Avoiding Six Dangerous Retention Mistakes Most Companies Make

Avoiding Six Dangerous Retention Mistakes Most Companies Make

Steve Puckett, SPHRDirector, Corporate Human Resources

Introduction

Employers facing “Talent Paradox”– Relatively high unemployment (peaked in 2010)– Increasing shortages in areas where attracting and

retaining employees is most critical– Loss of high-potential talent

Spike in voluntary turnover after a downturn– Employees advancing careers– Poor morale due to cost cutting measures– Gen Y’s comparing notes

The Cost of Turnover

Can be significant and can result in…– Loss of productivity– Lost institutional knowledge and relationships– Added burdens on employees who must take on

more work

The Cost of Turnover

Direct Placement Costs– Accrued paid time off and replacement costs – 50-60% of annual salary

Indirect Placement Costs– Disruptions to team-based work– Lost clients– Decreases in overall service or product quality– 90-200% of annual salary

12-40% of Pre-tax Income

No longer a problem for just “large” employers

Voluntary Turnover

During turbulent times best employees are the ones who leave– A’s first– B’s second– Left with C’s

Poor performers hold on to paychecks until unemployment eligible

4 Paths to Turnover

Employee is dissatisfied with job Employee has better alternatives Employee is following a plan Employee is leaving without a plan

Additional Factors

Organizational commitment and job satisfaction

Quality of the employee-supervisor relationship

Role clarity Job design Workgroup cohesion

Focus Shifted from Talent Retention to Cost Reduction

2/08 Corporate leaders priority – Retention of top talent

2/09 Cost reduction/survival– Top talent retention fell to #8

Once again, retention on our radar screens

– Retention of top talent is even more critical as economic conditions improve…

The Six Most Dangerous Retention Mistakes

1. Focusing on Retention Programs vs. Retention Processes

2. Supporting a Fear-Based Workplace3. Confusing Employee Engagement with Employee

Destruction4. Not Supporting a Multi-Generational Friendly

Workplace5. Not Holding Supervisors Accountable for

Retention6. Not Narrowing the Front Door to Close the Back

Door

Critical Retention Mistake #1

Focusing on Retention Programs vs. Retention Processes

Drive Retention from the Top, Because Executives Have Greatest Impact

Include turnover cost in annual report Include in strategic plans and report monthly Rewards for meeting goals Consequences for missing goals HR must encourage managers to lead with

influence rather than authority Leave authority to senior management

- CFO’s must be on board

Think!

Sales

Service

Quality

Safety

Retention

= $ Profits $

10 Strategies of Rethinking Retention - Richard Finnegan

1. People quit jobs because they can• Companies make it too easy to quit• No effort to hold on to our best

2. Employees stay for things they get uniquely from you

• Build a retention brand different from others

3. Supervisors build unique relationships that drive retention/turnover

• Employees stay for bosses• Employees leave because of bosses

4. Hold supervisors accountable for achieving retention goals

• Add to other measurable objectives

10 Strategies of Rethinking Retention (con’t.) - Richard Finnegan

5. Develop supervisors to build trust• Relationships Trust Information Success

6. Narrow the front door to close the back door• Focus as much on hiring process as retention

7. Script employees’ first 90 days• Predict how long employees will stay• The most critical time during employment

8. Challenge policies to drive retention (support/hinder)

9. Calculate turnover cost to galvanize retention

10. Drive retention from the top• Executive buy-in is a must

Design Job for Engagement

Capture the minds and hearts of employees– Avoid the Sunday blues

Challenging assignments– The absent Millennial

Goals with feedback Provide for personal growth and development Full partnership career development process

– Career interest forms

Hidden Obstacles to Retention

Young workers with fewer bills Growing number of entrepreneurs

Calculate Turnover Cost to Galvanize Retention

Develop formula to calculate turnover cost Those who have CFO endorsement have greater

opportunity for upper management support Call center identified turnover cost at $12K per employee

– Destroyed a $12,000 obsolete piece of computer equipment to drive point

– Drove home actual cost

Delivery company put cost of driver turnover at $60K, same value as company truck

– Showed video of totaled truck from accident to emphasize cost

Best practice

Retention is an on-going process driven by upper management

NOT

a Band-aid program


Supporting a Fear-Based Workplace

Managing Through Fear vs. Trust*

* Managing Through Trust vs. Fear, a Human Workplace E-Workbook by Liz Ryan

FEAR TRUST

The boss is always right. Who knows who’s right? Let’s brainstorm ideas.

