Avoiding Six Dangerous Retention
Mistakes Most Companies Make
Presented By
Jack Smalley, SPHR
Director, HR Learning
& Development
Introduction

SHRM predicting 2011/12 employment crisis
–
Up to 40% turnover




Employees not satisfied with current jobs
Gen Y’s first recession
Gen X and Y ready to move on
Employers of Choice not waiting until crisis hits
–
Where does your company stand?
Preparing for the Turnover Tsunami
Wall Street Journal 5-26-10
 Feb 2010
–
–

More employees resigned than laid off/terminated since 10/08
End of 2 year trend
60% of employees intend to change jobs after the
recession
–
–
–
Employees advancing career
Poor morale due to cost cutting measures
Gen Y’s comparing notes
Preparing for the Turnover Tsunami
Con’t.
2010
 34.6% of employees satisfied with wages
–
–

51% interested in their work
–

Down 7% from 1987
Wage cuts, freezes, added responsibilities, unemployed
spouses and X’rs Y’s moving back home
Down 19% from 1987
More employees feeling disengaged with their jobs
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
We are already seeing the results
Retention of top talent even more critical in
turbulent times

Years of retention neglect catching up with
employers
–
–
–
–
–
–

Sales
Service
Quality
Safety
Productivity
Why is there no focus on Retention
Retention no longer HR issue
–
Must have total mgmt support

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
The Cost of Turnover

PricewaterhouseCoopers Saratoga Study
–
–
–
Turnover cost from 12% to 40% of pretax income
$25B to retrain employees annually
That can be the amount to remain in business
No longer a problem for just “large” employers
Must Work Your Way Through Various
Issues




Don’t know why people quit – so count only
controllable turnover is inaccurate
Excluding employees who quit or fired during
probation
Supervisors holding back releasing poor
performers to pad their retention numbers
Message to supervisors
–
“You own your team”
The Six Most Dangerous Retention
Mistakes
1.
2.
3.
4.
5.
6.
Focusing on Retention Programs vs. Retention
Processes
Supporting a Fear-Based Workplace
Confusing Employee Engagement with Employee
Destruction
Not Supporting a Multi-Generational Friendly
Workplace
Not Holding Supervisors Accountable for
Retention
Not Narrowing the Front Door to Close the Back
Door
Four Groups Projects




Traditionalists
Baby Boomers
Gen X’rs
Millennials
–
–
Top three factors to keep you with company
Top three benefits to attract/retain your
generation
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 change managers with influence rather
than authority
Leave authority to senior management
–
CFO’s must be on board

Employers of choice moving from retention
programs to retention processes
–
–

Require full management participation
Accountability for process success
Retention must be on same page and
receive same attention as
–
–
–
Sales
Service
Profits
Think!
Sales
Service
Quality
Safety
Retention
= $ Profits
$
Organizational Flaws of Retention

Retention coaching conducted by HR vs.
supervisor/leader
–

Supervisors look up to their leaders
Organizations look at HR to solve turnover
–
Traditional thinking vs. Progressive thinking
10 Strategies of Rethinking
Retention
- Richard Finnegan
People quit jobs because they can
1.
•
•
Companies makes it too easy to quit
No effort to hold on to our best
Employees stay for things they get uniquely from
you
2.
•
Build a retention brand different from others
Supervisors build unique relationships that drive
retention/turnover
3.
•
•
Employees stay for bosses
Employees leave because of bosses
Hold supervisors accountable for achieving
retention goals
4.
•
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
•
Exec buy-in is a must
Design Jobs for Engagement

Capture the minds and hearts of employees
–

Challenging assignments
–



Avoid the Sunday Blues
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



In past, HR has developed formula for turnover cost
Those who have CFO endorsement have greater
opportunity for upper management support
Call center identified turnover cost at $12 K 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 $60 K
same value as company truck
–
Showed video of totaled truck from accident to emphasize cost
High Tech Retention
SHRM White Paper 5/2000

