 4. Lifestyle / work family conflicts -- Change their work schedule / location. 5. A lack of resources or support -- Give them direct assistance or additional resources. 6. A feeling of isolation and lack of recognition -- Increase their "exposure" opportunities. 7. They don't identify with the organization -- Develop common goals / passion/ values / a sense of urgency / and a shared vision. 8. No personal ties to the team -- Develop friendships, relationships and heroes. 9. They don't feel empowered, appreciated or that they are "members/ owners" of the organization. -- Develop a sense of ownership, identity / belonging / fit, etc., with the dept /
  4. 4. product / team. 10. No compelling vision of the future -- Make the future look more promising and the prospects of leaving unpleasant. 11. No pride in the products / company -- Improve our image / reputation. 12. A lack of authority / control / autonomy -- Increase their involvement / participation and control. 13. Not enough "toys"& great working conditions -- Change their physical environment. 14. Work isn't fun anymore -- Make work fun / make it hard to quit. 15. Lack of equity -- Create a perception of fairness and equity. 16. No group pressure to stay -- Develop a cohesive team. 17. They don't feel appreciated or" special" -- Make each employee feel special / wanted / needed. 18. A lack of external pressure to stay -- Involve their family and friends. 19. No prospects for a "new" job / promotion / growth -- Offer new job responsibilities. 20. Having a "bad" manager -- Avoid bad management actions (or in-actions) by individual managers. 21. Undefined or miscellaneous reasons for leaving -- Miscellaneous retention strategies. 22. Perception of low pay / benefits, rewards or no vision of wealth -- Change compensation / benefits.
  5. 5. 23. Retention efforts came too late -- Implement preventative strategies. MICRO REASONS WHY PEOPLE LEAVE THEIR JOBS INCLUDE 1. Compensation • Not enough stock options / low value • Not enough benefits • Lack of bonuses • Lack of promotions • Lack of awards • Low pay and Loss of possible chance of "Wealth" 2. Lack of motivation for a particular project • Lack of enthusiasm toward project • Work team not cohesive • Lack of communication in project team • Assigned to a project unwillingly 3. Stress • Impossible to meet deadlines • Too many projects on going • Long working hours • Work taken home = less leisure time • Family/relationship problems due to the above
  6. 6. • Possible health problems i.e. blood pressure high, nervous breakdown, and anxiety attack. 4. Competitor's work environment is a better place to work • Companies such as SGI, Levi, and Microsoft have reputation of being "fun places to work at." • More autonomy • POST-EXIT INTERVIEW REASONS FOR LEAVING (6 MONTH DELAY) 1. Bad management (actions--or inactions--by individual managers) 2. Lack of challenge • KEEPING THE PEOPLE YOU REALLY NEED IN THE OUTSOURCED ECONOMY The outsourced economy is here to stay. As a leader, you may not relish the idea of outsourcing. However, the reality is that you may soon need to. When that happens, you will want a workforce that is nimble, adaptable, and prepared to participate in your organization at a new level of competitiveness. Organizations that partner with their employees will retain those employees when they have the opportunity to become free agents. • THE BOTTOM LINE FOR EMPLOYEE RETENTION Want the bottom line when it comes to employee retention? The quality of the supervision an employee receives is critical to employee retention. People leave managers and supervisors more often than they leave companies or jobs. Learn how to help your managers address employee retention. • TOP TEN WAYS TO RETAIN YOUR GREAT EMPLOYEES Key employee retention is critical to the long term health and success of your business. Managers readily agree that their role is key in retaining your best employees to ensure business success. If managers can cite this fact so well, why
  7. 7. do many behave in ways that so frequently encourage great employees to quit their job? Here are ten more tips for employee retention. • HOW TO RETAIN YOUR BEST EMPLOYEES Interested in keeping your best employees when the job market rebounds? Retention will be a challenge, according to a recent study. Retention requires a competitive salary and great benefits. However, retention of your best requires a whole lot more. Employee involvement, recognition, advancement, development and pay based on performance just get you started in your quest to retain your best. • WHAT PEOPLE WANT FROM WORK: EMPLOYEE MOTIVATION AND POSITIVE MORALE Some people work for personal fulfillment; others work for love of what they do. Others work to accomplish goals and to feel as if they are contributing to something larger than themselves. The bottom line is that we all work for money and for reasons too individual to assign similarities to all workers. • EMPLOYEE RECOGNITION ROCKS: KICK EMPLOYEE RECOGNITION UP A NOTCH Employee recognition is limited in most organizations. Employees complain about the lack of recognition regularly. Managers ask, “Why should I recognize or thank him? He’s just doing his job.” And, life at work is busy, busy and busy. These factors combine to create work places that fail to provide recognition for employees. Managers who prioritize employee recognition understand the power of recognition. • MAGNIFY THE RETENTION VALUE OF YOUR 401K PLAN Tired of feeling as if your 401k plan doesn't get the appreciation and participation it deserves? You can maximize the impact of your 401k retirement plan to benefit the people you employ. These necessary and recommended actions will help you create an appreciated, valued benefit that helps you achieve your business goals. • USE YOUR TEAM FOR RECRUITMENT: A RETENTION STRATEGY Selecting and retaining great staff is key for business success. Talented people who continue to develop skills and increase their value to your organization and to your customers are your most important resource. Here's how to select and retain these people and create an environment in which they continue to thrive.
  8. 8. • FUN AND THE BOTTOM LINE: USING HUMOR TO RETAIN EMPLOYEES In today's uncertain work environment, humor isn't an option, it's necessary. When employees clown around, they're not wasting valuable time, they're making use of one of the few tools available to increase and maintain their group spirit. Laughter may not change reality, but it can certainly help people survive it. Here's how to use humor to retain employees. • EMPLOYEE ORIENTATION: KEEPING NEW EMPLOYEES ON BOARD You want your new employee to experience his new job as a major turn on. Here are tips, tools, and examples for new employee orientation processes that promote longevity and loyalty. • NINE RECRUITING AND SELECTION TIPS TO ENSURE SUCCESSFUL HIRING These nine tips will help you in recruiting and hiring a candidate who will become a successful, contributing superior employee. Learn how job analysis helps you in recruiting and hiring a superior staff. • POLL: WHY DO YOU STICK WITH YOUR EMPLOYER? • RECRUITING AND RETENTION SPECIAL Finding the best possible people who can fit within your culture and contribute within your organization is a challenge and an opportunity. Keeping the best people, once you find them, is easy if you do the right things right. Take a look at the helpful features in the Industry and Business Recruiting and Retention Special. • KEEPING GREAT EMPLOYEES Pay people reasonably and treat them great. Don Grimme recommends these top two ways to retain employees. He presents the findings of the Families and Work Institute. • LOYALTY COMPLEX Are you doing enough to hold on to your young staff members? This article, although geared to IT staff, offers ideas for retaining all staff you want to keep.
