RETENTION A Strategic Approach to Building Today, talent is - - PDF document

SLIDE 1

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RETENTION

A Strategic Approach to Building a Solid Talent Foundation

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“Today, talent is becoming the most important differentiator in

• business. There are few secrets

left in product development and service offerings. Anyone determined enough can copy and commoditize your offering. Only your talent will differentiate you from competitors or potential

• utsourcers.”

(McCormick, 2007, p. 15)

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Introduction

Since each organization is unique, no one retention strategy should be universally applied. To manage retention most effectively, organizations must regularly diagnose the nature and causes of their own turnover, develop the right mix of retention initiatives, and continually evaluate and hone these

• practices. By using an integrative strategic process,
• rganizations can retain the solid talent foundation that can

lead to a competitive advantage.

This presentation will discuss:

• Turnover and why it matters
• How organizations can assess the costs of their own turnover
• How organizations can identify an appropriate retention strategy
• Some commonly used retention practices from which organizations

may choose In addition to this information, readers can choose to learn more from our numerous supplementary slides and Suggested Resources section.

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Table of Contents

I. What is Turnover……………………………………………………… 5 II. Why Turnover Matters………………………………………….......... 12 III. Why Employees Leave……………………………………………..… 19 IV. Why Employees Stay………………………………….……………… 24 V. How To Develop a Retention Management Plan………………..… 27 VI. A Menu of Retention Practices…………………………………..….. 52 VII. Conclusions……………………………………………………….…… 66 VIII. References…………………………………………………….………. 68 IX. Suggested Resources………………………….…………………….. 71

• I. WHAT IS TURNOVER?

Definition: the number of employees in an organization who leave and are replaced over a given period.

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What is Turnover?

Employees leave organizations for various reasons:

• Some leave for a different job
• Some move out of town
• Some decide to go back to school or to no longer

work at all

• Some are laid-off or fired

Each of these reasons has different organizational implications and therefore, different implications for

• HR. To determine these implications, we must first

define the types of turnover.

SLIDE 2

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Turnover Classification Scheme

Turnover Voluntary Involuntary Functional Dysfunctional Unavoidable Avoidable

(Griffeth & Hom, 2001)

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Turnover Classification Scheme

Voluntary Involuntary Initiated by the employee Initiated by the

• rganization

vs

(Griffeth & Hom, 2001)

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Turnover Classification Scheme

Functional Dysfunctional No harm to the

• rganization:

The exit of poor performers,

• r employees with

easy-to-replace skills

Harmful to the

• rganization:

The exit of high performers,

employees with hard-to-replace skills, certain populations, or departures that will lead to high replacement costs

vs This distinction is relative and will vary by job,

• rganization, industry and other factors.

(Griffeth & Hom, 2001)

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Turnover Classification Scheme

Avoidable Unavoidable Stems from causes that the organization may be able to influence:

An employee leaves due to a lack of growth opportunities

Stems from causes the

• rganization has little or

no control over:

An employee leaves due to health issues, or a spouse’s transfer to another town

vs

(Griffeth & Hom, 2001)

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Voluntary Dysfunctional Avoidable Strategic Retention focuses here:

(Allen, 2008)

• II. WHY TURNOVER MATTERS

1. It is costly 2. It affects the overall performance of the

• rganization

3. It may become increasingly difficult to manage

Turnover matters for three key reasons:

(Allen, 2008)

SLIDE 3

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• 1. Turnover is Costly

Turnover costs organizations time, money and other resources:

• Direct replacement costs can be as high as 50-60% of

an employee’s salary, with total costs ranging from 90-200% of an annual salary.¹

• Costs can represent more than 12% of pre-tax

income for an average company and nearly 40% for those companies at the 75th percentile turnover rate.²

• Don’t forget the loss of productivity, loss of knowledge
• r loss of engagement of the person who checks out

long before s/he quits.³

(¹Cascio, as cited in Allen, 2008; Mitchell, Holtom & Lee, 2001; ²Saratoga Institute, as cited in Allen, 2008; ³McCormick, 2007)

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• 1. Turnover is Costly

VOLUNTARY TURNOVER COSTS AND BENEFITS

Separation Costs:

Financial

• HR staff time (exit interviews, payroll, benefits)
• Manager’s time off (vacation, sick pay)
• Accrued paid time off (vacation, sick pay)
• Temporary coverage (contingent employee, overtime for fulltime)