What is more critical than recruiting IT talent?
–


Answer: Retaining IT talent
Average IT employee stays 18 months at
current job in good times
New IT grads will have12 employers during
career
6 Elements to Retain IT Workers
1.
Salary
•
•
•
2.
Must be competitive
Constant survey of IT salaries/benefits in your area
IT turnover 100% to 150% of annual salary
Challenge
•
Best way to lose IT personnel
•
•
•
•
Answer: Bore them
Challenging work
New projects
Keep software updated
6 Elements to Retain IT Workers Con’t.
3. Training & Development
•
•
•
•
On-going training
Cutting edge technologies
Educational assistance = higher retention
Educational assistance beyond IT field
4. Flexibility, lifestyle perks & cool stuff
•
•
•
•
•
•
Compressed work weeks
Telecommunicating
Job sharing
Flexible shift schedules
Small amounts of flexibility can score big points
Solicit lifestyle desires
6 Elements to Retain IT Workers Con’t.
5. Appreciation & Rewards
•
•
All disciplines seek recognition
If cash strapped
•
•
Extra vacations
Time off
6. Culture
•
•
•
Employee friendly
Manager “Is the Company”
LIVE IT !
Continued Nursing Shortage


Bureau of Labor Statistics predicts 233,000
additional nursing jobs each year through
2016
Only 200,000 pass RN test annually
Wellness Programs as a Retention Tool



45% employees at Mid and Small size
companies report they would stay at job
longer if they had wellness programs
26% said they would miss less work
Why?
- Principal Financial Well-Being Index
SHRM 1/20/10
Top Reasons Employees Support
Wellness Programs
30% Reduce personal health care cost
 30% Longer, healthier lives
 28% Receiving employer incentives
 28% Reduce stress
--------------------------------------------------------------- 15% of employees have access to fitness
facilities
 11% in 2008



Partner with your talent supplier
Create a pool of contingent workers
in peak periods to give more
balance to core employees
Best practice retention is on-going processes
driven by upper management
NOT
Band-aid programs
Critical Retention Mistake #2
Supporting a FearBased Workplace

Fear-based employees cannot contribute
“Management by fear” is a hard habit to break

SHRM 7/1/10

–
–

Job satisfaction holding among older employees
Declining among X’s and Y’s
Gen X’s and Y’s
–
–
2008
2009
Job Dissatisfaction
Job Dissatisfaction
11%
19%



During economic downturns most companies
focus on keeping employees with good
attendance even with substandard work
This is better alternative to firing employee
and waiting days to replace
Some bosses are encouraging young
workers to buy new car, boat or other
expensive items knowing they would have to
keep job for payments
Beware “Jerk Bosses”




13 states have legislation pending on “workplace
bullying”
Verbal attacks from supervisors are generating
six figure settlements
37% of U.S. workers report they were a bully
victim
Four times more complaints than all forms of
harassment combined
Transitioning From a Fear-Based
Workplace
10 Early Signs of a Fear-Based Workplace
1.
Appearances are everything
•
•
•
2.
Staying longer than boss
7:30 to 5:30 employee
Perception is more important than reality
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
Your failure is my success
4. Numbers rule
•
•
•
•
Total obsession w/ metrics
Vending machine, ear plugs
Record profits and now unpaid lunches
Stock price vs. People price
5. 6,417 workplace policies
•
•
•
•
Overdependence of rules vs. common sense
Ordering a stapler
Coffee cup receipts
15 page parking policy
Transitioning From a Fear-Based
Workplace Con’t
10 Early Signs of a Fear-Based Workplace
6. Management discourages lateral
conversations
•
•
•
Fear of employees comparing notes
No one has authority to authorize meetings
Loss of sharing ideas
7. Information is restricted
•
•
•
•
Information leads to success
Why some managers restrict information
Knowledge = Power
Destroys trust
Transitioning From a Fear-Based
Workplace Con’t
10 Early Signs of a Fear-Based Workplace
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
•
Even though they are clueless, they constantly remind
you who is the boss
Transitioning From a Fear-Based
Workplace Con’t
10 Early Signs of a Fear-Based Workplace
10. Management leads by fear
•
•
•
•
•
Most decisions made in secret
Information is given in drips
Company culture “Be glad you have a job”
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 decisionmaking
Offering opportunities to question decisions
Critical Retention Mistake #3
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
17% actively disengaged
1.
•
•
54% not engaged
2.
•
•
•
3.
Unhappy
Undermining co-workers
Sleepwalking thru workday
Putting in time w/o passion
Fence sitters
29% work with passion
“Do you want your 54% hanging around your 17%?
Disengagement cost U.S. economy $300B loss productivity
annually
6 Essentials for World Class Employee
Engagement
1.
People
Senior leaders who excel at
1.
2.
3.
2.
Listening
Knowing and cherish relationship with employees
Outstanding communication
Work
Providing resources for employees to over-achieve
3.
Full Service Recognition
1.
2.
3.
4.
Competitive pay
Recognition for each generation
One size does not fit all
Opportunities
1.
2.
3.
Succession planning
Training
Career development
6 Essentials for World Class Employee
Engagement Con’t.
5. Quality of Life Issues
•
•
Targeted benefits
Flex schedule
6. Company Culture
•
Live your practices
•
•
•
Diversity
Company reputation
Performance management
*Every employee must understand
•
•
How their job impacts organization’s success
Irrelevance
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