  9. 9. • RETAINING TALENT IN A COMPETITIVE MARKET In a competitive market, best practices for retaining top talent include offering a stimulating work environment, flexible career options, an excellent benefit package, and a culture that values staff contributions. • RETENTION RESEARCH YIELDS ANSWERS Kevin Wheeler's review of research by Professors Peter Hom and Rodger Griffeth presents three factors which must be present for people to stay with an organization. Check out the four ways companies can impact and increase retention. • RETAIN TOP TALENT Employees may enjoy moving around laterally in different jobs. Flexible career options and knowledge sharing opportunities help to retain your talented employees. See Best Practices, LLC for more good ideas. • GRIMME'S TOP TEN FOR RETENTION Don Grimme lists his top ten recommended strategies for retaining good employees. No big surprises here, but this is an excellent reminder worth reading. • JOB STICKINESS Core values that are understood and rewarded and feeling a part of a sense of purpose at work are reasons organizations retain staff. • KEEPING GREAT EMPLOYEES Pay people reasonably and treat them great. Don Grimme recommends these top two ways to retain employees • LOYALTY COMPLEX Are you doing enough to hold on to your young staff members? This article, although geared to IT staff, offers ideas for retaining all staff you want to keep. RECRUITMENT & RETENTION:
  10. 10. Fascinating ways to attract & retain talent amidst layoffs and cost cutting, the top priority for organizations is the attraction and retention of the right talent. How can progressive organizations innovate ways attract and retain talent? Finding the right talent is as difficult as retaining them. Organizations try all ways - even poaching candidates from competitors, to get the right talent in. In the times of economic uncertainties, it becomes all the more important to retain talent to keep the show going if not excel. While some organizations are using pay-cuts and sabbaticals to protect employees from layoffs, progressive organizations are using innovative ways to attract and retain the right talent and making profits by cutting hiring costs. AT CISCO The online recruiting at Cisco is a well-planned tool, which also takes into consideration applicants' concerns. Recognizing the fact that most applicants post their resumes from their workplace, they installed a 'panic button' saying - 'Oh! My boss is coming' on their website, which immediately pops a page containing '7 habits of highly successful employees' on the screen. Such simple gestures create a sense of solidarity in the minds of applicants even before they join the organization. To attract the ideal recruitment targets - employees of competitors, they organize focus groups to discuss issues like how they spend their time outside office and what would make them consider quitting for another job. The focus group participants are even paid for participating in the discussions. Another innovative programme at Cisco is the 'Make Friends @ Cisco' programme. The organization advertises in the local movie theatres a phone number for candidates to call up and register into the programme. The profile of each registered candidate is analyzed to pair up with a similar profile of an employee of Cisco. The programme that enables both the candidates and the existing employees to share ideas, aims at attracting talent through networking. In the year 2000 alone the 'Make Friends @ Cisco' programme helped them recruit 800 employees. Even while acquiring other businesses, Cisco takes every care not to lose existing talent. When Cisco acquires another company, the HR practices are given as much importance in due diligence as legal and financial matters. The businesses they buy are carefully scrutinized to analyze the culture, management practices and pay systems and are not acquired unless they match Cisco's standards. The senior HR officers at Cisco are empowered to veto any acquisition and the organization abides by it. As there would be no second chance to create a first impression, Cisco ensures creation of a positive impression from the very first day. A phone, e-mail and business cards are made available to new employees the day they join and each is assigned to a 'mentor' immediately. The innovative practices of Cisco have paid-off. Their cost per hire is 40% less than the industry average; the number of new recruits rose from 2000 to 8000 annually and the time taken for filling up a vacancy reduced to 45 days from 113 days in 1998. In the year 1999, when it acquired about 20 businesses it lost only 7% of its 31,000 employees.
  11. 11. RETAINING THE EMPLOYEES: 1. Good rewards and compensation: It is paid to the employees as a form of remuneration for the work done. Salaries are paid to ‘White collar’ and ‘Blue collar’ workers. It is a cumulative earning which is normally paid in the beginning of the month. Wages are paid to non- executive workers. Wages may be calculated on the basis of time (hour rate) or unit produced (piece rate). Wages are of three types: • Minimum Wages - for meeting the basic needs / necessities: • Living Wages. • Fair Wages. 2. Workers participation in the management. 3. Empowerment. 4. Job security and Employability. 5. Motivation. According to the 2006 Entrepreneur magazine and PricewaterhouseCoopers' first annual "Entrepreneurial Challenges Survey," Employee retention was identified as the single most critical factor for business success in 2006. Losing key employees affects a company's momentum, and it can be very expensive for organizations to find and hire their replacements. Many companies are implementing employee retention activities and programs to help keep their talented professionals; from increased compensation to increased recognition. Employee retention is influenced by a number of factors, from pay to performance, to management and co-workers. Some of these factors cannot be controlled by the company, but most companies can be more proactive in better understanding the needs of their employees. Often, simply saying thank you or asking for an opinion can have a dramatic impact on employee retention. DIFFERENT INCENTIVE IMPACT IN AIDING RETENTION Human Resource Management involves all management decisions and actions that affect the nature of relationship between the organization and employees- its Human Resources. With the changing scenario HRM has come a long way in transitioning itself from a mere public relations department to strategic Department, strategic partner. Over the years Human Resource is being considered as one of the most important asset of the organization because at the end of the day the whole organization is being run by people (resource). In this global era where human resource is playing a pivotal role in organizations concern for recruitment of best possible talents, training and retention has become a major issue.
  12. 12. Importance of HRM: 1. Attract and retain talent. 2. Train people for challenging roles. 3. Develop skills and competencies. 4. Promote team spirit. 5. Develop loyalty and commitment. 6. Increase productivity and profits 7. Improve job satisfaction and so on to name a few. In this competitive era of globalization retaining of employees have become the major area of concern for the HRM. It is where the concept of Rewards and Incentives comes in to view. Organizations must reward employees because in return they are looking for competent individuals who agree to work with high level of performance and loyalty. The different types of Incentives being offered by organization are: 1. Fringe benefits: These are a part of mix of almost every reward package, organization differ in the percentage of total compensation costs allocated to cash versus fringe benefits. A typical fringe benefit package for employees consists of: • Extra pay foe time worked on holidays. • Non production awards and bonuses such as safety awards. • Payments for time not worked such as sick days, vacations. • Payment for employee health and security such as insurance, pension fund contributions, and supplement to workman’s compensation 2. Competitive pay policy: A competitive pay policy articulates an organization’s strategy for competing within targeted labor markets to recruit the employees it needs to achieve business success. Such policy guides managers in making effective decisions regarding the company’s investment in human capital assets. How a company articulates its competitive pay policy, therefore, is instrumental to optimizing pay program effectiveness. The competitive policy is typically expressed in terms of percentile levels of targeted market pay. Such as: • Review Employee Pay Annually to Calibrate Company Pay Practices with Competitive Pay level • Assess the Competitiveness of Employee Pay • Balance the Market Range of Pay with an Employee’s Market Value • Analyzing Pay Practices within Recruiting Markets to Assess Competitive Standing 3. Employee recognition Programme: Imagine an employee program the whole company embraces—including your CFO. Loyalty works understands your challenge. Not only do you need to find innovative employee incentives that motivate and engage, you must also ensure that your employee rewards program adds to the bottom line by doing things like: boosting employee retention,
  13. 13. reducing healthcare costs and encouraging performance improvement. Loyalty works’ employee recognition programs achieve that delicate balance. Some Important Employee Recognition Programmes: • On spot awards • Nominated Recognition • Employee appreciation. • Peer to Peer recognition • Employee of the month/ year etc. 4. Bonuses: A bonus is incentive that is given to an employee beyond ones normal wage. It’s generally given at the end of the year and does not become part of base pay. 5. Performance Related Pay: Individual employees’ performance objectives should be framed so as to contribute to the performance objectives of their own organization. REASONS FOR LINKING PAY TO PERFORMANCE: A number of reasons are commonly put forward to linking pay to performance. The main ones might be summarised as follows: • Improved motivation • Improved goal setting • Organizational change and new methods of work • Renegotiating the ‘effort bargain’ • Improved hiring. 6. ESOPs: An Employee Stock Option Plan is when the company offers its shares to the employees. An ESOP is nothing but an option to buy the company's share at a certain price. This could either be at the market price (price of the share currently listed on the stock exchange), or at a preferential price (price lower than the current market price). CONCLUSION AND MY STAND POINT: An effective pay policy is an important aspect of a company’s overall competitive strategy. Just as organizations compete to sell their products and services, they also compete with one another for talented employees. Toward that end, a competitive pay policy is the cornerstone of an organization’s human capital investment strategy. How a company competes depends on three recruiting market conditions: 1. The extent to which qualified employees are available in targeted recruiting markets.