Other

• Delays in production and customer service; decrease in product or service quality
• Lost clients
• Clients not acquired that would have been if employee had stayed
• Stiffer competition as employee moves to a rival company or forms own business
• Contagion (other employees decide to leave too)
• Disruptions to team-based work
• Loss of workforce diversity

Replacement Costs

• New hire’s compensation
• Hiring inducements (signing bonus, reimbursement of relocation expenses, perks)
• Hiring manager and unit/department employee time
• Orientation program time and materials
• HR staff induction costs (payroll, benefits enrollment)

Training Costs

• Formal Training (trainee and instruction time, materials, equipment)
• On-the-job training (supervisor and employee time)
• Mentoring (mentor’s time)
• Socialization (other employees’ time, travel
• Productivity loss until replacement has mastered job

(Heneman & Judge, as cited in Allen, 2008)

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• 2. Turnover Affects Organizational

Performance

• The loss of knowledge can cause stress on

those remaining and encourage others to consider leaving. Ultimately, these preoccupations can lead to dissatisfied customers.¹

• Research shows that reducing turnover rates

improves sales growth, employee morale, firm profitability and market value.²

(¹Jacobs, 2007; ² Batt, 2002; Huselid, 1995)

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• 2. Turnover Affects Organizational

Performance

The impact is even greater when organizations consider who is leaving:

• “The loss of star talent can hinder a company’s

performance, and the current shortage of highly skilled professionals in many specialties makes replacing these individuals even more difficult.”¹

• Losing employees with tremendous “social capital”

can dramatically erode performance by severing relationships that facilitate instrumental action.²

(¹Messmer, as cited in Smith, 2008, p. 6; ²Shaw, Duffy, Johnson, & Lockhart, 2005)

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• 3. Managing Retention May

Become More Challenging

• Businesses everywhere face an impending labor

shortage: “The statistics from the U.S. Department of Labor’s Bureau are frightening: every 10 minutes, a Baby Boomer turns 60; and by 2011, more than 75 million

• f them will be eligible for retirement. By 2016, there

is expected to be a shortfall of three million workers between the projected workforce and the number of jobs required to keep the economy moving.”

• Given the current economic climate, the jury is still out on

how this situation will unfold.

(Smith, 2008, p. 6)

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So When Does Turnover Matter?

All the time, even in a challenging economy when employees are driven to stay put.

• High unemployment rates have little impact on star

performers or those with highly sought after skills

• As previously mentioned, businesses everywhere

face a looming labor shortage.¹

Organizations that strategically manage retention – in good times and bad – will be more likely to weather an economic storm and emerge with the solid talent foundation that could lead to a competitive advantage.²

(¹Trevor, 2001; ²Minton-Eversole, 2008)

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• III. WHY EMPLOYEES LEAVE

With an understanding of turnover and its associated costs, organizations can begin to look at WHY employees leave and, ultimately, predict and influence these decisions.

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Why Employees Leave

• 1. According to the Theory of Organizational Equilibrium, employees

will stay with an organization as long as the inducements offered by the organization (pay, good working conditions, developmental opportunities, satisfaction, etc.) are equal to or greater than the employee’s contributions (time and effort).¹

• 2. Individuals are also influenced by their desire to leave the
• rganization (for any number of reasons, good and bad) and the

ease with which they can leave.²

• 3. Turnover Drivers can predict employee departures. Research

shows that certain drivers affect employee attitudes, satisfaction and commitment. While with the organization, these turnover drivers can lead to withdrawal, absenteeism, tardiness, and poor performance, but over time, they can ultimately lead to turnover.²

(¹Subramony, Kraus, Norton & Burns, 2008; ²Allen, 2008)

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Why Employees Leave

The graphic on the following slide lists numerous turnover drivers by order of strength:

• Notice that the strongest predictors are related to behaviors

associated with the beginning stages of turnover. Other predictors involve role clarity, commitment to the organization, and the quality of relationships between employees and their

• supervisors. Organizations could monitor these variables and

intervene when possible.

• Notice here that compensation and pay are not as strongly

linked to turnover as other predictors. Other research, however, indicates that the importance of pay is often underemphasized by employees. ¹

• Implication: Organizations should think strategically about how

to use compensation in developing their retention practices.

