The Retention Riddle, or Who Owns Retention and Why?

Keeping a company’s workforce has somehow become a job for recruiters in many organizations. I happen to think that’s scapegoating – putting the blame for poor hiring decisions on the recruiter. If there is anyone to blame it has to be the hiring manager. And if there is anything we do understand about people, it is why they tend to leave their employers. The reasons are always complex and involve several variables, none of which have much to do with the staffing organization. People are driven to leave companies less by market forces (i.e. salaries and benefits) than by intangible forces. Survey after survey has pointed out that the reasons people leave are focused around their manager. The simple truism is that good managers retain good people. Yet some staffing organizations I work with have – amazingly in my opinion -taken on that responsibility and will suffer from it in the end. Let’s take a look at the issue of keeping people. The U.S. government has done the best job of this over the past few decades – much too good of a job as it turns out! It is at the cusp of losing large percentages of workers over the next decade. The IRS, Foreign Service, CIA and other organizations that have “enjoyed” turnover rates approaching zero are soon to be faced with replacing more than half their workers. The government has kept too many people by offering them excellent pension programs and lifetime benefits. This approach to retention – the golden handcuffs – works well and has also been used by many Fortune 500 companies. The problem with this approach is not in the tools but in the way they are applied. Neither the government nor most of the Fortune 500 had robust performance management systems to weed out poor performers. Any employee so inclined could stay as long as they wished. If you takes a look at General Electric over the past two decades, you’ll see a picture of vigorous performance management coupled with a constant and predictable replacement rate – about 10% of the workforce every year. This is surely the way it should be: a few out and a few in all the time. The trick is to meter this to a level that makes sense for the organization and its strategic objectives. For organizations that have resisted the golden handcuff approach, turnover has been an increasing problem. There is little understanding of the need to meter turnover and control, not prevent it. Making certain that organizations have some basics in place for managing this flow of people is where HR, and by association, the staffing function, can play a role. Here are five ways you can endeavor to control turnover – not prevent it altogether, which, as we have seen, is not a noble goal. Retention, well-defined, is simply keeping those whom you wish to keep and letting go those whom you do not wish to keep. Endeavor #1: Place Responsibility Where It Belongs. Managers own retention. There have to be measures that report and hold them accountable for the people they lose. Managers that develop relationships with their staff, who act fairly and consistently and demand performance, have the right kind of turnover. Managers who keep everyone are very bad managers. Managers who lose large numbers consistently are also bad managers. Endeavor #2: Establish Performance Management Systems. Whether you ascribe to Jack Welch’s style of removing the bottom 10% or so of poor performers or prefer simply moving, removing, or developing poor performers, it has to be a corporate norm. Letting people “slack off” quickly becomes a way of life and fewer and fewer people strive to do their best. This kind of environment is disheartening to those whom you hire who are diligent and motivated, and they move on. I could cite many examples but won’t for obvious reasons. Endeavor #3: Provide Development Opportunities To The Best. When you have good performers who contribute to the organizations’ goals and profits, you are beholden to help them grow. Focusing development on the poor performers (something I see all the time) deprives the best. These best see that the worst get the most, realize that they have nowhere to go inside the firm, and so go outside. This is the kind of turnover than is insidious and can destroy an organization as surely as a fungus can destroy a plant. Endeavor #4: Promote Ruthlessly And With Accountability. Take the best performers, develop them and let them go to wherever they are stretched. Giving people challenges and encouraging them to try for something that seems unattainable motivates and retains. Managers who, for selfish reasons, keep the best toiling on critical projects and let poor performers attend classes and take advantage of development opportunities build resentment. Managers who promote the hard working to levels just outside their comfort zone and who at the same time make development and coaching available, are going to have high levels of performance and keep their people. These people also need to be held accountable and have metrics that are meaningful and lead to more pay or other rewards. Carrots always work better than sticks. Endeavor #5: Understand The Market And Be With It. People know what they should be paid and have an innate sense of what they are worth. Organizations with good retention also have excellent salaries and benefits that publicly point to those others should emulate. Everyone likewise quickly recognizes people rewarded beyond their efforts, and become disillusioned. The base of any retention pyramid has to be market-level pay, fairly given. Recruiters may have a slight role in the retention process by ensuring that candidates they present to management are the best they can find. But, the decision on whether or not a person is hired rests entirely with management. So too does retention. If you are being seduced to take on the retention “problem” in your company, resist. You will in the end be blamed and have no one to complain to but yourself. <*SPONSORMESSAGE*>

Article Continues Below

Kevin Wheeler is a globally known speaker, author, futurist, and consultant in talent management, human capital acquisition and learning & development. He has founded a number of organizations including the Future of Talent Institute, Global Learning Resources, Inc. and the Australasian Talent Conference, Ltd. He hosts Future of Talent Retreats in the U.S., Europe, and Australia. He writes frequently on LinkedIn, is a columnist for ERE.net, keynotes, and speaks at conferences and events globally, and advises firms on talent strategy. He has authored two books and hundreds of articles and white papers. He has a new book on recruiting that will be out in late summer of 2016. Prior to his current work, he had a 20+year corporate career in several San Francisco area tech and financial service firms. He has also been on the faculty of San Francisco State University and the University of San Francisco. He can be reached at kwheeler@futureoftalent.org.