Employees 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 listen 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 5 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?
Now write down reasons you feel they have
stayed
Tangible
Shift
Schedules
Intangible
New skills
Good supervisor
Critical Retention Mistake #4
Not Supporting a
Multi-Generational
Friendly Workforce
Four Groups Projects




Traditionalists
Baby Boomers
Gen X’rs
Millennials
–
–
Top three factors to keep you with company
Top three benefits to attract/retain your
generation
Major Increase in Employment
Replacing Exiting Boomers
* 330 Boomers
turning 60 every
hour
1
2
3
Sales
Customer Service
Financial
Top Job
Opportunities for
Next 10 Years
4
5
6
Social Work
Software Development
Administrative
7
8
9
10
IT
Nursing
Mechanical Engineering
Sales Executive



Job Satisfaction Levels Significantly Declined for
Younger Employees During Recession
- SHRM
19% of X’s, Y’s dissatisfied with their jobs
- SHRM
To retain X’s and Y’s, companies must
–
–

Keep them engaged
Find ways for them to grow
Management must become accountable to
employees
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.
What’s my next career move? I’ve
been here for 12 months and haven’t
been promoted yet.
Gen Y
Generations View Change
Traditionalists
Boomers
Gen Xers
Gen Ys
Something’s
Wrong
Caution
Potential
Opportunity
Improvement

#1 benefit desire for employees with families
–

Retirement
#1 benefit desire for singles
–
Time Off
SHRM
Gen X’s and Y’s


42% have looked for other jobs to balance
work/life issues
65% of employees would give up 21% of
salary for more family time
- Coopers & Lybrand Survey
Pre Recession
SHRM
Using Social Media to Engage Workers

Gen Y will make up 40% of U.S. workforce
by 2014
–
–

They have overwhelming desire to collaborate
Text while talking
Employers must embrace social media to
enhance learning opportunities
Challenge Policies to Ensure They
Drive Retention

Career Builders and Robert Half survey of
1,000 managers and 900 employees found:
–
Most attractive benefits for retention


Flexible schedules
Telecommuting
Washington Post Survey
3400 Surveyed
Employee Retention Desires
1
2
3
Telecommuting
Educational Assistance
Flextime
548
396
379
16%
11.6%
11.1%
4
5
6
Benefits
Bonus
Fitness
375
370
357
11%
10.8%
10.5%
7
8
9
Money
Other Perks
Time Off
334
302
227
9.8%
8.9%
6.7%
Critical Retention Mistake #5
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 2008 Survey
–

70+% of employees surveyed were interested in
getting a new job due to dislike of boss
Florida State University study on supervisors
–
–
–
–
39% failed to keep promises
37% failed to give credit when due
31% got silent treatment from boss
27% made negative comments about employees to
other employees
Supervisors Build Unique Relationships
That Drive Retention Con’t.
Top supervisory skills for retention
1.
2.
3.
4.
5.
6.
Trust
Trust
Trust
Trust
Trust
The need to feel important
* You stay with employers who:
•
•
Look out for you
Make you feel good about yourself
Fellinger/Brink
Supervisors Build Unique Relationships
That Drive Retention Con’t.

Great attention getter
–
–
Surprise gift box for management meeting
#1 driver of retention
Supervisors Build Unique
Relationships That Drive Retention

Supervisor/Employee relationships can withstand
most causes of turnover

Supervisors score their impact on employee
retention a 5 on a scale of 1-10

Employees score it at a 7-8
What Employees Seek from Supervisors




Recognized for individual contributions
Sufficiently respected
Practice ethical behavior
Treat people fairly
Treating Employees Fairly Requires
1.
2.
3.
4.
Fair distribution of rewards
Heightened awareness of interpersonal
relationships
Involving employees in decision making
Offering opportunities to question decisions
MBWA