(¹Rynes, Brown, Colbert, 2002)

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Why Employees Leave

TURNOVER PREDICTORS

WEAKER STRONGER

Race Cognitive Ability (+) Sex Marital Status (-) Education (+) Lateness (+) Pay Satisfaction (-) Training (-) Family Responsibilities (-) Degree of Routinization of Job Responsibilities (+) Outcome Fairness (-) Pay (-) Age (-) Job Involvement (-) Role Overload (+) Satisfaction with Supervisor (-) Participation in Decision Making (-) Co-worker Satisfaction (-) Work-Group Cohesion (-) Quality of Communication in Organization (-) Job Scope (-) Alternative Job Opportunities (+) Children (-) Promotion Opportunities (-) Stress (+) Job Performance (-) Satisfaction of Expectations of Job or Company (-) Comparison of Alternatives to Present Job or Company (+) Work Satisfaction (-) Absenteeism (+) Role Conflict (+) Job Satisfaction (-) Tenure (-) Role Clarity (-) Relationship with Supervisor (-) Organizational Commitment (-) Weighted Application Blank (+) Search Behaviors (+) Search Intentions (+) Thoughts of Quitting (+) Turnover Intentions (+) (+) indicates that the predictor is positively related to turnover (as the predictor increases, turnover increases) (-) indicates that the predictor is negatively related to turnover (as the predictor increases, turnover decreases) (Griffith, Hom & Gaertner, as summarized by Allen, 2008, p.7)

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Why Employees Leave

Implications for Organizations:

• While there are a few exceptions, most employees do not

leave organizations on an impulse. Rather, they evaluate their current job against alternatives, weigh options, and engage in various job-search behaviors.

• The lesson for organizations is to proactively manage

retention by continually monitoring and adjusting the factors that influence employees’ desire to stay or go.

• “The savviest companies never stop ‘re-recruiting’ people
• nce they’ve been hired. These organizations regularly

sell top performers on their employment with the firm before they are tempted with an offer from a competitor.”¹

(Allen, 2008; Steel, 2002; ¹Messmer, as cited by Smith, 2008, p. 6)

• IV. WHY EMPLOYEES STAY

Employees choose to stay with organizations for various reasons. Perhaps most important is how the employee is embedded.

SLIDE 5

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WHY EMPLOYEES STAY

Embeddedness includes factors from on and off the job:

• Links to other people, teams and

groups

• Perception of their fit with their job,
• rganization and community
• What they say they would have to

sacrifice if they left their job

(Mitchell, 2001)

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• Links: The higher the number of links between the

person and the web, the more an employee is bound to the job and the organization. Leaving their job and perhaps their home can sever or require the rearrangement of some of these links.

• Fit: Fit is defined as an employee’s perceived

compatibility or comfort with an organization and with his

• r her environment. A person’s fit with the job and
• rganization relates to attachments to the organization.
• Sacrifice: Sacrifice captures the perceived cost of

material or psychological benefits that may be forfeited by leaving one’s job. The more an employee gives up when leaving, the more difficult it is to sever employment with the organization.

WHY EMPLOYEES STAY

(Mitchell, 2001)

• V. HOW TO DEVELOP A

RETENTION MANAGEMENT PLAN

The SHRM report on Retaining Talent suggests the following four-step process to strategically manage retention.

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4-Step Retention Strategy Process

Step 1: Assess Turnover Step 2: Determine an Appropriate Retention Strategy Step 3: Implement the Strategy Step 4: Evaluating the Results

(Allen, 2008)

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STEP 1. Assess Turnover

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Assess Turnover

Organizations must determine whether their

• wn turnover is problematic and costly

by analyzing these three questions:

• 1. How many people are leaving (turnover rate)?
• Calculate turnover rate and track types of turnover (voluntary/

involuntary, locations, supervisors, etc.)

• 2. Who is leaving?
• Not every employee is of equal value to the organization
• 3. What are the relative costs and benefits of

current turnover?

• Benchmarking and needs assessment can give additional

information to determine whether turnover is a problem

(Allen, 2008)

SLIDE 6

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Assess Turnover

Benchmarking

• External – Compare organization turnover rates against

industry standard

• Internal – Track organization’s turnover rates over time

Needs Assessment

• External – Consider trends in the industry which may affect

supply and demand of human capital

• Internal – Evaluate organization’s future strategic direction and

the implications of labor requirements

• In thinking about what to consider in a needs assessment,

Cappelli suggests asking questions like:

• 1. How long will you need the talent you have?
• 2. What new talent will you need?
• 3. Are there methods of developing this new talent within the
• rganization?¹

(Allen, 2008; ¹Cappelli, 2008)

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STEP 2. Determine an Appropriate Retention Strategy

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Determine an Appropriate Retention Strategy

Once organizations have conducted a needs assessment, they can choose to develop a broad- based and/or a targeted strategy for retention.

• Broad-Based Strategies are general, all

encompassing strategies that are designed to increase retention across the entire organization.

