Playing for Keeps

How do you keep top hires happy?  These days it’s not about the money.  Here’s how five innovators on our list are driving down turnover.

Remember that classic nightmare – the one where you’re back in high school on test day, and you suddenly realize you’ve never attended the class before?  Well, mangers have a recurring nightmare too:  A star employee walks in and announces he or she is joining the competition.  The trouble is, with unemployment at 4.5% - the lowest since mid-2001 – those HR nightmares are distressingly real.  Consider, for instance, what HR consulting firm Compensation Resources Inc. found when it recently surveyed over 100 companies across a wide range of industries:  Since 2004, the last time CRI took this poll, turnover among managers has jumped from 4% to 8.8%.  Among salespeople it rose from 8% to 16%, and among skilled manufacturing workers it went from 7.5% to 17.5%.  No wonder 75% of employers call turnover a “persistent worry.”  But there’s an intriguing wrinkle:  People’s reasons for leaving are changing.  In the 2004 survey, more money was the main motivator.  This time around, most of the employees polled said they were after more responsibility or the chance to gain new skills.  Other recent studies echo that theme (see charts below).  The bottom line?  Taking a hard look at turnover may actually benefit your bottom line.  Just ask No. 48, SAS Institute, where employee turnover has never exceeded 5% - in an industry in which the average is 20%.  According to a recent Harvard Business Review case study, SAS saves $75 million a year in recruiting, training, and other turnover-related costs, while spending considerably less than $75 million on benefits.  For a look at how five other Best Companies are keeping their best and bright happy, turn the page to see our foldout.