The most important thing I do is make sure we hit our goals.

The most important this I do is remove barriers for my team (so they can hit goals).

If someone goofs up, I write them up.

If something goes wrong, we talk about it to get the learning.

Managing Through Fear vs. Trust*

* Managing Through Trust vs. Fear, a Human Workplace E-Workbook by Liz Ryan

FEAR TRUST

I need to let people know who’s in charge.

I need to make sure people know I have their back.

Incentives & penalties make employees perform.

Carrots & sticks are for donkeys. Treat people like adults & watch them succeed!

We need lots of policies & controls because people can’t be trusted.

Why would I work among people I don’t trust? We solve problems in context.

During economic downturns most companies focus on keeping employees with good attendance even though their work is substandard.

This seems to be a better alternative to firing the employee and waiting days, weeks or months to replace.

Some bosses are encouraging young workers to buy a new car, boat or other expensive item knowing they would have to keep their job to make the payments.

Beware “Jerk Bosses”

Since 2003, 24 states have introduced legislation on “workplace bullying”, however no laws have been enacted*

9 states with 12 bills active as of 3/25/13* 37% of U.S. workers report they were a bully victim – 12%

have witnessed workplace bullying* Verbal attacks from supervisors are generating six figure

settlements Four times more complaints than all forms of harassment

combined

*According to the Workplace Bullying Institute

Transitioning From a Fear-Based Workplace10 Early Signs of a Fear-Based Workplace

1. Appearances are everything• Staying longer than boss• Worrying less about quality of work than how they’re

perceived

2. Fear-based discussions rule over work discussions

• Who’s stock is falling/rising• Preoccupied with who is invited to meeting vs.

meeting agenda• Predicting employee failures

Transitioning From a Fear-Based Workplace (con’t.)10 Early Signs of a Fear-Based Workplace

3. Distrust rules• Off the record conversations• Coded messages• Back alley meetings• Backstabbers thrive…”Would this be your knife in my back?”• Your failure is my success

4. Numbers rule• Total obsession w/ metrics• Employee is sum of numeric goals• Record profits and now cutting back on perks…coffee, etc.• Stock price vs. People price

5. Too many workplace policies• Overdependence of rules vs. common sense• Lengthy, tedious policies• Ordering supplies, scheduling a business trip or vacation day

6. Management discourages lateral conversations• Fear of employees comparing notes• No one has authority to authorize meetings• Loss of sharing ideas…No Brainstorming Allowed!

7. Information is restricted• Information leads to success• Lack of transparency• Knowledge = Power• Destroys trust



8. Brown-nosers rule• Kissing up at all levels• “Who said it” rules over “what was said”• Fear-based leaders surround themselves with “yes

men” and “yes women”• Right answer vs. truth

9. The boss is so out of touch it’s almost comical…The Office• Focuses on keeping one’s head down, taking no risks

and sucking up to anyone in management


10. Management leads by fear• Most decisions made in secret• Information is given in drips• Company culture “Be glad you have a job, stop

whining and get back to work”• Leadership is based on keeping employees in the

dark• Major gap between management and employees

Treating Employees Fairly Requires:

Distributing rewards Respect through interpersonal relationships Involving employees in difficult decision-

making Offering opportunities to question decisions


Confusing Employee Engagement with Employee Destruction

Employee Engagement

Employees who are so committed to their jobs that they want to give…

Discretionary Effort

3 Buckets of Employee Engagement- N. Davis, Editor, HR Magazine- G. Sherrill, VP HR, Wal-Mart

1. 17% actively disengaged• Unhappy• Undermining co-workers

2. 54% not engaged• Sleepwalking thru workday• Putting in time w/o passion• Fence sitters

3. 29% work with passion

“Do you want the 17% hanging around your 29%?