  14. 14. 2. The aggressiveness of other employers competing within those same recruiting markets. 3. The company’s clout in the marketplace to recruit qualified employees (e.g., financial resources to pay employees, perception of the company as an employer of choice, etc.). An incentive policy addresses these three market conditions. It articulates the company’s strategic position for competing within its recruiting markets in terms of the pay elements it will offer employees and the pay levels it will target for each element. IMPLEMENTING AN EMPLOYEE TRAINING & DEVELOPMENT PROGRAM Employee Training and Development Process Learning happens all the time whether or not we are fully aware of it. Are we a person who forgets to save your work on your computer on a regular basis? If a computer failure occurs and we loose some data, do we learn anything? If we say to yourself, "I must remember to save more often", we have done some learning. This type of learning is called incidental learning; we have learned without really thinking about it or meaning to. On the other hand, intentional learning happens when we engage in activities with an attitude of "what can I learn from this?" Employee development requires we to approach everyday activity with the intention of learning from what is going on around we. Who is Responsible for Employee Training and Development? Employee training is the responsibility of the organization. Employee development is a shared responsibility of management and the individual employee. The responsibility of management is to provide the right resources and an environment that supports the growth and development needs of the individual employee. For employee training and development to be successful, management should: • Provide a well-crafted job description - it is the foundation upon which employee training and development activities are built. • Provide training required by employees to meet the basic competencies for the job. This is usually the supervisor's responsibility. • Develop a good understanding of the knowledge, skills, and abilities that the organization will need in the future. What are the long-term goals of the organization and what are the implications of these goals for employee development? Share this knowledge with staff. • Look for learning opportunities in every-day activity. Was there an incident with a client that everyone could learn from? Is there a new government report with implications for the organization?
  15. 15. • Explain the employee development process and encourage staff to develop individual development plans. • Support staff when they identify learning activities that make them an asset to your organization both now and in the future. For employee development to be a success, the individual employee should: • Look for learning opportunities in every-day activity. • Identify goals and activities for development and prepare an individual development plan. The Individual Development Planning Process The employee in partnership prepares an Individual Development Plan with his or her supervisor. The plan is based upon the needs of the employee, the position and the organization. A good Individual Development Plan will be interesting, achievable, practical and realistic. It is implemented with the approval of the employee's supervisor. Step 1 - Self-Assessment • The employee identifies his or her skills, abilities, values, strengths and weaknesses. To conduct a self-assessment: • Use the many self-assessment tools found on the Internet Compare your knowledge, skills and abilities to those identified in your job description • Review performance assessments (performance assessments are often used as the starting place for developing Individual Development Plans) • Ask for feedback from your supervisor Step 2 - Assess Your Current Position and Your Work Environment • The employee does an assessment of the requirement of his or her position at the present time and how the requirements of the position and/or organization may change. To conduct a position assessment: • Identify the job requirements and performance expectations of your current position • Identify the knowledge, skills, and abilities that will enhance your ability to perform your current job • Identify and assess the impact on your position of changes taking place in the work environment such as changes in clients, programs, services, and technology. Based on your analysis in Steps 1 and 2, use the sample Individual Development Plan forms to answer the following questions:
  16. 16. • What goals do we want to achieve in your career? • Which of these development goals are mutually beneficial to your organization and we? • Write what we would like to achieve as goals. Select two or three goals to work on at a time. Set a time frame for accomplishing your goals. Step 4 - Identify Development Activities • Identify the best ways to achieve your development goals. • What methods will we use? • What resources will be required? Step 5 - Put Your Plan in Action • Once we have prepared a draft of your Individual Development Plan: • Review your plan with your supervisor for his or her input and approval. • Start working on your plan. • Evaluate your progress and make adjustments as necessary. • Celebrate your successes! Cost-Effective Methods for Employee Training and Development Employee training and development needs to suit your organization's context, job descriptions, employment contracts and collective agreements. When selecting employee training and development methods, it is important to remember the learning process. There are many ways to provide employees with learning opportunities, including: • On-the-job Experience • Relationships and Feedback • Classroom Training • Off-the-job Learning • E-Learning On-the-job Experience Committees are part of every-day activity in any organization. They can also be effective learning tools, with the right focus. Committees made up of staff from different areas of your organization will enhance learning by allowing members to see issues from different perspectives. Set aside part of the committee's work time to discuss issues or trends that may impact on the organization in the future. Conferences, Forums
  17. 17. Employees can attend conferences that focus on topics of relevance to their position and the organization. Upon their return, have the employee make a presentation to other staff as a way of enhancing the individual's learning experience and as a way of enhancing the organization. (Some conferences and forums may be considered off-the-job learning.) Critical Incident Notes Day-to-day activities are always a source of learning opportunities. Select the best of these opportunities and write up critical incident notes for staff to learn from. Maybe a client complaint was handled effectively. Write a brief summary of the incident and identify the employee's actions that led to a successful resolution. Share the notes with the employee involved and with others as appropriate. If the situation was not handled well, again write a brief description of the situation identifying areas for improvement. Discuss the critical incident notes with the employee and identify the areas for the employee to improve upon and how we will assist the employee in doing this Field Trips If your organization has staff at more than one site, provide employees with an opportunity to visit the other sites. This helps your employees gain a better understanding of the full range of programs and clients that your organization serves. Field trips to other organizations serving a similar clientele or with similar positions can also provide a valuable learning experience. Give staff going on field trips a list of questions to ansyour or a list of things to look for. Follow up the field trip by having staff explain what they have learned and how they can apply that learning to your organization. (Fieldtrips can also be an off-the-job activity.) Job Aids Tools can be given to employees to help them perform their jobs better. These tools include: manuals, checklists, phone lists, procedural guidelines, decision guidelines and so forth. Job aids are very useful for new employees, employees taking on new responsibilities and for activities that happen infrequently. Job Expanding Once an employee has mastered the requirements of his or her job and is performing satisfactorily, s/he may want greater challenges. Consider assigning new additional duties to the employee. Which duties to assign should be decided by the employee and her or his manager. Organizations with flat organizational structure are starting to give some managerial tasks to experienced staff as a way of keeping those staff challenged. Job Rotation