• Targeted Strategies are designed to address specific
• rganizational issues or populations.
• These strategies can be used in any combination that

best addresses the specific challenges an

• rganization is facing.
• The size and complexity of the organization also will

help determine what combination of strategies can and should be used.

(Allen, 2008; Branham, 2008; Sears, 2003)

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Broad-Based Strategies

• In choosing a broad-based approach,
• rganizations can look at a number of sources

for information.

• 3 main sources for broad-based strategies are:
• 1. Retention Research
• 2. Best Practices
• 3. Benchmarking Surveys
• Click on any of the sources above for more

information.

(Allen, 2008)

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• 1. Retention Research
• Retention Research is an ongoing source
• f ideas and information that
• rganizations can utilize in designing an

approach.

• Some sources of retention research are:
• Academy of Management Journal
• Journal of Applied Psychology
• Society for Industrial and Organizational

Psychology

• Industrial Relations
• Human Resource Management Review

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• 2. Best Practices
• Best Practices are successful strategies implemented

by other organizations. HR professionals must use these as references and not blue prints; in other words, organizations must adjust them to fit their own needs.

• These can range from resources such as SHRM,

ASTD, and World at Work to networking with colleagues both in person and through internet sources such as LinkedIn.

• On the following slide is an example of best practices.

It shows employee retention practices over a three- year period which indicates trends that organizations can choose to adapt for themselves.

SLIDE 7

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• 2. Best Practices - An Example

(2005 & 2006 U.S. Job Recovery and Retention Poll, as cited in Allen, 2008)

Perceived Effectiveness of Employee Retention Strategies (HR Professionals)

2004 2005 2006

Competitive salary 59% 60% 59% Career development opportunities 47% 56% 46% Flexible work schedule 45% 52% 47% Promoting qualified employees 31% 40% 38% Competitive merit increases 24% 33% 19% Increased health care benefits 28% 31% 25% Competitive vacation & holiday benefits 18% 26% 19% Bonuses 22% 21% 15% Telecommuting 3% 9% 6% Childcare (paid/subsidized/provided by employer) 5% 8% 4% Early eligibility for benefits 3% 7% 4% Stock options 3% 4% 4% Other competitive benefits 2% 7% 5% 38

• 3. Benchmarking Surveys
• Benchmarking communicates what the
• rganization considers to be important and

what direction they are moving.

• Organizations can conduct the

benchmarking themselves or employ companies such as Deloitte, The Saratoga Institute, Watson Wyatt and Best Practices, LLC, to name a few, to provide such services.

(Allen, 2008; Siegfried, 2008)

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• 3. Benchmarking Surveys

An Example

• The 2008 Turnover and Retention Benchmarking Survey

published by Deloitte found that to be considered an “Employer of Choice”, organizations must provide the following:

• Treats an employee as an individual
• Market related remuneration
• Open & transparent career advancement
• pportunities
• Engaging leadership
• Effective two-way communication and consultation
• Adequate training and development
• Non-monetary recognition
• A realistic amount of pressure and work-life balance

(Deloitte Turnover and Retention Benchmarking Survey 2008)

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Targeted Strategies

• When organizations need to determine more

precise causes for turnover or focus on certain populations, they can turn to targeted strategies.

• 5 main sources for targeted strategies are:
• 1. Exit Interviews and Post-Exit Surveys
• 2. Current Employee Focus Groups
• 3. Linkage Research
• 4. Predictive Turnover Studies
• 5. Qualitative Studies
• Click on any of the above sources for more

information.

(Allen, 2008)

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• 1. Exit Interviews & Post-Exit Surveys
• In a recent SHRM survey, it was shown that 61%
• f companies surveyed use exit interviews.

These combined with post-exit surveys can help determine why employees leave an

• rganization.
• They can serve as a good will effort to end the

relationship in a constructive manner if done in a manner that allows the employee to feel that their thoughts are valued.

• A major drawback to exit interviews is that the

information gathered may not be accurate.

(Allen, 2008; Branham, 2005; Fegley, 2006; Zarandona & Camuso,1985)

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• 1. Exit Interviews & Post-Exit Surveys
• Post-exit surveys are conducted at a later point in time

and collect similar information that can either corroborate

• r contradict exit interview data.
• In a study of exit interviews, Zarandona & Camuso found

that 38% of employees gave salary as the reason for leaving and only 4% said it was because of supervision; 18 months later these same employees reported that

• nly 12% left because of salary and 24% because of

supervision.

