Love ‘Em Or Lose ‘Em: Retaining Talented Employees

Even in a slower economy, attracting and keeping top talent is a serious concern for corporations. The problem is exacerbated by a growing propensity for people to change jobs frequently.

Retaining key employees is now the number one problem for corporations. With unemployment rates going toward all-time lows, attracting and holding top talent is a serious concern. After 20 years of down-sizing, it is ironic that corporations are now concerned about losing employees.

The problem is one of getting qualified and talented people into the right jobs an dkeeping them there. HR professionals, managers and CEO's are all searching for what they can do to keep their good, talented employees. Particularly hard-hit has been the high-tech industry, which reports turnover rates as high as 30 percent.

Some organizations are turning to retention bonuses to attract and retain talented people, some say as high as $20,000. There are also reports of an amazing array of perks and benefits being offered to make employees' lives more comfortable. Some organizations offer dry-cleaning services, car-detailing, concierge services to run errands, child-care, pet-sitting, gym programs, and chair massages.

But you can't buy love. Throwing money or gifts at people isn't enough to keep them. If they don't like the company, the people they work with, the boss or the way that they're treated, they will still leave.

Finding solutions to employee retention means more profitable companies, happier, more productive employees, and more satisfied customers.

Losing employees is very expensive. Studies have found that the cost of replacing lost talent is 70 to 200 percent of that person's annual salary. Expenses include recruiting, orientation and training, lost productivity during that period, and lost customer satisfaction because of the change. Finding and training the best employees is a major investment.

What can a company do, once they have found talented people and given them valuable training, to prevent them from walking out the back door and going to competitors?

Why They Leave, Why They Stay

Study after study shows that people leave because of their direct supervisors, more so than any other reason. It is the manager who more than anyone else can do something about retaining workers. The manager can be seen as responsible for creating a satisfactory working environment.

However, studies also show that 9 out of 10 managers think people stay or go because of money ( Harvard Management Update , June 1988 ). This keeps showing up in research, in spite of the fact that people leaving jobs say otherwise. Money and perks matter, but employees report that what they want most is challenging, meaningful work, a good boss, and an opportunity for learning and development.

In 1999 the Hay Group studied more than 500,000 employees in 300 companies. They found that of 50 retention factors, pay was the least important. Other studies bring up similar lists of the 10 most important reasons people want to stay with a company.

1. Career growth, learning and development
2. Exciting, challenging work
3. Meaningful work, ability to make a difference and a contribution
4. Great people
5. Being part of a team
6. Good boss
7. Recognition for work well done
8. Autonomy, a sense of control over one's work
9. Flexible hours and dress
10. Fair pay and benefits

This is contingent upon people having already attained a certain level of material comfort. That is, once people have their basic needs met, they care more about what they do and who they work with, rather than the money.

It's Not About the Money

So why do managers think it's the money? Do they view people as important capital assets, or as easily replaced? Do they nurture, respect and protect their workers? Or are they looking at them only as performers? It is important to diagnose the gap in esposed theory and theory in action. Retention efforts need to be put in the hands of managers who are most closely working with their employees.

One possible explanation why managers still think it's the money may be that when employees complain to them, they often bring up the subject of compensation. Workers come to their bosses when they want a raise. They may feel they are not earning enough, or as much as another person. When these concerns are frequently verbalized to managers it gives them the impression that money is what matters the most.

A 1999 study by the Saratoga Institute for the American Management Association cites three reasons people leave their jobs:

1. Poor supervisor skills
2. No growth opportunities
3. Inability to speak freely

Some of the most comprehensive research on what makes a great company has been done by the Gallup Organization. In 1999 they published the results of a meta-survey of over 1 million employees. This information is invaluable and is contained in the book, First Break All the Rules: What the World's Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman (Simon & Schuster, 1999).

The Important Relationship with the Manager

Based on a wealth of data, the Gallup Organization attempted to define not only what makes a great company, but because so much depends upon it, what makes a great manager.

In today's tight labor markets, companies compete to find and keep the best employees, using pay, benefits, promotions, impressive job titles and training. But these well-intentioned efforts miss the mark. The most important element in attracting and retaining key employees is the front-line manager.

The Gallup study found that people weren't necessarily loyal to the company, but rather to the unit they worked in, and this was because of their feelings toward their immediate supervisor. In other words, companies aren't employers-of-choice, but rather supervisors are the essential factors in retaining talented people.