  18. 18. On a temporary basis, employees can be given the opportunity to work in a different area of the organization. The employee keeps his or her existing job but fills in for or exchanges responsibilities with another employee. Job Shadowing If an employee wants to learn what someone else in your organization does, your employee can follow that person and observe him or her at work. Usually the person doing the shadowing does not help with the work that is being done. Learning Alerts Newspaper articles, government announcements and reports can be used as learning alerts. Prepare a brief covering page which could include a short summary and one or two key questions for your employees to consider. Then circulate the item. Include the item on the agenda of your next staff meeting for a brief discussion. Peer-Assisted Learning Two employees agree to help each other learn different tasks. Both employees should have an area of expertise that the co-worker can benefit from. The employees take turns helping their co-worker master the knowledge or skill that they have to share. 'Stretch' Assignments These assignments give the employee an opportunity to stretch past his or her current abilities. For example, a stretch assignment could require an employee to chair a meeting if the person has never done this before. To ensure that chairing the meeting is a good learning experience, the manager should take time after the meeting to discuss with the employee what went well and what could have been improved. Special Projects Give an employee an opportunity to work on a project that is normally outside his or her job duties. For example, someone who has expressed an interest in events planning could be given the opportunity to work as part of a special events team. Relationships and Feedback Coaching Coaching refers to a pre-arranged agreement between an experienced manager and his or her employee. The role of the coach is to demonstrate skills and to give the employee guidance, feedback, and reassurance while s/he practices the new skill. Mentoring
  19. 19. Mentoring is similar to coaching. Mentoring occurs when a senior, experienced manager provides guidance and advice to a junior employee, the protegé. The two people involved have usually developed a working relationship based on shared interest and values. Networking Some professional specialties have informal networks designed to meet the professional development need of the members. Members meet to discuss current issues and to share information and resources. Performance Appraisal Performance appraisals are partly evaluation and partly developmental. In traditional performance appraisals the manager and employee evaluate the employee's strengths and weaknesses. In a 360-degree performance appraisal, feedback is gathered from supervisors, peers, staff, other colleagues, and sometimes clients. The results of an appraisal can be used to identify areas for further development of the employee. CLASSROOM TRAINING Courses, Seminars, Workshops • These are formal training opportunities that can be offered to employees either internally or externally. A trainer, facilitator and/or subject matter expert can be brought into your organization to provide the training session or an employee can be sent to one of these learning opportunities during work time. • Off-the-job Learning • Courses Offered by College/Universities Many colleges and universities offer courses relevant to employees in the non-profit sector. Employees may attend these classes on their own time or your organization may give them time off with pay to attend. Employees are often compensated by the organization for the cost of the course. Professional Associations Professional associations, like networks, provide employees an opportunity to stay current in their chosen field. Reading Groups (Also called Learning Circles or Reading Circles)
  20. 20. A group of staff meets to discuss books or articles relevant to the workplace/organization. Meetings usually take place outside normal working hours, such as noon hour or right after work. Click here for sample Reading Group Guidelines. Self study Self-paced independent reading, e-learning courses, and volunteer work all provide learning opportunities. The employee engages in the learning activity by choice and at his or her desired pace of learning E-Learning Information and course offered by the internet are called e-learning. A variety of learning opportunities can be accessed this way. The choices range from formal training offered by colleges and universities, to an informal walk-through of a given subject, to reading reports on a topic. E-learning can take place on or off the job. The history of performance appraisal is quite brief. Its roots in the early 20th century can be traced to Taylor's pioneering Time and Motion studies. But this is not very helpful, for the same may be said about almost everything in the field of modern human resources management. There is, says Dulewicz (1989), "... a basic human tendency to make judgements about those one is working with, as well as about oneself." Appraisal, it seems, is both inevitable and universal. In the absence of a carefully structured system of appraisal, people will tend to judge the work performance of others, including subordinates, naturally, informally and arbitrarily. The human inclination to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured appraisal system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate. Performance appraisal systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified. The process was firmly linked to material outcomes. If an employee's performance was found to be less than ideal, a cut in pay would follow. On the other hand, if their performance was better than the supervisor expected, a pay rise was in order. Little consideration, if any, was given to the developmental possibilities of appraisal. If was felt that a cut in pay, or a rise, should provide the only required impetus for an employee to either improve or continue to perform well. Sometimes this basic system succeeded in getting the results that were intended; but more often than not, it failed.
  21. 21. For example, early motivational researchers were aware that different people with roughly equal work abilities could be paid the same amount of money and yet have quite different levels of motivation and performance. These observations were confirmed in empirical studies. Pay rates were important, yes; but they were not the only element that had an impact on employee performance. It was found that other issues, such as morale and self-esteem, could also have a major influence. As a result, the traditional emphasis on reward outcomes was progressively rejected. In the 1950s in the United States, the potential usefulness of appraisal as tool for motivation and development was gradually recognized. The general model of performance appraisal, as it is known today, began from that time. MODERN APPRAISAL Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions. By the same token, appraisal results are used to identify the poorer performers who may require some form of counseling, or in extreme cases, demotion, dismissal or decreases in pay. (Organizations need to be aware of laws in their country that might restrict their capacity to dismiss employees or decrease pay.) Whether this is an appropriate use of performance appraisal - the assignment and justification of rewards and penalties - is a very uncertain and contentious matter. Controversy, Controversy Few issues in management stir up more controversy than performance appraisal. Between these two extremes lie various schools of belief. While all endorse the use of performance appraisal, there are many different opinions on how and when to apply it. There are those, for instance, who believe that performance appraisal has many important employee development uses, but scorn any attempt to link the process to reward outcomes - such as pay rises and promotions.
  22. 22. This group believes that the linkage to reward outcomes reduces or eliminates the developmental value of appraisals. Rather than an opportunity for constructive review and encouragement, the reward-linked process is perceived as judgmental, punitive and harrowing. For example, how many people would gladly admit their work problems if, at the same time, they knew that their next pay rise or a much-wanted promotion was riding on an appraisal result? Very likely, in that situation, many people would deny or downplay their weaknesses. Nor is the desire to distort or deny the truth confined to the person being appraised. Many appraisers feel uncomfortable with the combined role of judge and executioner. Such reluctance is not difficult to understand. Appraisers often know their 'appraisees well, and are typically in a direct subordinate-supervisor relationship. They work together on a daily basis and may, at times, mix socially. Suggesting that a subordinate needs to brush up on certain work skills is one thing; giving an appraisal result that has the direct effect of negating a promotion is another. The result can be resentment and serious morale damage, leading to workplace disruption, soured relationships and productivity declines. On the other hand, there is a strong rival argument which claims that performance appraisal must unequivocally be linked to reward outcomes. The advocates of this approach say that organizations must have a process by which rewards - which are not an unlimited resource - may be openly and fairly distributed to those most deserving on the basis of merit, effort and results. There is a critical need for remunerative justice in organizations. Performance appraisal - whatever its practical flaws - is the only process available to help achieve fair, decent and consistent reward outcomes. It has also been claimed that appraises themselves are inclined to believe that appraisal results should be linked directly to reward outcomes - and are suspicious and disappointed when told this is not the case. Rather than feeling relieved, appraises may suspect that they are not being told the whole truth, or that the appraisal process is a sham and waste of time. The Link to Rewards Recent research (Bannister & Balkin, 1990) has reported that appraises seem to have greater acceptance of the appraisal process, and feel more satisfied with it, when the process is directly linked to rewards. Such findings are a serious challenge to those who feel that appraisal results and reward outcomes must be strictly isolated from each other.