Disengagement costs U.S. economy $300B in lost productivity annually.

6 Essentials for World Class Employee Engagement

1. PeopleSenior leaders who excel at Listening Knowing and cherishing relationship with employees Outstanding communication

2. WorkProviding resources for employees to over-achieve

3. Full Service RecognitionCompetitive payRecognition for each generationOne size does not fit all

4. Opportunities Succession planningTrainingCareer development

6 Essentials for World Class Employee Engagement (con’t.)

5. Quality of Life IssuesTargeted benefits

Flex schedules

6. Company CultureLive your practices

• Diversity• Company reputation• Performance management

*Every employee must understand How their job impacts organization’s success

Employees First and Customers Second- Vineet Nayar

HCL Technologies

Key is holding management equally accountable to employees

Live in a world of democratic form of government

BUT Autocratic nature of business

Customer Service Focus Must Include Internal Customers

Employee first, Customers second Satisfied employees display better customer

service

How Not To Engage Your Employees

Company President– Not listening to employees– Hires a $100K consultant– Consultant listens to employees– Makes same recommendations

Not embracing 50-50 meetings– 50% informing– 50% listening

Employees Stay Because of Things They Get Uniquely From You

Write down 2-3 employees in your company who are critical to your success

Write answers to these questions for each employee

– Could this employee leave you for a better job?– Has the employee ever considered looking elsewhere?

Now write down reasons you feel they have stayedTangible…shift, schedules

Intangible…new skills, good supervisor


Not Supporting a Multi-Generational Friendly Workforce

Traditionalists (Veterans)

Born before 1945 Long term careers Loyal Tech-challenged Like structure Respect authority Law & order Hard work…max effort Duty before pleasure Honor

Baby Boomers

Born 1945-1964 Motivated by position, perks

and prestige Competitive Goal-oriented; equate work

& position with self-worth Independent Prefer to meet face-to-face Believe you have to “pay your dues”

to get ahead in the workplace

Generation X

Born 1965-1980 Technologically savvy Like informality Learn quickly Work/life balance Embrace diversity Like to work independently Like casual work environment Short attention spans

Generation Y (Millennials)

Born after 1980 Communicate through

texting, social networking,

email Family-centric Embrace diversity Expect to advance quickly Attention craving Participation vs.

accomplishments Good at multitasking

Major Increase in Employment Replacing Exiting Boomers

1 Personal Financial Advisors

2 Dental Hygienists

3 Civil Engineers

4 Market Research Analysts

5 Computer Systems Analysts

6 Physicians and Surgeons

7 Computer Appl. Software Engrs.

8 Management Analysts

9 Accountants and Auditors

10 Registered Nurses

Top Job Opportunities for Next 10 Years*

The best paying, fastest growing jobs will grow up around one of the richest and fastest growing segments of the population: the retiring Baby Boomers.

*24/7 Wall St.

Generational Expectations of Succession Planning

Traditionalists My dedication and service have been rewarded.

Baby Boomer It’s about time! I’ve paid my dues.

Gen X What do you mean I can’t be promoted yet? I have delivered the results for which you asked.

Gen Y What’s my next career move? I’ve been here for 12 months and haven’t been promoted yet.

