Employee Retention: Notes from the Underground

If you are committed to building an organization that will someday achieve what Jim Mullen of Mullen Advertising calls “corporate greatness,” employee retention should be at the top of your to-do list (right along with hiring the right people in the first place). Philosophically, employee retention is important; in almost all cases, it is senseless to allow good people to leave your organization. When they leave, they take with them intellectual property, relationships, investments (in both time and money), an occasional employee or two, and a chunk of your future. And from a more practical standpoint, retention is important for the following reasons:

  • Replacing qualified employees can be extremely difficult, exceptionally expensive, and very often unnecessary.
  • Training new employees is costly.
  • Poor retention creates a “revolving door” culture within the organization, lowering morale and confidence.
  • Poor retention affects your customers (no matter the type of business you have, your customers develop important relationships with their contacts within your organization).
  • High turnover eats away at your organization’s productivity, ability to deliver, and overall efficiency. This sad reality always manages to impact your customers negatively in one way or another.

The first thing to understand about employee retention is that there is no magic wand, no single answer as to how to retain your employees. Many factors that you cannot control affect retention, including but not limited to:

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  • Shifting markets
  • Demand for specific skills
  • Business conditions
  • Demographics
  • Lifestyle changes
  • Technology issues
  • Trends in work/life decisions as employees’ needs change

Retention is not affected so much by the things you do as a company as the things you are as a company. Realizing this, to a small degree, senior management has tried to create many things they thought would be good for employee retention: for example, casual Fridays (soon to be casual every day); flex time; telecommuting, company-paid pizza lunches; wine, cheese, and nachos on Friday afternoons; cookies and prizes at meetings, and on and on. All of these things are nice, but they are not enough. Employee retention is significant in theory, elusive in practice, and never-ending as a good and noble objective. The Dirty Dozen The following are what I call the “dirty dozen” of employee retention principles. Are there more and other variations on these ideas? Of course. But the commitment to retain employees is akin to the commitment to lose weight. You must start today. Not tomorrow, but today. And starting small is far better than not starting at all. Armed with this knowledge, consider beginning with the following. If you are successful at implementing all of them, you are clearly on your way to creating an organization that has employee retention as part of the corporate culture. And this, my friends, is a giant step in the direction of corporate greatness. 1. Hire only the best candidates. The interviewers and those who make the final hiring decisions are the gatekeepers of an organization. They should be allowing only the cream of the crop to enter ó no compromises. This should be upper management’s standard as well as yours. So often people join an organization because of the quality of the staff already in place. It is critical that you understand this point. If you let this standard slide, you eradicate this very significant reason for people to join your company. Great companies are, for the most part, made up of great employees. If you are fortunate enough to have, or be part of such a company, hiring only the best candidates is a good way to remain in that position. (Do you think Microsoft goes through difficult times in order to hire only the best candidates? I think so.) 2. Work to make sure employees are satisfied with their jobs. Create reasons for people to join your organization and to stay. See that they enjoy their jobs, their responsibilities, and their possible career paths. They should also have a good understanding of how their work supports the objectives of the organization, and you should offer ongoing feedback so they know if they are meeting expectations. Talk to your employees on a regular basis. Never assume things are rosy because you have not heard otherwise. By the time you hear bad news, things are probably far worse than you expect. These surprises are seldom positive, and the results can be downright disastrous. Above all, be sure to communicate with new employees on a regular basis. Do not watch them “sink or swim.” Set goals, coach, and give them every opportunity to succeed. I suggest a one-on-one with each new employee at least once a week. Do this for a few months to review progress and address concerns that arise both for the employee and/or the manager. In this way, you are being proactive rather than reactive, and it allows you to catch minor problems before they become major ones. Your new employees will feel valued, motivated to do their best, and will take pride in being part of a successful organization. 3. Let it be known your organization wants the best. It is important that the organization informs its employees that, as a company, it is always on the lookout for exceptional talent and not just trying to fill open positions. But what happens if a stellar candidate arrives at your door and there is no position for that candidate? What do you do? You figure out a way to create a place because brilliance and ability demand a place. If you locate a candidate who is clearly a “must have,” make room for that candidate. Most importantly, it is more effective to change the position to fit the person than the other way around (people don’t change all that easily). This behavior demonstrates your commitment to hiring the best and speaks volumes about your organization’s overall commitment to seeking excellence. 4. Develop your employees. Exceptional employees want to become even better. You can help by developing them in the following ways:

  • Develop a comprehensive career advancement program.
  • Utilize mentoring and coaching where appropriate.
  • Allow employees to move in different directions within the organization (this develops perspective).
  • Always look within before you look outside to promote. The employees who took your company to its present position deserve the first shot at the new jobs that will in turn help your company to get to the next level