  23. 23. There is also a group who argues that the evaluation of employees for reward purposes, and frank communication with them about their performance, are part of the basic responsibilities of management. The practice of not discussing reward issues while appraising performance is, say critics, based on inconsistent and muddled ideas of motivation. In many organizations, this inconsistency is aggravated by the practice of having separate wage and salary reviews, in which merit rises and supervisors and managers decide bonuses arbiter COMMUNICATING RETENTION INITIATIVES ESSENTIAL FOR SUCCESS Employee Retention Strategies also helps organizations provide effective employee communication to improve commitment and enhance workforce support for key corporate initiatives. Consultation focuses on marketing-communication efforts related to organizational cultural change activities and to building employee and customer loyalty to new company goals and services. Employees can be fully engaged in change initiatives only when they understand and appreciate the importance of company goals. When equipped with full understanding of where the organization is heading, staff can then tailor their daily actions to effectively support key strategies, initiatives and customer-focused programs. Every employee needs and wants to know: • What’s my company doing to stay competitive in the marketplace? • How will my organization seize the opportunities of the market and economy? • What can I do, specifically, to make a difference? Recent studies have shown: • Only 52 percent of employees feel they know how their job helps promote company objectives, and • Only 39 percent of American workers trust their companies’ senior leaders Yet, there’s also good news: • Companies in which employees trust top management had shareholder returns that were 42 percentage points higher than those whose workers lack confidence in management • A 5-percent increase in employee loyalty can increase profits by as much as 50 percent. Communications services include: • Consultation and review of existing communication processes and content
  24. 24. • Development of new media for employee and customer communication and education • Business literacy programs to help employees understand markets, strategies and basics of corporate finance • Communication programs for organization-change initiatives • Communication to support targeted quality initiatives, JCAHO review, Magnet award attainment and Malcolm Baldrige assessments. MYTHS ABOUT EMPLOYEE MORALE PREVENT COMPANIES FROM ACHIEVING RETENTION SUCCESS Despite years of research that point to far different solutions, many companies use the wrong tactics when trying to improve employee morale, satisfaction and retention. These myths prevail, in part, because businesses have used these methods, however wrong, for a very long time and have become used to trying the same ideas. MYTH #1: PEOPLE MOST OFTEN LEAVE A COMPANY FOR MORE PAY Exit interviews, conducted to learn why people leave an organization; contain some of America’s greatest fiction. People frequently say they’re leaving for more money because it’s the easiest reason to give. More often the causes leading to departure are related to issues that were unsatisfying in the job or the company. Typical issues that cause dissatisfaction are company policies and procedures, quality of supervision, working conditions, relationship with the immediate supervisor and salary. Yes, pay does matter. While research shows most people don’t actually leave a job for more money, there are two important facts: Very-low-income workers will leave for more money because it’s a survival issue. For the rest of workers, the issue of money actually is about fairness. People become dissatisfied with pay when they feel it is unfair within the company, within the industry or when pay doesn’t seem to match the amount or type of work required. To increase employee satisfaction and retention, companies make more gains by working to improve whether people feel a sense of achievement, recognition, competence and growth, whether there are choices about how work gets done and whether employees feel respected by management.. MYTH #2: INCENTIVE PROGRAMS PRODUCE LONG-TERM PROFITS AND IMPROVE PRODUCTIVITY AND MORALE So, who doesn’t like free stuff? However, incentives such as gifts and cash bonuses for meeting speed and volume goals don’t affect employee commitment. They’re really a throwback to outdated management beliefs that workers must be coerced in order to work hard. All the extras don’t add up to the real glue that creates employee commitment: the
  25. 25. chance to learn and grow, meaningful work, good supervisors and respect and appreciation for a job well done. Incentives have been over-used particularly in the past decade, as management books touted the importance of improving recognition of excellent work. Yet, studies show that carrot-and-stick motivation actually does not pay off in long-term company profitability or employee satisfaction or retention. To the contrary, incentives can harm quality when employees aim for speed or other goals rather than quality. MYTH # 3: PEOPLE DON’T WANT MORE RESPONSIBILITY They don’t want more work if they’re already overloaded due to lean staffing; but people indeed want the opportunity to grow and develop their skills, advance their careers and have the opportunity for greater variety. Keep in mind what the research confirms: People do want to try new things, to feel skillful and to experience the personal satisfaction of higher levels of achievement. People don’t need a job promotion in order to gain more responsibility. The same job can be broadened to include more variety, more contact with different parts of the organization and greater control over decisions on accomplishing work tasks. MYTH #4: LOYALTY IS DEAD Not at all, though it is ailing in many organizations. People are seeking greater work-life balance than in the past, and employers have made great strides in providing more flexible hours and dress codes. Still, people seek to make a contribution, and organizations that provide healthy doses of the main satisfiers enjoy significantly lower turnover and higher morale. Profits are higher, too, according to recent research studies. Things have changed, indeed. Today’s workers will, in fact, change careers and jobs much more often. When the economy is good, people have become much more at ease in changing companies, are more likely to acquire new skills and move to companies that offer greater chance to use more of their knowledge and more willing to take the risks of starting anew at another organization. What has emerged in current management studies are that the same qualities that hold employees are the ones that best serve the customers: Employees who can make quick decisions on behalf of the customer and the company; employees who have a broader scope of responsibility that allows them some freedom and leverage to solve customer problems; learning opportunities that give employees the skillfulness to address customer issues; and supportive management and supervisors who use any mistakes that occur as teaching opportunities. MYTH #5: IMPROVING EMPLOYEE SATISFACTION IS EXPENSIVE
  26. 26. Research tells us the true satisfiers can’t even be bought: career growth, meaningful work, respect and appreciation and being able to influence how work gets done. In these leaner times employers have the same opportunity to gain true loyalty despite lowered budgets. The trinkets and prizes given in recognition and rewards programs aren’t necessary ingredients for developing an engaged workforce. The “glue” that holds people is made of much different stuff: Management that listens and responds to employees’ ideas about improving service, supervisors who support people’s growth and initiative, training in how to do the job successfully, good relationships with coworkers and genuine appreciation for a job done well. There are no costs incurred to build or enhance these motivators. MYTH #6: EMPLOYEE SATISFACTION IS “FLUFF” Does having engaged workers make a difference in the bottom line? Studies now show that lower turnover and greater levels of employee satisfaction have a definite positive impact on customer satisfaction and profitability, which are the key factors in company growth and sustainability. Consider these facts: • A strong link was found in a study by PricewaterhouseCoopers between employee retention and the quality of service as rated by companies’ customers. • According to the American Society of Training & Development, organizations that invested the most in training had higher gross margins and income per employee. • The cost of replacing an employee who leaves has been estimated by various studies to be between 70 and 200 percent of that worker’s annual salary. • The Council on Competitiveness found that a 10-percent increase in education has a more positive impact on productivity than a 10-percent increase in work hours. The bottom line on the bottom line? Investing in people and using the most effective management practices increases profits. MYTH #7: SUPERVISORS ARE THE PROBLEM Many senior leaders express dismay about the quality and actions of their middle managers and front-line supervisors. The “blame game” is old, yet the solutions are strikingly similar to those required to build an engaged workforce. In most organizations today, supervisors have more people reporting to them than in the past, more demanding customers than ever and greater amounts of change – all occurring at the same time. Yet, the amount of training provided to managers and supervisors in many organizations is minimal. More importantly, the amount of time that senior managers spend in dialogue with middle and line managers also is minimal.