How Generations View Change

Traditionalists Boomers Gen Xers Gen Ys

Something’s Wrong

Caution Potential Opportunity

Improvement

Using Social Media to Engage Workers

Gen Y will make up 36% of U.S. workforce by 2014; 46% by 2020– Opportunities for career progression– Opportunities for personal development– Collaborative work environment– Flatter them; motivate them

Employers must embrace social media to enhance learning opportunities

Washington Post Survey3400 Surveyed

Employee Retention Desires

1 Telecommuting 548 16%

2 Educational Assistance 396 11.6%

3 Flextime 379 11.1%

4 Benefits 375 11%

5 Bonuses 370 10.8%

6 Fitness 357 10.5%

7 Money 334 9.8%

8 Other Perks 302 8.9%

9 Time Off 227 6.7%


Not Holding Supervisors Accountable for Retention

Hold Supervisors Accountable for Achieving Retention Goals

All levels of supervisors should have retention goals

Should be weighted same as productivity, safety, other goals

Talent Keepers recent survey

– Only 14% supervisors have retention goals

Holding Supervisors Accountable for Achieving Retention Goals

Top methods for setting retention goals Transitioning from consoling counseling to

accountability counseling Consoling conversation

– Sad we lost Susan– Really going to miss her– It may take weeks to replace her– I am sure you will do a great job

Accountability conversation– How did we lose Susan?– She earned highest rating– What could/should we have done to save her?– What changes will you make to prevent from this happening

again?

In reality, many supervisors would say

“Susan was not as good as we thought”

In Order to “Own Your Team”

Supervisors must be part of the hiring process– You hire it– You coach it– You are responsible for outcome and results

Adjust retention goals for economic downturns Compare to the best, not the rest

Supervisors Build Unique Relationships That Drive Retention

#1 factor in retaining employees is “immediate supervision”

Best working conditions, world class benefits, employer of choice branding– Will be over-shadowed by ineffective supervisor

Average benefits and pay may be overlooked for great supervisor relationships

Employees join companies for “things” but stay for people

Supervisors Build Unique Relationships That Drive Retention (con’t.)

Yahoo Hot Jobs Survey– 70+% of employees surveyed were interested in

getting a new job due to dislike of boss

Florida State University study on supervisors– Failed to keep promises (39%)– Failed to give credit when due (37%)– Gave “silent treatment” to employees (31%)– Made negative comments about employees to other

employees (27%)

What Employees Seek from Leaders

Trustworthiness – 79% Cares about others’ well being – 67% Encourages development of talent in the

organization – 56% Highly visible to employees – 42% Manages financial performance successfully –

42%

Treating Employees Fairly Requires

1. Fair distribution of rewards

2. Heightened awareness of interpersonal relationships

3. Involving employees in decision making

4. Offering opportunities to question decisions

Develop Supervisors to Build Trust with Teams

According to 80% of employee surveys, TRUST is the most important factor employees seek from supervision…

Relationships lead to

Trust leads to

Information leads to

Success

Behaviors of a Non-Trusted Supervisor

Kiss up vs. kiss down Rumor central

– Caught up in employee rumors

Employees clam up– Employees polite but not engaging– Conversations very short

Complaints bubble up– Most complaints hidden– Playing favorites– Bullying– Retaliatory behavior

Behaviors of a Non-Trusted Supervisor (con’t.)

Fewer individual meetings– Group and one-on-one– Meetings cut short– Tight agenda– Meetings postponed/cancelled

Employee survey scores nose dive Production suffers

– Productivity declines– Blame game– No accountability

Increase in turnover

Turnover Retention

Traditional Thinking Progressive Thinking

Most important supervisory skills for retention: communication, feedback, coaching

Supervisors who cannot build trust have little credibility regardless of other skills

To reach their positions, supervisors/managers have already learned their trust skills

Some supervisors are trustworthy and some are not

Trust begins with relationships

Only one chance for making a good first impression

Employee Retention is a Significant Factor to be Considered for Managerial Promotions


Supervisors cannot control all reasons employees leave

Like sales – supervisors strongly influence results

Pay & other policies are outside supervisor’s control

Supervisor can impact pay decisions

Supervisor won’t fire poor performers to pad retention numbers

Manage supervisors towards right decisions

Supervisors are a small part of a big problem

Supervisor takes ownership of team

Wegman Food Stores, Rochester, NY (#10 Fortune’s 100 Best Employers)

Requires front line management accountability for retention

A Great Retention Story

Who was your best boss? Why?