• These numbers indicate that employees may not want to

give the real reasons for leaving in order to maintain a positive relationship with an organization that will provide them with references, contacts, and relationships in the

• future. As a result, exit interviews should be followed by

post-exit interviews.

(Branham, 2005; Zarandona, & Camuso, 1985)

SLIDE 8

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• 1. Exit Interviews & Post-Exit Surveys

To obtain maximum benefits from exit interviews and post-exit surveys, organizations should:

• Use trained, independent interviewers, such as an

HR professional or an outside consultant

• Use a structured format with consistent questions
• Guarantee confidentiality of findings (with the

exception of certain legal issues – harassment or discrimination)

• Combine data with other sources of data such as

employee surveys

• Use the information; this sends the signal to

employees that the interview is more than a gesture

(Branham, 2005;Griffeth, & Hom, 2001)

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• 2. Current-Employee Survey Groups
• As opposed to gathering data about employees

who are leaving, survey groups gather data about why employees stay and why they may consider leaving.

• These can take the form of interviews or focus

groups and can involve all employees or targeted groups that the organization is interested in retaining, such as high performers.

• Similar rules apply to survey groups in that they

should be 1) conducted by trained, neutral parties, 2) confidential, and 3) acted upon.

(Allen, 2008; Domeyer, 2007)

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• 3. Linkage Research
• Linkage research is the study of the links

between business practices, employee opinions, customer satisfaction, and business outcomes.

• In terms of retention, linkage research shows

turnover rates for business units and the causes for turnover.

• It can be used to test hypotheses about why

employees are leaving.

• Outside consultants can be used to help the
• rganization carry out the research and

understand the results.

(Allen, 2008)

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• 4. Predictive Turnover Studies
• These studies look at individual (as opposed to business

unit) responses to attitude and opinion surveys and then retention patterns are tracked for a following period of time to identify turnover trends.

• They can be used to show connections between specific

predictors and turnover results which is useful in designing a targeted retention strategy.

• A major drawback to these studies is that in order for

data to be tracked, employees must indentify themselves.

• Employee data must be kept confidential from

supervisors and workgroups if they are to feel secure in providing honest data.

(Allen, 2008)

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• 5. Qualitative Studies
• Qualitative Studies are more in-depth and

can serve to reveal more intricate and harder-to-measure reasons for turnover.

• They often capture information that

surveys don’t provide.

• These studies can include such things as

interviews, employee journal entries, and job satisfaction reports.

(Allen, 2008)

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Addressing Specific Employee Groups

• Once data has been gathered, organizations
• ften discover that certain groups of employees

leave for reasons different than other groups.

• Targeted strategies can be more cost-effective

than applying a broad-based approach.

• Organizations then can design a retention

strategy that targets such high-value employees such as:

• Star performers
• Women and minorities
• Multiple generations

(Allen, 2008)

SLIDE 9

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Turnover Costs

Tolerable Intolerable

Turnover Rates Acceptable Acceptable High

• r

Increasing High

• r

Increasing Acceptable Acceptable High

• r

Increasing High

• r

Increasing Who Is Leaving Functional Dysfunctional Functional Dysfunctional Functional Dysfunctional Functional Dysfunctional Response Maintain Status Quo And Monitor Low- Investment Targeted Strategies Low- Investment Broad-Based Strategies Low- Investment Broad-Based and Targeted Strategies Streamline Costs Targeted Strategies Broad-Based Strategies Broad-Based and Targeted Strategies

Determine an Appropriate Retention Strategy

(Allen, 2008, p.15)

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Steps 3 & 4 Implementing a Retention Plan & Evaluating the Results

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Steps 3 & 4 Implementing and Evaluating

• How an organization implements its retention

plan depends upon the unique strategy the

• rganization is focused on.
• Support from top-management is key as well as

communication at all levels of the organization. “75% of managers are unaware of a retention strategy in their office.”¹

• Evaluating the results of the strategy will be key

to measuring the impact and the costs of the strategy.

(Allen, 2008; Branham, 2005; Michelman, 2006; ¹Laff, 2007)

• VI. A Menu Of Retention Practices

Once an organization understands its own turnover and associated costs, it can determine an appropriate retention strategy to deliver results. Following are some commonly used retention practices that may be a part of those initiatives.

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Recruitment

To retain new hires, consider these recruitment practices:

• 1. Present a Realistic Job Preview (RJP) – Accurate

information about the positive characteristics and challenges associated with the job.