  27. 27. Middle managers and supervisors can appear resistant to improvement efforts. However, the true failure exists in our understanding of their world, the challenges they face and the support they need in order to be successful. Successful organizations seek to build teamwork between senior leaders and middle managers and line supervisors (which is a key ingredient in creating teamwork throughout the company). MYTH # 8: MY COMPANY/INDUSTRY/PEOPLE ARE DIFFERENT Yes, every company is unique, and every industry has its own set of unusual challenges. However, a very costly mistake is made when we believe information from other sectors doesn’t apply to us or our organization. Retention research studies cross all industries, all types of work settings and in varied economic conditions. Still, the same results come up time and again. We build employee loyalty – and, indirectly, customer loyalty – through providing people with growth and learning opportunities, minimizing red tape, allowing people to think and make good choices, supporting middle managers and front-line supervisors and appreciating the efforts that people give to help our customers. It’s downright dangerous to ignore these findings – risky to the bottom line and the organization’s future. FACTS HALLMARKS OF RETENTION SUPERSTARS 10 Themes Define Retention-Rich Organizations and Healthcare Leaders In examining both the research and the practices of retention leaders, 10 themes emerge. These themes are core beliefs that govern decisions that affect employees, and, in turn, customers. Some of the leading stars are hospitals and nursing homes, which have risen to the challenge of what, will be the greatest shortage of caregivers and technical professionals in our history. Keep in mind: Hospitals are also struggling with reduced reimbursement rates, greater levels of technology, an ever-increasing knowledge base for their employees and a more knowledgeable, demanding consumer. In spite of these challenges, hospitals are leading the way in building magnetic cultures employees rave about. 1. VALUE YOUR EMPLOYEES, AND YOU’LL HAVE BETTER BUSINESS RESULTS
  28. 28. Independent studies of Magnet hospitals, designated by the American Nursing detailing Committee for high levels of retention and best nursing practices, show better outcomes for patients, lower mortality rates, shorter lengths of stay and increased patient and nurses satisfaction rates Turnover rates are significantly lower than non-Magnet hospitals. When taking into account that it costs 150 percent of a nurse’s salary to replace him or her, the savings are substantial, indeed. Retention superstars also value their managers and supervisory staff, providing needed support for them to lead well. 2. EMPLOYEES WHO CONTRIBUTE TO HOW WORK GETS DONE ARE MORE ENGAGED AND LOYAL. The 2007 #1 spot on Fortune Magazine’s 100 Best Companies to Work For is Google, which has a mere 2.7 percent turnover. Google allows its engineers to spend a portion of their time on projects they choose. One past winner, American Cast Iron Pipe Company, boasts the lowest turnover rate, at only 2 percent. At ACIPCO, a Fortune Best Company for multiple years, employees are represented on committees to ensure fair and uniform work rules, rates, apprentice training, seniority, medical service and the charity fund distributions. And, there’s more: Twelve employees are elected to a Board of Operatives, one is elected as clerical director, and an employee-at-large advises management on employee relations and four elected employees are voting members on the ACIPCO board of directors From the healthcare arena, local decision-making is king at retention-superstar facility and Magnet Award winner St. Luke’s Regional Medical Center in Boise, Idaho: “We have shared governance in all hospital areas. People participate in decision-making, determining what kinds of education and training they need, patient-care issues and there’s self-scheduling in some areas.” 3. PAY AND BENEFITS MATTER. BUT YOU CAN’T “BUY” TRUE COMMITMENT However, it’s not the glue that holds top talent. Sixty years of research still tell us that the true motivating environment is based in the intrinsic motivators of choice in how work gets done, seeing results from the work performed, meaningful work and learning and growth opportunities. Yet there’s no denying the powerful message sent by management when it channels resources into benefits that impact the well-being of employees and their families. Duncan Aviation, a recent 100 Best, boasts a low 6-percent turnover rate and provides $8,000 in scholarship funds for each employee’s child.
  29. 29. Healthcare had to face the hard facts that nurses and nursing aides were underpaid. Salaries have increased. However, Magnet hospitals also shine for their workplace cultures. At Boise’s St. Luke’s the belief has been: “You don’t have to pay the most. We don’t feel we’re going to get people to come and stay because of pay. We want people who want to take good care of patients.” 4. LAYOFFS ARE A LAST RESORT Loyalty is a two-way street. An economic downturn is where the rubber truly meets the road. The no-layoff policy at semiconductor company Xilinx has remained intact in the historically bad technology downturn. Employees had pay cut 6 percent; the CEO chopped his pay by 20 percent. Yes, management often must use layoffs to save the company. However, employees always wonder whether there isn’t more management can do in marketing, product development and streamlining business processes. Credibility is on the line. 5. LEARNING AND DEVELOPMENT ARE PRIORITIES Edward Jones, which formerly held the Number One slot on the Fortune list, spends 3.8 percent of its budget on training, with employees averaging 146 hours. New brokers receive four times as much. “Grow your own” is how talent-short industries are bringing people into the field. Hospitals are leading the way, with nursing school programs located right on their campuses. Paid tuition helps lower-wage nursing assistants get their RN degrees and move to a higher skill level. European nations never let go of their apprentice programs, but here in the US we’ve slacked off in many industries. What better way to have employees skilled in exactly the methods and practices your organization needs than to train them yourselves? 6. REPUTATION BREEDS RETENTION Nurses seeking a new job look to the Magnet-designated hospitals. Word is spreading about the Eden Alternative concept of involving nursing-home patients and staff members in how their facility operates are bringing new vitality to residents’ lives. Some of these facilities even have waiting lists of prospective employees – in an industry with intense staff shortages.
  30. 30. Magnet hospitals unabashedly promote their status. Hackensack Medical Center let the world know on roadside billboards. Cedars Sinai handed out free phone cards to its 1,200 nurses, suggesting they call their friends and brag that they work at a Magnet hospital. How does your organization stack up? How many job applicants are referred by current employees? How many people visited the “careers” section of your web site after publication in the media of an article about your company’s community-service deeds or workplace attractors? 7. SIMPLE AND LEAN ALLOWS PEOPLE TO DO WHAT THEY LOVE. WORK SHOULD MAKE SENSE Beware: Younger-generation workers have even less patience for tedious processes, unnecessary paperwork and needless bureaucracy. The key to improving productivity in your organization may be as simple as: Get out of people’s way! Learn about lean processes to explore how unnecessary paperwork and approvals can be eliminated. 8. THE GOLDEN RULE STILL RULES Respect for employees by management is a hallmark of organizations with low turnover. Treating employees no differently than managers expect to be treated is a cultural imperative at organizations truly committed to their workforces. These organizations have narrowed the traditional management-worker gap. Most noteworthy is that employees generally pass along how they’re treated to how they regard customers. We know, too, that losing a key customer-contact employee often means losing the customers who depended upon them. 9. KEEP PEOPLE “IN THE KNOW,” NOT IN THE DARK A study at George Mason University found employees stated their three top motivators as appreciation, being well-informed and empathy. People care deeply about their work and want to know their efforts are helping the company and its customers. Baptist Health Care Corporation has a “no secrets” culture in which results of customer satisfaction, finances and employee satisfaction are shared with everyone. 10. HIRE AS IF YOU COULD CHOOSE YOUR FAMILY MEMBERS We’re talking more than reference checks here. Every person who joins your organization will impact others. Culture is a delicate thing; treat it with care. Keep current with the best learning on interviewing methodologies, and check for consistency of applicant values with corporate values and vision. Spend as much time as necessary getting to know candidates – and allow them to spend as much time in and around your organization as they’d like. Imagine you were stuck in a
  31. 31. snowstorm or fogged in at an airport with this person. Would they give up their last quarters so you could get a candy bar out of the snack machine? STRATEGIES: Your resource for creating a retention-rich organization culture that attracts engages and builds lasting loyalty among today’s most talented employees. What sets Employee Retention Strategies apart is a steadfast philosophy that: • Uses only research-based, theory-supported approaches to improving employee engagement. Avoided are gimmicks such as employee of the month, suggestion boxes, prizes or other “carrots.” While commonly used, these short-term fixes fail to produce genuine employee loyalty (more than 60 years’ of research tells us so!). • Employs an easy-to-understand systems approach to ensure the root causes of turnover are addressed and the potential for lasting change unleashed. • Customizes all activities to your organization’s unique history, current practices and strategic objectives. Also considered are challenges unique to your industry sector, competitive marketplace issues and talent shortages. • Involves those responsible for implementing change in actually creating the change, ensuring input and improved shared understanding and support of all initiatives. • Integrates hands-on, action-oriented approaches that enable organizations to move forward quickly and effectively • Recognizes the research-proven role of no-cost strategies in developing the “glue” that builds employee loyalty and commitment. • Brings to your organization leading-edge organization-development best practices to effectively and quickly build a retention-rich culture. The Employee Retention Strategies newsletter, which gained this website the No. 1 positions on Google and Yahoo during its publication in the early part of this decade, was a nationally noted source for research-based, fact-driven guidance on enhancing employee retention. (Back issues still are available). From that research come approaches built on a solid foundation of what works (and what doesn’t) to gain the commitment of employees in all industries and economic sectors. Added to this base are leading-edge organization-development methodologies to bring your organization’s strengths to the fore, to rekindle the dynamic potential of your company to meet today’s challenges and to rebuild workforce commitment to the heart of your organization’s mission. Spend time reading the topics on this site. Understand more about what truly contributes to employee engagement and retention. Then, call for an individual discussion of your organization’s unique retention agenda.
