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Retaining Rules
05/01
By: Paul R. Dorf, The ProEmp Journal
One of the most common mantras that seemingly every company has adopted is that "Our most important asset is our employees". This apparently translates into the recognition that without the skills, dedication and efforts of the employees, things just will not happen, and any competitive edge that the organization might otherwise have would be lost to its competition. Many companies have strenuously asserted that their employees are to be called "associates", since they are all part of a great team, dedicated to the common good of the company; this prominently displayed somewhere in the Employee Handbook or similar corporate statement of many put forth by many firms
As wonderful as this sounds, something is wrong with this picture. If companies think their employees are as important to their continued success as they indicate, why are employees becoming so disenchanted and leaving those same companies, as evidenced by the increasing percentage of turnover? From 1996 onward, the monthly percent of turnover has crept up each year, from 0.9 percent to 1.2 percent in 1999, and last year, the number decreased slightly. Although the overall numbers do not appear to be very high, they represent a 33% increase in just three years. The "why" the employees are leaving is somewhat perplexing to some management, given that they are constantly "throwing money at the problem". In reality, there are a number of very basic reasons that employees are either seeking other jobs, or are succumbing to the siren song of headhunters and other companies seeking to get them to defect to a new employer.
In a recent study , the top four most often cited reasons for individuals leaving to go to another position were:
1. Higher pay (70%)
2. Financial opportunity, which includes stock options in the company (49%)
3. Opportunity for promotion (38%)
4. More benefits (36%).
Three of the four reasons listed above involve money, specifically compensation and benefits. It is interesting to note that these reasons for turnover, as provided by the companies themselves, are different than the results of most previous studies, many of which date back to the days of behavioral theorists Abraham Maslow and Frederick Herzberg. In those studies as well as the Baverdam Research study, when the question is turned around, the reasons for people joining and staying with a particular company are very different . Company culture and good working environment, challenging work, company reputation, and quality of life are deemed to be more important. Better benefits actually comes in fourth in this list, but is virtually tied with the life style issues.
What does this mean for companies that are trying to put their best foot forward and attract the qualified applicants and then hold onto them, particularly in today's heated-up environment in which everyone appears to be vying for the limited number of available applicants? First and foremost is the need for companies to begin to put into practice what they preach. If they truly believe that their employees (or associates, if you would rather) are really their "most important asset", all companies (including those in the professional employer outsourcing industry) must develop and adopt a philosophy that embraces this concept.
For one, Compensation and benefit programs must not only be competitive with their respective marketplace, they must provide a consistent and realistic method of recognizing and rewarding the desired performance and contributions among different individuals. Human Resource (HR) policies and practices must be consistent with the organization's mission and culture, and should provide sufficient flexibility to recognize the unique needs that employees may be exposed to at different periods in their life.
Among the methods used by various companies to improve their retention of trained personnel are the more traditional items such as better compensation and benefits, stock options, and tuition reimbursement . Some of these, such as pay and benefits, have always been high on the list of retention devices, but some, such as tuition reimbursement and causal dress, are now considered to be very important retention tools, and these address the quality of life issues. Interestingly, three other methods for improving retention have been employed to a much greater degree than previously. These have to do with the procedures themselves, as well as the need to open up the window to identify the causes of turnover. These methods include: more careful selection of applicants for hire, expanded use of exit interviews, and better orientations for new employees. Often, an employee seed of discontent often begins right when the person is hired, by being not properly orientated into the new environment. (This process ultimately involves the concept of human capital management, which is explored in the previous article of the issue, "Revamped Recruiting".)
Clearly, to the extent possible, organizations should provide challenging work and an environment that supports each individual's ability to maximize the development of his/her own professionalism and skills. These may sound like idealistic rantings rather than practical suggestions, yet they are not on only realistic goals, but they are achievable. Exactly how a company goes about tackling what could seem to be daunting is the challenge.
The starting point for the company is to develop a Human Resource Philosophy that sets forth its people goals and direction. This then becomes the baseline for the eventual development of programs, policies and practices that will be consistent with both the stated philosophy, as well as being consistent with its culture, business strategy and desired goals. Surprisingly, it becomes increasingly easier to develop the specific programs that are needed, once the intent is clearly outlined in the philosophy.
Actually translating, these goals into reality takes a lot of time and resources, and it really cannot be rushed. Remember that many of the problems that are to be corrected did not just happen overnight. A plan of action needs to be devised that will lay out the steps to be achieved within a reasonable time frame, and of course the resources that are needed to make it happen.
Companies may have the resources, time, and energy internally that they can devote to these programs, but, more likely, it will be appropriate to turn to outside help. This can come in two forms: consultants who specialize in the areas to be worked on, and professional employer outsourcing companies that are equipped for and can handle human relations activities. Either can assist with the design and implementation of programs that can drive the organization in the desired direction. However, this can only occur once the owners and management come to grips with the hard decisions related to how they want to treat their employees. In other words, do your client companies really want to treat employees like their most important asset? If the answer is yes, that's great. But think about it: what are they willing to do to make that a reality?
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