• Don’t candy-coat the job to make it sound more appealing;

you’ll lose those employees when reality hits

• This may reduce applicant pools, but will find qualified

applicants who will be satisfied in the position for potentially a longer period of time

• Click here for instructions on how to create an RJP
• 2. Look at the source from which you hired the applicant
• Consider an Employee Referral Program

“Employees who make referrals have a personal interest in the individuals they refer succeeding on the job.”¹

(Allen, 2008; ¹Sullivan, 2007, p.1)

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How to Create a Realistic Job Preview (RJP)

1. Interview incumbents about their job duties and work experiences 2. Identify common themes and descriptors 3. Validate that the resulting statements portray a relatively common work experience 4. Develop the RJP in booklet, brochure, or electronic form – oral presentations can be particularly effective 5. Use the RJP with a group of applicants while maintaining a control group of applicants who are not exposed to the RJP 6. Revise and update the RJP as needed based on findings from the previous step

(Allen, 2008)

SLIDE 10

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Selection

To select candidates who are more likely to stay, HR professionals can consider these selection practices:

1. Use bio-data during the selection process to identify life experiences which tend to differentiate those who stay in an

• rganization from those who leave:
• Includes tenure in past positions, why they left their past

positions, early work experiences, education experiences, involvement in career-related organizations

• Carefully avoid any data related to a protected class

2. Create Weighted Application Blanks which ask questions to determine if some areas differentiate employees who stay from those who leave:

• Can be weighted as needed in each organization
• Can be used during the selection process among future

applicants

(Allen, 2008)

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Selection

3. Assess compatibility of individual within the work environment:¹

• The most skilled employee is not always the right person for

the job and can cause premature turnover

• Mainly subjective in nature, so caution should be used when

assessing fit

5. Reward managers for exemplary selection and retention:²

• Less than one in three organizations reward managers for

having low turnover rates among new hires

• Show managers the impact turnover has on business results
• Tie manager’s bonus to retaining top performers, diverse

individuals, or employees in mission-critical positions significantly higher than average positions – no consequence for losing a bottom performer

(¹Allen, 2008; ²Sullivan, 2007)

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Socialization

Despite significant investments in recruitment, selection, and training, turnover can be high among new

• employees. Research shows that the following

socialization practices can help new employees become embedded in the organization and more likely to stay:¹

• Structured orientation activities for all new hires
• Clear information about the socialization process
• Positive feedback for new hires as they adapt to the new

environment

• Shared and individual learning experiences
• Formal and informal get-to-know-you activities
• Mentoring programs²

(¹Allen, 2006; ² Van Maanen & Schein, 1979)

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Training & Development

Many organizations worry about making their employees more marketable and desirable by developing them. However, research suggests that:

• Those who receive more training are somewhat less likely to quit than

those who receive little or no training

• Employees value growth opportunities; a lack thereof can influence the

decision to turnover¹

Organizations who are still concerned can consider:

• Job-specific training, which is less transferable to other contexts,

instead of generalized training

• Linking developmental opportunities to retention. For example,

reimburse tuition for employees who remain with the organization for a certain period of time after the education is obtained²

(¹Allen, Shore & Griffeth, 2003; ²Hom & Griffeth, 1995)

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Compensation & Rewards

Depending on an organization’s individual needs and strategies, numerous compensation and rewards options can be used. Consider the Employee Value Proposition (EVP) – Total package of intrinsic and extrinsic rewards provided for remaining in the

• rganization.

(Allen, 2008)

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Compensation & Rewards

EVP Approaches: 1. Lead the market in rewarding employees by promoting satisfaction among workers and making competitors less attractive 2. Tailor rewards for individual needs:

• Performance-Based Pay – “A strong pay-for-performance

culture has the ability to unlock performance potential, keep your ‘superstars’ happy, and ultimately drive a healthier bottom line.”¹

• Spot Bonuses – “45% of companies say they use spot

bonuses as a means of retaining employees.”²

• Flexible Work Schedules – Take employee preferences

seriously if you wish to retain them

• Offer Employer-Paid Training – Make the employees more

valuable and this generally decreases their desire to leave

(Allen, 2008; ¹Workforce Mgt., 2008, p. S4; ²Report On Salary Surveys, 2007, p. 13)

SLIDE 11

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Compensation & Rewards

3. Explicitly link rewards to retention by increasing compensation based on seniority:

• Common Rewards
• Increased Vacation time based on years of service
• Service Awards
• Less Common Rewards
• “Golden handcuffs” – Pay-based incentives to keep top talent
• Pay “hot skills” premiums to employees with rare skills

needed by the organization to keep them in place during critical periods of time

• Pay “sign-on” bonuses over a period of time
• Pay retention bonuses to retain top talent currently on your

team, to make a competitor’s offer seem less attractive

• Discretionary Contributions to 401k plans – Include a longer

vesting period to help retain these top employees; also aids

• rganization cash flow since it is not expensed at one time

(Allen, 2008, Cappelli, 2000)