  32. 32. THE MANAGER’S RETENTION CHECKLIST BUILDS RETENTION-RICH WORKPLACES Managers and supervisors who possess excellent track records for retaining high- performing staff have attained a healthy balance of helping staff achieve both organizational and personal, professional goals. The checklist below is a guide for incorporating into daily management and supervisory practices the best of current research for retaining top talent. For My Staff: I work collaboratively with each staff member to develop a personal growth plan, and I support their acquiring new skills and provide opportunities for them to use their newly acquired knowledge and talents. I look for each person’s strengths and guide individuals toward fully using their best talents. I leave as many choices as possible in how work gets done to those who perform the tasks. I promote meaningful work by allowing employees to work on “whole tasks” whenever possible. My staff gains a sense of accomplishment greater than when they only repeatedly perform a single function I ensure all staff has the training they need to produce excellence. I recognize and acknowledge personal achievement of each staff member at least weekly. I provide performance feedback regularly and promptly; at regular reviews, there are no “surprises” to my staff. I take a personal interest in each staff member, their professional and personal growth, their interests and passions. I assist with their being able to do more of what they love as often as possible. I continually clarify and update job-performance requirements and expectations. I am aware of the resources required by my staff to produce top-quality work. I ensure adequate resources by using my influence in the organization to obtain what’s needed. I share company information regularly, and I demonstrate that I value employees’ desire to be “in the know.” I regularly report results of our department’s work, its impact on the customer and the company, keeping staff apprised of how our work fits into “the big picture” of serving customers and achieving corporate goals.
  33. 33. I remain open to employee ideas and fully consider all, even if they appear at first to be impractical. I get back to the employee in a timely manner with an honest reply about whether the idea can be implemented. I encourage my employees to learn from other departments and managers who are willing mentors. I provide coaching to under-performing staff members. I appropriately reassign or terminate employees when their skills, personal deficits or behavior have a negative impact on customer service, company objectives or the morale of their coworkers. I recognize these can be times of great uncertainty because of global economic shifts that may impact our organization and industry. I allow dialogue about concerns, and provide honest input. I seek answers when possible. I’m not afraid to say “I don’t know” when questioned about the future. For Myself I am the monitor of my own behavior, providing a role model of integrity, compassion, passion and encouragement. I never discuss one employee’s issues with another staff member. I keep confidences, except when there is potential harm to the company or other staff members. I partner with other managers for the benefit of the company, customers and our employees. I make good use of my own coaches and mentors and their advice. When I’m unsure how to handle a problem, I seek counsel from others before making crucial decisions. When under pressure, I make efforts not to pass on my own doubts to my staff. I use my coaches and mentors to learn how to better manage my own stress. I take care of personal issues by seeking help for myself, knowing that when I am doing well I can be the best resource to my staff members. I am the advocate for my staff to my management, raising important issues that affect staff morale, customer service and the company’s strategic objectives. I have my own personal growth plan that includes continuously improving my managerial skills. I keep current on professional/technical issues and marketplace changes and learn from and pass on knowledge of my industry’s technical experts.
  34. 34. When approached by staff with a problem, I work hard to avoid being defensive. I listen fully and respond honestly. I realize that problems provide an opportunity to improve the department, my employees’ work life and our response to customers. I demonstrate to my staff that I am learning to balance work and home life. I set appropriate boundaries between my company obligations and my desire to spend time and energy with my family and friends. THE HIGH COST OF TURNOVER Unwanted or controllable turnover costs American businesses billions annually. However, “hidden” costs – those not typically taken into account – further drain a company’s resources, harm its reputation and can negatively impact service to customers. The articles below provide insight into costs of turnover as well as the positive benefits of building a retention-rich organization: Hidden Costs of Turnover: “Hidden” Costs of Turnover Can Greatly Exceed Numerical Calculations Finding data on the cost of turnover is easy – many researchers have been able to quantify hard-dollar costs of losing valued employees. However, many costs occur that can’t be assigned dollar amounts. These “costs’ can far outweigh the traditional, hard-dollar calculations – and organizations are incurring huge, unseen losses productivity, customer satisfaction, reputation among job-seekers and, significantly, in the morale of the departing employee’s co-workers. When we take into account that about three-quarters of employees polled by the Society of Human Resource Management and the Wall Street Journal’s CareeerJournal.com said they are looking for a job (according to information released by the Institute of Management and Administration in 2007), the costs of turnover can be nearly crippling to organizational finances and marketplace position. Consider these examples; looking at the hard dollars incurred that result from unwanted turnover as determined by research studies plus the costs that can’t be measured precisely: • Average employee turnover is 14.4% annually, according to the Bureau of National Affairs. And, turnover rates are on the rise, the Bureau now reports; turnover also varies widely among different industries. Yet, we can’t measure the blow to morale and increased job stress when remaining employees are burdened with the distribution of the departed employee’s workload. We also can’t always determine the negative impact on
  35. 35. customer service. • Replacement costs for a departing employee are estimated at one-third of his or her salary. Even at the former minimum wage, the cost to replace an employee is $3,700. The US Department of Labor’s Bureau of Labor Statistics estimates average costs to replace a worker in private industry at $13,996. (To determine an organization’s annual turnover costs, simply multiply turnover cost by the number of annual new hires.*) We can’t measure the future turnover of employees who are lured to other organizations by their friends who have departed. With all organizations in an industry competing for talent, informal networks are powerful resources for job seekers and friends often follow colleagues to other employers. • The cost to replace a registered nurse is 1.2 to1.3 times his or her salary, which is substantially higher than for most other times of workers. We can’t measure the damage to an organization’s reputation when customer service falters due to low staffing levels. When customers are unhappy, research shows they’ll tell their stories to more people than they’ll share a tale of good service. Additionally, the current nursing shortage means that those remaining will have higher caseloads, possibly face mandatory overtime and incur greater job stress – all contributors, according to the research, to nursing turnover. Nearly half of all nurses under age 52 have said they expect to change jobs within five years. • A 3,000-employee organization with average salaries of $45,000 that reduces turnover by just 1% can save $1.3 million, according to the Voluntary Hospitals of America. We can’t measure how employees feel when an admired, valued co-worker chooses to leave the organization. People naturally begin to consider their own options. • Estimates have determined that lost knowledge that leaves with the departing employee can be as high as 50% of the exiting employee’s salary for one year of service; and, this figure grows by 10% for each year of employment. We can’t measure how many new ideas and innovations each employee might generate in the future to help the company. Nor can we determine his or her potential to be promoted to higher-level roles and leadership positions. • On average, 30% of a financial advisor’s clients will move with their advisor if he or she changes firms.
