Thursday, July 06, 2006

The Surreal Art of Staff Retention

The challenge to keep employees has mystified managers for time immemorial - how to build a workplace where employees wish to remain and outsiders want to join.

Successful managers ask themselves this question all the time, because, simply put, employee retention matters:

  • Dependent on position, high turnover leaves customers and other employees in the lurch; departing employees take a great deal of knowledge with them, which makes it hard to meet organization goals and serve customers well due to lack of continuity;
  • Replacing employees’ costs money. The cost of replacing an employee is estimated as up to twice an individual’s annual salary (or higher for some positions, such as middle management), and this doesn’t even include the cost of lost knowledge; and
  • Recruiting employees consumes a great deal of time and effort, much of it futile. You’re not the only one out there vying for qualified employees, and job searchers make decisions based on more than salary and benefits; and
  • Bringing employees up to speed takes even more time, while being short-staffed often means putting in extra time to get work done.

So, how do you keep employees? In a nutshell, you keep them satisfied enough to believe their needs will be better met at your firm than anywhere else.

It sounds straightforward enough - yet many employers aren’t sure where to begin.

In the good old days, employees were employees for life, striving for that gold watch and retiring to California. Employees had an intrinsic belief that the company would take good care of them if they did a good job. Well, that mindset has changed. Layoffs, reductions in workforce, and terminations have all eroded loyalty on the part of workers - even for those employees not directly affected. Today’s employees, particularly younger ones, think more of themselves as ‘free agents,’ selling their services to the highest bidder and ever willing to entertain other offers. Some employees maintain their resumes permanently posted on websites.

As such, recruiting employees cannot be put on the back burner until you need to replace someone.

In many organizations, losing employees has a domino effect, as when one employee leaves, others often wonder about opportunities elsewhere. Those other opportunities start to look better as employees have to pick up the slack for those who have moved on.

Respect, Recognition, Reward
Firms need to provide these three elements to keep employees on board and satisfaction high.

Respect is esteem, special regard, or particular consideration given to people. Respect is the foundation of keeping your employees. Recognition and rewards will have little effect if you don’t respect employees.

Recognition is providing attention and perceiving clearly. Most problems with retention and morale occur because management is not paying attention to people’s needs and reactions.

Rewards are the extra perks you offer beyond the basics of respect and recognition that make it worth people’s while to work hard, to care, to go beyond the call of duty. While rewards represent the smallest portion of the retention equation, they are still an important one.

In general, respect should be the largest component of a company’s efforts. Without it, recognition and rewards appear hollow and have little effect - or they have negative effects. True success is measured through a mix of the three.

An employer who installs respect, recognition and reward will create a ‘hard-to-leave’ environment, and one with a waiting list of applicants for any position that becomes available purposefully, and not through departure.