Practice
–



MANAGEMENT BY WALKING AROUND
Work side-by-side with employees
Kick up your exit interviews
Must act on employee issues
Develop Supervisors to Build Trust
with Teams





According to 80% of employee surveys,
TRUST is the most important factor
employees seek from supervision
Relationships to
Trust to
Information to
Success
Top Behaviors To Avoid Mistrust
Communication
1.
•
•
•
Availability of information – not withholding
Listening
Valuing others opinions
Competence
2.
•
•
•
•
•
Awareness
Knowledge of the job
Decision-making
Sharing direction/vision
Not micromanaging
Consistency
3.
•
•
•
Following through on promises
Fairness
Consistent direction
Top Behaviors To Avoid Mistrust Con’t.
4. Courage
•
•
•
Supporting and being an advocate for your staff
Standing up for beliefs/principles
Being assertive in place of conflict
5. Character
•
•
•
•
Keeps confidences
Does not take others credit
Honesty
Does not act in self-serving ways
Behaviors of a Non-Trusted Supervisor


Kiss up vs. kiss down
Rumor central
–

Employees clam up
–
–

Caught up in employee rumors
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
–
–
–
–


Employee survey scores nose dive
Production suffers
–
–
–

Group and one-on-one
Meetings cut short
Tight agenda
Meeting postponed/cancelled
Productivity declines
Blame game
No accountability
Turnover rises with new supervisor
Turnover
Retention
Traditional Thinking
Progressive Thinking
Most important supervisory
skills for retention:
communication, feedback,
coaching
To reach their positions,
supervisors/managers
have already learned their
trust skills
Supervisors who cannot
build trust have little
credibility regardless of
other 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
Wegman Food Stores, Rochester, NY (#10 Fortune’s 100 Best Employers)
Requires front line management accountability for retention
Traditional Thinking
Progressive Thinking
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 Increases supervisor ownership of
problem
team
A Great Retention Story


Who was your best boss?
Why?
Ron Sybert
–
–
–
Great listener
We are going to have great days
Bad days

“I may be difficult”
–


Internal conflict
“You may want to resign”
“I get the chance to fix the problem”
Supervisors build relationships based on trust
Critical Retention Mistake #6
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 A.L.S. 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
–

General Mills
–

“A Great Place to Start; A Great Place to
Stay”
eBay
–

“Think Big, Think Bold, Think Texas
Instruments”
“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
–

Publix Supermarkets
–
–

“Where shopping is a pleasure”
“If you think shopping at Publix is a pleasure, try
working here”
Barnes & Noble
–

“Delta employees don’t just travel the world, they work
to improve it”
“If you love books why not work at a place surrounded
by books”
Hard Rock (25,000 employees)
–
–
–
“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 employee stay
“Someone cares that I stay”
Concerns are addressed
Supervisors must be trained how to conduct stay
interviews
–
–
–
Not complaint sessions
Clear focus of meeting purpose
Avoid “implied contract”
Stay Interviews Con’t.

Broaden employee’s awareness
–
–
–
–
–
What do you look forward to coming to work each
day?
Which parts of your job are most enjoyable?
Which parts are most challenging?
What are you learning here and what else do you
want to learn?
How do you like the people you work with?
Narrow the Front Door to Close the
Back Door
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According to Bureau of Labor Statistics
–
The length of time an employee stays with a job
increases with their age they began the job
Employee Referral Programs

3M
Texas Instruments
Fidelity Investments
McDonnell Douglas

Reduced hiring cost 75-90%
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Implement Employee Referral Program
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Include taxes and gross up awards
–
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Match rewards to employee needs
–
–
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$100.00 = $73.87
Cash
Trips
Present awards publicly
One big prize annually
Build Programs to Attract Older
Workers

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
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

Partner with your staffing firm
–
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–
Bring them into your culture
Recruit year round
Full service approach

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Temps
Temp to hire
Direct hire
Professional placement
Track length of service
–
–
Non exempt 90 days
Exempt 1 year
Build a Realistic Job Preview Program
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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
Narrow the Front Door to Close the
Back Door
Traditional Thinking
Progressive Thinking
We source all employees
who meet our
qualifications
We pay good money for
employee referrals
We take extra effort to
source older applicants
because they stay longer
We market our employee
referral program to meet
employees needs
We give applicants a tour
We have a formal job
preview program
Express Employment Professionals
Wishes You Great Retention Success