An important issue
The days of viewing an employee as an interchangeable part,
easily replaced by a new one when the old wore out, are gone.
In today's knowledge based economy more executives realize that
the most important assets of the company walk out of the building
each evening. That is disconcerting. But when the assets walk
out and don't return, it is frightening.
True costs of turnover are astronomical. When companies calculate
the actual total cost of recruitment, hiring and training they
are always shocked. But when they add lost productivity, the
impact on customers, the mistakes that a new person makes, the
disruption to the team, and the lost "institutional wisdom",
turnover takes on ominous meaning. Most estimates per the cost
at two to three times the annual salary of the employee
A complex issue
Retention is an extraordinarily complex issue. Complex because
zero turnover in an organization is usually unhealthy, and 100%
turnover is catastrophic. So finding the right number is the
first step.
The complexity continues when you realize that not all turnover
is equal. Simply looking at a turnover rate of 17% per annum
does not tell the complete story. The loss of a top engineer
with ten years of experience, strong customer contacts, and
good relationships with suppliers is obviously more troubling
than losing a filing clerk you hired a month ago. Understanding
turnover requires probing into the details. Who is leaving (high
performers or low performers, older versus younger people, recent
hires or people with long tenure), when are they leaving (after
six months, after five years, or ten years), and why they are
leaving (boring work, dislike of their manager, non-competitive
compensation, no peers whom they respected), what job categories
or departments are experiencing the most turnover (production
staff, systems analysts, salespeople), and what portion was
voluntary rather than the company's decision?
Solutions exist
The fact that H-P's turnover is at least 10 percentage points
lower than other comparable companies in Silicon Valley attests
that turnover can be impacted by the leadership of the organization.
It isn't out of our control. So what impacts retention? The
list sounds much like any list of excellent organizational practices:
- A strong corporate culture
- Positive relationships with the immediate manager and
peers
- Exciting and meaningful work assignments
- Opportunities to grow and develop on the job
- Information on how you are doing and your future in the
organization
- Competitive rewards
- Opportunities to "make a difference"
- Having the right resources to do your job
The bottom line is that great places to work have lower turnover
than not-so-great places to work.
PROVANT's perspective
First, understand the current state of mind of your workforce.
Through surveys, focus groups and one-on-one interviews, you
can determine the current degree of loyalty you enjoy.
Start by understanding why people are staying, and what you
are doing that creates a desire to remain for long periods
of time. It is also important to find out what troubles people
and would lessen their commitment to stay. But we encourage
you to begin with your success and find out what binds people
to your organization.
Collect detailed data on turnover for the last two or three
years. Probe into the data. An aggregate turnover number won't
tell you much. A "granular" analysis of turnover
is required to really understand what is happening.
Examine the information you have regarding the reasons people
left. Do further research on selected turnovers. That is,
the person who left because their spouse got a fantastic job
in a different city may not be worth further exploration.
But the outstanding performer who left for "better opportunities"
or "personal reasons" may be worth a follow-up call,
even a year or so after their departure. In fact, today they
may well be more forthcoming with the real reasons they left
than they were at the time of their resigning from the company.
Second, enlist your current workforce to help the organization
retain employees. We've found that concrete, practical
suggestions for important change are most likely to come from
your current people. They can recommend changes in procedures,
the elimination of silly policies, changes in work processes,
and methods for improving communications.
Third, provide ample training and development. There
is clear research to show that people are, as the author Maxell
Maltz suggested, like bicycle riders. If they aren't moving
forward, they fall over. People want the sense of growing
and learning. PROVANT can advise in the selection of the right
learning activities, and provide assistance in their delivery.
Because the research shows that people tend to "quit
their immediate boss" rather than the total organization,
helping managers to develop strong, personal relationships
with their people is an excellent way to boost retention.
Fourth, strengthen new employee orientation and assimilation
programs. Most companies have orientation sessions for
new employees. But the research suggests that assimilation
is at least a six-month process. Done well, the research says
people stay longer and are more productive. The process needs
to not only acquaint people with the history of the firm,
the markets it serves, and the employee benefits; but more
importantly, it needs to create a social group into which
the new employee fits. It needs to help everyone know what
is expected of them, and how to function most productively
in the system. Thus, it is not an HR activity. The new employee's
department must be thoroughly involved in this process.
Fifth, retention begins with hiring the right person.
Accurate profiles for jobs, and improving the recruitment
and selection process is a long-term element in improving
retention. Helping managers to sharpen their interviewing
skills can assist in better selection.
Sixth, constantly review your recognition and reward systems.
Make sure that your compensation and benefits are competitive.
Provide people with frequent feedback on how they are progressing
in learning and performing on the job. When possible, give
people some long term incentive to stay with the organization.
* Desert - To abandon, esp. when most needed. Webster's
II New Riverside Dictionary. 1996.
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