Vice President of HR– Good communicator– Held me accountable– Not afraid to offer praise and/or criticism– Became a good listener– Relationship builder– Trustworthy…did what he said he would do– Good sense of humor

Supervisors build relationships based on trust…


Not Narrowing the Front Door to Close the Back Door

Narrow the Front Door to Close the Back Door

Hiring the wrong employees puts you on a direct path to turnover

Tips for hiring employees who stay– Don’t forget the basics

Blocking Tackling

– Compare to the best http://www.weddles.com/awards/index.htm

Most Turnover Occurs Within 90 Days

Set retention goals– 90 days– Annual– Adding a few months to Average Length of Service

can increase ROI tremendously– Doubling length of service cuts turnover in half

Do not classify the employee who quit as a slacker

Increasing Retention Involves Improving Employer Branding

Texas Instruments– “Think Big, Think Bold, Think Texas

Instruments” General Mills

– “A Great Place to Start; A Great Place to Stay”

eBay– “You can find a lot of cool things on eBay

but nothing cooler than our jobs” Children’s Healthcare of Atlanta

– Video of how jobs impact children's health

Increasing Retention Involves Improving Employer Branding (con’t.)

Delta– “Delta employees don’t just travel the world, they work

to improve it” Publix Supermarkets

– “Where shopping is a pleasure”– “If you think shopping at Publix is a pleasure, try

working here” Barnes & Noble

– “If you love books why not work at a place surrounded by books”

Hard Rock – “For those about to Rock, we recruit you”– “Kick a– service, served fresh daily”– “Rock stars wanted, come perform for a packed

house”

Script the First 90 Days

At one time Wal-Mart had lost 65% of its employees in the first 90 days

University of Florida study states most employees form opinions in first 30 days which impact their decision to leave within 90 days– #1 on their list is disrespect from supervisors

Stay Interviews

Employers of choice are focusing on stay interviews– Equal importance as exit interviews– Educating supervisors why employees stay, as well as why they

leave– “Someone cares that I stay”– Concerns are addressed

Supervisors must be trained how to conduct stay interviews

– Not complaint sessions– Clear focus on purpose of meeting– Avoid “implied contract”

Stay Interviews (cont.)

Broaden employee’s awareness– What do you look forward to as you come to work each

day?– Which parts of your job are most enjoyable?– Which parts of your job are the most challenging?– What are you learning here and what else do you want to

learn?– How do you like the people you work with?


According to Bureau of Labor Statistics– The length of time an employee stays with a job

increases with their age when they began the job

Employee Referral Programs

3M Texas Instruments Fidelity Investments McDonnell Douglas

Reduced hiring cost 75-90%

Implement Employee Referral Program

Include taxes and gross up awards– $100.00 = $73.87

Match rewards to employee needs– Cash– Trips

Present awards publicly One big prize annually

Build Programs to Attract Older Workers

2012 – 20% of workforce age 55+ 60%-75% plan on working past retirement age

due to recession Beat back misconceptions

– National Council on Aging Reports 97% older workers reliable

AARP National Employer Team– www.aarp.org/money/work/articles/national_employer_team.html

Build a Realistic Job Preview Program

More than just a tour Working conditions Pay Benefits Succession planning Co-workers Use subject matter experts to build job description Schedule applicant to meet with high performance

employees

Probe for past resignation reasons– What drove you to look– Go for detail

Google professional candidates– 35% of executive candidates have been turned down

due to internet information – Look for high level accomplishments/memberships in

professional organizations



We source all employees who meet our qualifications

We take extra effort to source older applicants because they stay longer

We pay good money for employee referrals

We market our employee referral program to meet employees needs

We give applicants a tour We have a formal job preview program

Encourage Employee Embeddedness (Is that a word?)

Provide mentors Design work in teams Foster team cohesiveness Encourage employee referrals Provide clear socialization and communication about the

company’s values and culture Provide financial incentives based on tenure Provide unique incentives that may not be common

elsewhere

Express Employment Professionals Wishes You Great Retention Success

Avoiding Six Dangerous Retention Mistakes Most Companies Make

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