5. Create an atmosphere where fun is valued. People want to have fun, but the wisdom of corporate America sees very little value to this most important and often overlooked attribute. I don’t know about you, but I’d never want to work for a company where no one ever laughed. (Don’t tell me that work is work, and there is no room for fun in the workplace. That is “dark ages” thinking at best.) Fun lowers blood pressure, releases tension, eases stress, humanizes the workplace, and helps people to think. We all know that work is tiring, stressful, competitive, and demanding. This is all the more reason to create some diversion in the workplace. Of course, your sense of fun may not be the same as your employees’, so consider asking what they would prefer by conducting a survey, appointing a committee, or sending out emails. (As an aside, the workforce is aging. Lots of people feel that they have “paid their dues” and have little tolerance for organizations that are devoid of fun. Life is too short for that sad state of existence.) 6. Get to know your employees. This is not easy, especially if you are a Fortune 500 company. But is your company that large? If the answer is no, take a few minutes to step into your employees’ offices and ask a question or two about their projects (even if your company is really that large, managers can still get to know their employees). Get their opinions on industry trends. If you see family pictures, ask how old their kids are (come into my office and I’ll tell you all about my motorcycle). You want to regard your employees as people, not only as workers in your organization. The five minutes spent may turn out to be the best investment of your day. 7. Communicate often and honestly. One of the complaints I hear most often from employees is the lack of communication from senior management and between departments. I recently finished working with a client whose marketing and sales departments do not communicate with each other. Can you believe that? How does an organization exist if sales and marketing do not communicate? Set the tone at the senior management level and work on communication. Make certain information is disseminated among your employees. Employees kept in the dark on news both good and bad are generally not the happiest of employees. Regardless of the message, communicate often and effectively. An informed workforce is more effective than an uninformed workforce. 8. Make sure your leaders lead. If you are the CEO of your organization, this is for you. Your position is all about leadership, working with your team to set and execute the vision, and driving the process to achieve corporate objectives. Always remember that your staff is watching you very closely, and that they have invested their careers, mortgages, futures, and trust in your capable hands. Make sure you earn that trust everyday. Be very careful of saying one thing but doing another. As employees settle into the organization, they will do far less listening to what you say and far more watching of what you do, since today’s employees are probably the most savvy and sophisticated of all time. Lead with courage, conviction, and integrity. You might not have everyone agreeing with you all the time, but at least they will know you are acting in the best interests of the organization. 9. Pay your employees well. Compensation is extremely important. It buys all the things people need, and more to the point, it buys all the things people want. It reinforces their sense of value and worth to the organization. Is compensation the most important element in employment? No. Studies have shown that it is generally fourth or fifth in terms of importance. But rest assured, that order will change quickly if employees feel they are under-compensated for their contributions; no one wants to feel underpaid. Employees must feel good about their compensation package. Allowing good people with track records to leave the organization because of inappropriate compensation is indefensible. 10. Conduct exit interviews. Exit interviews are as important as employment interviews and are invaluable to the organization. They provide the kind of sincere insight that will allow you to craft a better organization. In an exit interview, the employee tends to be honest since he or she has no reason to lie or to embellish (as might be tempting in an employment interview). This brutal honesty can evolve into an unpleasant experience for you. Try to make it as relaxed as possible or have another more neutral manager from a different department conduct the interview. You will hear things in exit interviews that you may not want to hear, but should. It is vital that you try to understand issues from the employee’s perspective and give him or her the opportunity to be heard. There is a great deal to be learned from exit interviews. Are you listening? 11. Be properly prepared for your employee’s first day of work. I have conducted numerous exit interviews where the employees mention their first day of work as the first negative experience with the organization. Can you imagine that? Their first impression of their new company is one of negativity? Can it get any worse than that? Some of these employees had been there for 20 years or more so you can see how indelible an impression the first day of work can make. Unfortunately, this is not surprising; people never forget their first impressions. It is burned in employees’ minds forever, especially if it was a bad experience. You do not want to dash the hopes of a new employee by saying, “I’m sorry. Is today your first day? I thought you were starting next Monday.” Or worse, “I’m sorry, I’m embarrassed. I don’t know who you are.” Your lack of preparation tells the candidate how much you value him or her. 12. Make sure your managers can and want to manage. How often does this happen? Your employees do well in their positions and are promoted to managers ó and then, the beginning of disaster. People are not necessarily good managers because they are capable employees. Some don’t even want the role or the responsibility. But as companies grow, you need more good managers, so your best contributors are given the golden opportunity to manage. With a raise and reassurances, they are sent out into the cruel managerial world with no training and no real understanding that their new role will be significantly different from the old one. Develop a training program for first-time managers. That will sensitize them to their new role and teach them the basics of managing people and problems. (Beware of the ones who tell you they do not need this training. They probably need it more than the rest. Besides, would you like to be an employee under the newly promoted manager who never managed anyone before and believes he does not need any training to do so?) Make no mistake. Implementing the above mentioned ideas and making them a part of your organization’s culture is no easy task. It is not done in a day, nor done by executive order or edict. Rather, it is a gradual process that should be championed by your organization’s leaders and led by examples that are highly visible in an ongoing and consistent manner. Organizational change can be a slow and arduous task, but once again, if management is willing to lead by example, they can do virtually anything. The commitment to employee retention is clearly worth the effort if you are trying to build a business.

Howard Adamsky has been recruiting since 1985 and is still alive to talk about it. A consultant, writer, public speaker, and educator, he works with organizations to support their efforts to build great companies and coaches others on how to do the same. He has over 20 years' experience in identifying, developing, and implementing effective solutions for organizations struggling to recruit and retain top talent. An internationally published author, he is a regular contributor to ERE Media, a member of the Human Capital Institute's Small and Mid-Sized business panel, a Certified Internet Recruiter, and rides one of the largest production motorcycles ever built. His book, Hiring and Retaining Top IT Professionals/The Guide for Savvy Hiring Managers and Job Hunters Alike (Osborne McGraw-Hill) is in local bookstores and available online. He is also working on his second book, The 25 New Rules for Today's Recruiting Professional. See twitter.com/howardadamsky if you are so inclined for the occasional tweet. Email him at H.adamsky@comcast.net

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