  36. 36. We can’t measure customer loyalty to staff. Customer loyalty often is people loyalty: Customers trust and build relationships with their contacts, often more so than to the organization. Out the door go not only the confidence in this employee, but future referrals from the employee’s loyal customers. Is All Turnovers Problematic? Of course not. Poor performers, those who are not the best fit to their roles and discontented staff typically are not considered unwanted turnover. In fact, one study showed that as high as 50% of employees are disheartened that their organizations tolerate inadequate work and poor work ethics. However, controllable turnover – the loss of desirable, talented staff remains a costly concern – often with a price tag higher than most organizational leaders may perceive. Is There Any Good News? Fortunately, yes! For the flip side of employee turnover – the gains of creating high- satisfaction workplaces. NOTE: Turnover calculators are available on a number of Internet sites, enabling easy calculations for the cost of turnover for specific positions and organizations as a whole. • The Good News: The good news about employee satisfaction shows positive results in bottom lines & customer loyalty. Organizations that make commitments to creating the type of workplace cultures that fully engage employees at all levels continue to reap abundant financial rewards, as well as enhanced reputations among customers, potential customers and among skilled, top- performing prospective employees. Consider the following: • Money invested in the “100 Best Companies to Work for”® would have returned almost three times more than the same amount of a portfolio in the S&P 500 during the past six years. • The Number 1 “Best Company” for 2007 is Google, where turnover is 2.6% -- a record low. Keep in mind that Google has a fast-paced, stressful and demanding work culture. • The 2006/2007 Work USA® survey of more than 12,000 US workers across all job levels and in all major business sectors shows that financial performance of organizations is strongly related to employee engagement.
  37. 37. • This same study found that, for the typical S&P 500 organization, a significant improvement in employee engagement is associated with a $95 million increase in revenue. • Additionally, the Watson Wyatt Human Capital Index® study of 147 employers found that firms that fill vacancies quickly (within a month) have financially outperformed those that take longer by 48 percentage points over a three-year period. • A study by Cornell University professor Christopher Collins found that small businesses that implement employee-management strategies experience 22.1% higher revenue growth, 23.3% higher profit growth and a 66.8% reduction in turnover over companies that do not use similar practices. • In the world of healthcare, where nursing and healthcare worker shortages are extremely challenging, Magnet Hospitals, accredited for low turnover and better patient outcomes by the American Nurses Credentialing Center, found savings not only in turnover costs but also in shorter patient stays. • An organization with 3,000 employees and an average salary of $45,000, a 1% reduction in turnover equals savings of more than $1.3 million, according to a 2002 study by the Voluntary Hospitals of America. What is more difficult to measure is the value of the good or excellent reputations of organizations with high employee engagement when it comes to attracting the best talent. The value of “I really want to work there!” is hard to measure, yet priceless in recruiting efforts. EMPLOYEE TURNOVER CAUSES The Society for Human Resource Management and Aon Consulting did a study that discovered the top three reasons employees voluntarily leave a company. 1. To advance their career with greater opportunities for training and career development. 2. A better compensation and benefits package. 3. Poor management EMPLOYEE TURNOVER STATISTICS INCLUDING COST The Wall Street Journal reports the total cost of employee turnover ranges from a low of 50% to 60% (The Hay Group) to 100% to 150% (Hewitt Associates) of the employee's annual compensation. Imagine the savings if your company retained one or two additional employees each year by having better managers and by providing training and career development. Take a mid-level manager that earns $35,000. If you had to replace this manager, at the minimum it would cost your business $17,500. How many managers
  38. 38. does your company lose per year? If your business loses two managers in a year, that's $35,000. Five managers, that’s $87,500. Ten managers, that’s $170,500. Imagine the savings by holding onto one or two extra managers per year! Let’s look at the first cause of employee turnover -- employees want to advance their career with greater opportunities for training and career development. Providing a set of tools to develop the leadership and management skills of your employees will provide immediate and long-term benefits to your business. It should be a major step in your employee retention strategy. When you provide training to your supervisors and managers, they will be receiving training and career development which they want and need. Their sense of advancement and skills will lead to increased productivity for them and their team. They will have more fulfilling work and are less likely to leave your company. This provides an immediate benefit to your bottom line - reduced employee turnover! Another cause of employee turnover is poor management. Have you had a poor manager? What happened to your work, initiative, and attitude? Exactly! Work quality diminishes, productivity decreases, attitudes drop. Have you left a job because you had a poor manager? Your company's employees should be focusing on the advancement of your company goals, not on their manager.
  39. 39. CONCLUSION "The Leadership Journey has proven to be an excellent tool to train and enhance the skills necessary for success. It is well received by employees because it's interesting, challenging to the mind, and to the point." A VARIETY OF TOPICS & FORMATS FOR IMPROVED PERFORMANCE The Leadership Journey is a supervisory management training system consisting of 24 courses available on DVD, CD-ROM, VHS, and Online (Web). All the critical skills your managers and supervisors need to achieve extraordinary results are in one easy to use system. Courses teach relevant topics like: • Conflict management • Motivating others • Coping with change • Leadership • Professionalism • Decision making • Empowerment YOUR MANAGERS WILL ACHIEVE EXTRAORDINARY RESULTS Managers benefit in hundreds of ways by using training. Managers will have: • Improved relationships with their employees and a better attitude toward upper management. • Greater self and leadership awareness. • Decreased time and effort spent solving people problems. • Enhanced communication, teamwork, and problem solving skills. • Higher energy levels. • Increased ability to cope with, adapt to, and learn from a rapidly changing environment. Managers are not the only ones to benefit even the company will experience: • Improved employee retention and decreased hiring expenses. • Increases in productivity of 17% to 24%. • Increased confidence in management. • Multiplied profits by up to 24%. • Raised income per employee by 218%. • Record setting performance of corporate goals. RETENTION DIAGNOSTIC: COMPLETE ORGANIZATIONAL ASSESSMENT
  40. 40. The Retention Diagnostic is a rapid benchmarking process that identifies the costs and pinpoints the real obstacles to creating a high-performing workforce. It is a powerful process that uncovers the hidden challenges affecting employee loyalty, development, performance, and engagement. This is the starting point to align the workforce to the company goals. THE GOAL Your company wants to comprehensively evaluate what is working and what is not in how you recruit, develop, motivate and retain your workforce. You want to confidently validate, and invalidate, assumptions about what is needed to reduce turnover, increase performance, and boost morale. You want clear, precise action plans that will work for your company’s goals. YOUR CHALLENGE: Change is coming and you need to know the "current state" of your workforce. You need to develop strategic workforce goals and implement solutions that will both get results and be embraced by staff and management. You need clear links between employee practices and the impact on the organization. HOW WE CAN HELP: Retensa’s Retention Diagnostic provides you with a clear snapshot of the internal best practices and barriers to success of your current workforce. It is a 360 degree view of your employee-firm relationship. Most importantly, the Retention Diagnostic delivers prioritized Action Plans with recommended options, and potential advantages, to help attract and retain the optimal workforce -- the workforce that will achieve your long-term goals. Results: Armed with the clarity of this unique organizational assessment, you know where to invest in the programs that yield the highest ROI and you know where to stop spending money. Companies save hundreds of thousands and up to millions of dollars as a result. We provide you with real-world staff attraction strategies, recruiting plans, leadership development opportunities, orientation and on boarding designs, and motivation programs to build employee loyalty and much more.