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Supervision

An employee’s relationship with a boss can profoundly affect turnover. Here are reasons how:

• When employees leave an organization, they are not

necessarily escaping the company but rather, the

• boss. “The major reason employees leave a company

is because of the supervisor or team leader.”¹

• “Some of the leading causes of turnover are reported

to be lack of attention and feedback, the need for more recognition and an inability to communicate up the organization and resolve outstanding issues.”²

• “In all of these cases, the boss is the key player,

determining whether attention, feedback and recognition are given and whether upward communication is allowed and effective. When these elements are lacking, the workplace atmosphere and culture set the stage for dissatisfied workers.”²

(¹Flex Execs, 2001; ²Munzel & Moore, 2002)

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Supervision

• A skilled boss needs “soft skills”: non-technical, people skills and

behaviors such as the ability to resolve conflicts, listen, remain

• pen to criticism and learn from mistakes.
• Trained leaders have the ability to deal effectively with employee
• concerns. These conversations require a high degree of skill –

both communicating to employees and listening to detect silent

• r hidden concerns, questions and issues.
• To decide what skills and behaviors the leaders in your
• rganization need, start by considering both present and future

business goals and the strategies necessary to achieve them.

• Bosses who are good at managing their particular employees

have more satisfied workers who are less likely to leave their bosses and their employers.

(Munzel & Moore, 2002)

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Employee Engagement

Strengthening employee engagement can help

• rganizations retain talent. Engaged employees:
• 1. Are satisfied with their jobs
• 2. Enjoy their work and the organization
• 3. Believe that their job is important
• 4. Take pride in the company
• 5. Believe their employer values their

contributions¹

• In fact, one study found that highly engaged

employees are five times less likely to quit than those who are not engaged.²

• On the following slide is a list of engagement
• practices. Notice that these practices also support

retention efforts; everything can be aligned behind a common goal!

(¹Vance, 2006; ²Ramsay, as cited in Allen, 2008)

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Employee Engagement

Strengthening Engagement in Your Organization

Job Design Increase meaningfulness, autonomy, variety, and co- worker support in jobs Recruitment & Selection Use clear communication to achieve person-job and person-organization fit Hire internally where strategically and practically feasible Training & Development Provide orientation that communicates how jobs contribute to the organization’s mission and that helps new hires establish relationships with colleagues Offer ongoing skills development Compensation & Performance Management Consider competency-based and pay-for-performance systems Define challenging goals Provide positive feedback and recognition of all types of contributions

(Allen, 2008)

• VII. Conclusion

SLIDE 12

12

67

HR professionals must assess the singular nature of their own organizational challenges, develop appropriate strategies In focusing on turnover, organizations will unlock priceless retention practices which will increase bottom-line results, build credibility and earn HR a seat at the table

• f executive management. By strategically

developing retention plans, Human Resources professionals can deliver a competitive advantage built on a solid foundation of employee talent.

68

• VIII. References

3 key steps to building a pay-for-performance culture. (2008). Workforce Management, 87(17), S4-S4. 2005 U.S. Job Recovery and Retentions Report http://moss07.shrm.org/Research/SurveyFindings/Documents/2005%20US%20Retention%20and%20Job %20Recovery%20Survey.pdf 2006 U.S. Job Recovery and Retentions Report http://moss07.shrm.org/Research/SurveyFindings/Documents/2006%20U.S.%20Job%20Retention%20Poll %20Findings.pdf Allen, D.G., (2008), Retaining talent, SHRM Foundation. Allen, D., Shore, L, & Griffeth, R. (2003). The role of perceived organizational support and supportive human resource practices in the turnover process. Journal of Management, 29(1), 99-118. Allen, D.G., Griffeth, R.W., (Winter99). Job Performance and Turnover: a Review and Integrative Multi-Route Model. Human Resource Management Review, Vol. 9, Issue 4. Batt, R. (2002). Managing customer services: human resource practices, quit rates, and sales growth. Academy of Management Journal, 45(3), 587-597. Branham, L., (2005). The 7 hidden reasons employees leave, New York, AMACOM. Cappelli, P. (2000). A market-driven approach to retaining talent. Harvard Business Review, 78(1), 103-111. Cappelli, P. (2008). Talent management for the twenty-first century. Harvard Business Review, 86(3), 74-81. Deloitte Turnover and Retention Benchmarking Survey 2008 http://www.deloitte.com/dtt/cda/doc/content/ZA_Consulting_HC_TRBendhcmarkingSurvey08_300109.pdf