No matter how generous its pay, benefits or training, a company that lacks great supervisors and managers will suffer. Great managers, according to the Gallup research, have the following behaviors that set them apart from others:

1. They select an employee for talent rather than for skills or experience.
2. They set clear expectations and define the right outcomes rather than the right steps.
3. They motivate people, by building on their strengths rather than trying to fix their weaknesses.
4. As each employee grows, they encourage them to find the right fit for their strengths within the organization.

Creating Loyalty

The following four of elements that have been proven to be effective in creating employee loyalty: praise and recognition, a sense of contribution to the company, learning and development, and having a best friend at work.

Managers know that they need to attract and retain talented people in order to succeed in the competitive workplace. And they also have to find ways to get workers to improve performance. People usually don't think of themselves as performers, but as individuals with certain strengths and talents. Workers must know that the manager cares about them on a human level before they are going to be motivated to make extra efforts.

There is no one-size-fits all retention formula. Here are some of the ingredients:

There are no new tricks. It is the same old story: there is a great need to engage and enable the hearts, minds, and yes, even the soul of people at work. This engagement is far more important than bonuses, perks and even chair massages. It is primordial to retaining talented people.

Measuring Strong Retention Factors

The Gallup Organization has released the results of their massive in-depth study of great manager across a wide variety of industries in a book, First Break All The Rules: What Great Managers do Differently, by Marcus Buckingham and Curt Coffman (Simon & Schuster, 1999). This research generated thousands of different survey questions on employee opinion.

Finally, using sophisticated statistical analysis, they produced 12 questions which work to distinguish the strongest departments of a company. This essential measuring stick provides the link between employee opinions and productivity, profit, customer satisfaction and the rate of turnover.

The 12 questions are reprinted here with permission of the Gallup Organization, Copyright 1999. They are copyrighted and cannot be used without Gallup 's permission. They can be accessed at: www.gallup.com/poll/managing/managing.asp.

1. I know what is expected of me at work.
2. I have the materials and equipment I need to do my work right.*
3. At work, I have the opportunity to do what I do best every day.*
4. In the last seven days, I have received recognition or praise for good work.
5. My supervisor or the person I report to seems to care about me as a person.*
6. There is someone at work who encourages my development.
7. In the last six months, someone at work has talked with me about my progress.*
8. At work, my opinions seem to count.
9. The mission/purpose of my company makes me feel my job is important.
10. My associates (fellow employees) are committed to doing quality work.
11. I have a best friend at work.
12. The last year, I have had opportunities at work to learn and grow.

According to the results of years of Gallup Organization research, these 12 questions are the simplest and most accurate way to measure the strength of a workplace.

*Further analysis revealed that five of these questions are linked to retention: numbers 1, 2, 3, 5, and 7. When employees score high marks on these five questions, the company has a strong retention factor. As a manager, if you want to build high retention, then securing high marks to these five questions is a good place to start.

Resources for Retention

Buckingham, Marcus and Curt Coffman;First Break All the Rules: What the World's Greatest Managers Do Differently; Simon & Schuster, 1999.

Gendron, Marie; " Keys to Retaining Your Best Managers in a Tight Job Market," Harvard Management Update (June 1998): 1-4.

Hay Group, " 1998-1999 Employee Attitudes Study," 8, HR/OD, (December 1, 1998).

Herman, Roger E.;Keeping Good People: Strategies for Solving the #1 Problem Facing Business Today; Oakhill Press, 1999.

Kaye, Beverly and Sharon Jordan-Evans:Love ‘Em or Lose ‘Em: Getting Good People To Stay; Berrett-Kockler Publishers, 1999.

Klobucar Logan, Jill; Retention Tangibles and Intangibles; ASTD's Training & Development, April 2000.

Smart, Bradford D., Ph.D; Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People; Prentice Hall Press, 1999.

Working Resources is a Leadership Consulting, Training and Executive Coaching Firm Helping Companies Assess, Select, Coach and Retain Emotionally Intelligent People; Emotional Intelligence-Based Interviewing and Selection; Multi-Rater 360-Degree Feedback; Career Coaching; Change Management; Corporate Culture Surveys and Executive Coaching.

Dr. Maynard Brusman
Consulting Psychologist and Executive Coach
Trusted Advisor to Senior Leadership Teams
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