Topics

4 Comments on “The Retention Riddle, or Who Owns Retention and Why?

  1. As usual Kevin pens another cogent article.

    I suggest, however, that a 10% turnover rate every year is an indication that too many non-performers are slipping through the selection process. Solving turnover is neither difficult nor expensive — stop hiring people who will not become successful employees. The hard part is convincing managers that the selection process can be improved quickly and cost-effectively.

    The cost of replacing an employee is about 150% of annual salary, see Bill Bliss’ excellent “Cost of Turnover” article, or ask me for the free, demo version of his Excel workbook. Therefore, managers should invest some of their time and budgets to save most of their cost of turnover.

    Bob Gately
    gately@compuserve.com

    You can read the original article at:
    http://www.erexchange.com/a/d.asp?cid=0EA4589C656311D582F800105A12D660

    Post your own Article Review
    http://www.erexchange.com/p/g.asp?d=M&cid=0EA4589C656311D582F800105A12D660

  2. Bob,
    You suggest that the problem in turnover is a
    result of “hiring people who will not become
    successful employees”. Kevin points out in his
    article that more people leave because of
    intangible forces. For example, their manager.
    If this is true, then the hard part is NOT
    convincing managers that the selection process
    can be improved quickly and cost-effectively, but
    rather they need to take a long, hard look in the
    mirror to re-align their priorities.
    The article was written in reference to retaining
    employees worthy of retention.
    Without putting words in Kevin’s mouth, I have a
    feeling that you are one of those managers he is
    referring to. The problem is never you and your
    management style, it’s always the employee’s
    incompetence. Again, I quote you, “stop hiring
    people who will not become successful employees”.

    You can read the original article at:
    http://www.erexchange.com/a/d.asp?cid=0EA4589C656311D582F800105A12D660

    Post your own Article Review
    http://www.erexchange.com/p/g.asp?d=M&cid=0EA4589C656311D582F800105A12D660

  3. Ross makes some good points.

    >You suggest that the problem in turnover is a
    result of “hiring people who will not become
    successful employees”.< Yes, it does seem too simple. >Kevin points out in his article that more people leave because of intangible forces.< Yes, but managers can measure the intangibles. The hard part is getting managers to try it. Too many managers are convinced that hiring good employees is a crapshoot at best. >For example, their manager.< I agree. I've seen it reported that the number one reason employees look for another job is their relationship with their immediate supervisors. >If this is true, then the hard part is NOT
    convincing managers that the selection process
    can be improved quickly and cost-effectively, but
    rather they need to take a long, hard look in the
    mirror to re-align their priorities.< Actually, the secret is to stop hiring people who will not or cannot get along with their supervisors. This approach is easier and faster than replacing the supervisors although I do prefer replacing managers who are ill-suited to manage people. >The article was written in reference to retaining employees worthy of retention.< I agree, which is why we need to be very selective in the hiring process. Unfortuately, most hiring managers don't know which qualified applicants are most likely to become successful employees so they often select the most qualified which are all too often not the best people to hire. >Without putting words in Kevin’s mouth, I have a
    feeling that you are one of those managers he is
    referring to.< Who, me? 🙂 >The problem is never you and your management style, it’s always the employee’s incompetence.< An employee's poor performance is always related to some manager's non-performance. It was my own realization that as a manager I was ill-prepared to be a manager that drove me into an Executive MBA program where I learned my intuition was correct. I think you misunderstand me. Whenever a new hire fails to meet expectations we must look at the hiring manager not the new hire since only the hiring manager is in a position to know if a qualified applicant will be successful if hired. >Again, I quote you, “stop hiring people who will not become successful employees”.< Which applies to managers as well as non-managers. Bob Gately gately@compuserve.com

    You can read the original article at:
    http://www.erexchange.com/a/d.asp?cid=0EA4589C656311D582F800105A12D660

    Post your own Article Review
    http://www.erexchange.com/p/g.asp?d=M&cid=0EA4589C656311D582F800105A12D660

  4. This article addresses what many astute Human Resources professionals and Career Coaches have long recognized. The key for many organizations is to recognize when there is a need for a “manager” to be further developed, even coached on their management style. The challenging issue has been that bottom line results have been the primary measure and focus for the past few years. Organizations can achieve strong results in the short term, but poor management, lack of employee motivation and engagement over time yields poor results. The question is how do you keep employees who are worth keeping? How do you measure their worth? Each organization reports to their shareholders their yearly results. The questions to ask are what value does the short term goals deliver and what are the long term investments and expected returns, or return on investment (ROI) with a long term perspective.

    The focus needs to be on influencing the hiring manager to view their open positions as an opportunity to look within their team, and/or within their organization to determine if there is talent that warrants the developmental opportunity. The other key is to have the management team support and provide the right supports to help the individual succeed. Potential is a critical component when choosing a candidate – internally or from the external market.

    As a HR professional certified as an Executive Coach, there is much work to be done within organizations to encourage development beyond the short term bottom line results. Strong HR Business Partners understand this and would value from partnering with Executive Coaches in developing “managers”.

Leave a Comment

Your email address will not be published. Required fields are marked *