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• VIII. References

Domeyer, D. (2007). Keeping A grip on good talent. (cover story). Office Pro, 67, 10-13. Fegley, S. (2006). 2006 SHRM talent management survey report. SHRM Research. Griffeth, R.W., & Hom, P.W. (2001). Retaining valued employees. Thousand Oaks, CA: Sage. Hom, P. & Griffeth, R. (1995). Employee Turnover. South-Western. How to reward top performers on a tight budget. (2007). Report on Salary Surveys, 7(6), 1-13. Flex Execs. (2001). Why do people leave? Employee retention. Retrieved Mar. 18, 2009, from http://www.flexexecs.com/fe_images/WOWno5.pdf Huselid, M. (1995). The impact of human resource management on practices, on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3), 635-672. Jacobs, K. (2007). The rewards of retention: Retaining your best and your brightest. Public Relations Tactics, 14(8), 18-20. Laff, M. (2007). The hidden talent retention strategy. T+D, 61(12), 20-20. McCormick, H. (2007, Spring/Summer). Talent management – 10 keys to success. NCHR Review, 14-18. Michelman, P. (2006). Why retention should become a core strategy now. Retaining your best people (pp. 21). Boston: Harvard Business School Press. Minton-Eversole, T. (2008, February 20). Focus shifts from talent retention to cost reduction. Retrieved from www.shrm.org. Mitchell, T. (2001). Using job embeddedness to predict voluntary turnover. Academy of Management Journal, 44, 1102-1122. ). Mitchell, T.R., Holtom, B.C., & Lee, T.W. (2001). How to keep your best employees: Developing an effective retention

• policy. Academy of Management Executive, 15(4), 96-108.

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• VIII. References

Munzel, M., & Moore, J. (2002). To retain key employees-develop the boss. Retrieved Mar. 19, 2009, from http://moss07.shrm.org/Research/Articles/Articles/Pages/CMS_000123.aspx Rynes, S. L., Brown, K. G., & Colbert, A. E. (2002). Seven common misconceptions about human resource practices: Research findings versus practitioner beliefs. Academy of Management Executive, 16(3), 92-103. Sears, D. (2003). Successful talent strategies: Achieving superior business results through market-focused staffing. New York, AMACOM Shaw, J., Duffy, M., Johnson, J., & Lockhart, D. (2005). Turnover, social capital losses, and performance. Academy

• f Management Journal, 48(4), 594-606.

Smith, M. E. (2008). Do you have a bench? Business Credit, 110(7), 6-6. Steel, R. (2002). Turnover theory at the empirical interface: Problems of fit and function. Academy of Management Review, 27(3), 346-360. Subramony, M., Krause, N., Norton, J., & Burns, G. (2008). The relationship between human resource investments and organizational performance: A firm-level examination of equilibrium theory. Journal of Applied Psychology, 93(4). 778-788. Sullivan, J. (2007). Retention problems begin during the hiring process. Retrieved March 1, 2009 from http://www.drjohnsullivan.com/content/view/171/27/ Trevor, C. (2001). Interactions among actual ease-of-movement determinants and job satisfaction in the prediction of voluntary turnover. Academy of Management Journal, 44(4), 621-638. Siegfried Jr., R. L. (2008). Mapping a career path for attracting & retaining talent. Financial Executive, 24(9), 52-55. Vance, R. (2006). Employee engagement and commitment: SHRM Foundation's Effective Practice Guidelines (Research Report). Retrieved from Society of Human Resource Management: www.shrm.org. Zarandona, J.L. & Camuso, M.A. (1985). A study of exit interviews: Does the last word count? Personnel, 62, 47-48.

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• IX. Suggested Resources
• Dr. John Sullivan’s Retention Articles

http://www.drjohnsullivan.com/content/category/6/25/38/ Reitman, A., Talent Retention, ASTD Press Infoline, (3/2007) Six basic steps to conducting a benchmark survey http://en.wikipedia.org/wiki/Benchmarking SHRM’s Retention Tool Kit http://moss07.shrm.org/TemplatesTools/Toolkits/Pages/ CMS_014942.aspx Talent Management www.talentmgt.com World at Work Total Rewards Model http://www.worldatwork.org/waw/adimLink?id=28330

THE END

Any questions? please contact the instructor