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How to Retain Employees

How to Retain Employees

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Published by: Mosa Elemam Ahmed on May 15, 2011
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How to retain employees: a high turnover rate is costly in both direct and indirect costs.

By Shehan, Tom Publication: Detroiter Date: Saturday, January 1 2005 Many owners of businesses with high employee turnover find themselves running in place instead of growing their companies. As the economy improves, more employers are facing this issue because employees are shopping around their resumes in hopes of landing better positions. In fact, 83 percent of employees surveyed by the Society for Human Resource Management said they are dissatisfied with their current positions and are seeking new employment. High turnover affects companies in several ways. First, when long-time employees leave, they often take valuable institutional knowledge or intellectual assets with them. Seasoned staff members serve as morale boosters for work teams and help new employees progress more quickly. Having to replace these assets costs employers a lot in both time and money. Second, high employee turnover often forces business owners to focus their own efforts on staffing. Whether the employees being replaced are senior-level executives, middle managers or entry-level staffers, business owners often bear the responsibility of recruiting, interviewing and training new hires. And this is at a great cost--typically the equivalent of 30 percent to 150 percent of the salary for the position. Furthermore, many business owners mistakenly believe that the cost of replacing employees is merely the price of newspaper or Website advertisements. However, both direct and indirect costs must be taken into consideration.
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employers may need to hire a search firm or a headhunter to find the right candidates for hard-to-fill positions. * Are ready for new experiences (32 percent). According to a Society for Human Resource Management survey. While a position remains vacant. Why employees choose to leave Understanding why staff members look elsewhere is a key to employee retention. While salaries and career advancement are important. many employees choose to leave because they don't believe their work is appreciated. their managers or both. * Are dissatisfied with their potential career development (35 percent). the top-three reasons why employees search for new positions are because they: * Want better compensation and benefits (53 percent). This often stems from poor communication on the part of either employees. a lack of teamwork and the perception that business owners don't care about their employees are consistently the highest-rated reasons for low job satisfaction. Surveys reveal that more than 40 percent of people who leave their jobs do so because they don't believe their companies value their contributions. An oftenoverlooked indirect cost of turnover is its effect on other staff members.For example. other employees usually take on additional responsibilities. A lack of appreciation. 2 . Without proper implementation and management. Ways to avoid high turnover Business owners can avoid high employee turnover by addressing compensation and benefits. implementing training programs with clear paths for advancement and providing comprehensive employee relations programs. this can result in low morale and lost productivity.

we are only as good as the people who work for us. Managers should have a clear idea of the types of people they want to hire for each position. Another key to employee satisfaction is implementing formal training programs that provide employees with clear paths for advancement. Employees are more likely to remain loyal to businesses committed to staff development and promoting from within Likewise. Just hiring the best people for your business can be tough enough ± but keeping those employees can be even tougher. PEOs provide businesses with better benefits than they could obtain on their own. write detailed job descriptions and commit to hiring the best candidates rather than the first candidates who meet minimum requirements.good employees. Tom Shehan is Detroit area president for ADP TotalSource in Troy. staff members can benefit from formal employee relations programs that include the use of employee handbooks and resources to resolve issues as well as personal problems that workers encounter. One way of assuring continued success is to attract ± and retain. a Bronze-level member of the Detroit Regional Chamber. or PEO. One way small and mid-size businesses can offer Fortune 500 type benefits is by working with a Professional Employer Organization. many business owners regularly check benchmarks for their industries and geographic locations. 3 . hiring the right people from the start reduces turnover. But competition for top talent is fierce these days. [ILLUSTRATION OMITTED] Retain your best employees As managers. Finally.To make sure they are offering competitive compensation and benefits. Through economies of scale.

doers come in all shapes and sizes: Don¶t fall for stereotypes ± the wiry or muscular type may not necessarily be actionoriented. My talent will be appreciated elsewhere´. at the keyboardcalling meetings or dashing about aren¶t necessarily producing ± they may not be your thinkers.´ 4 .The following tips can help you keep your top talent happy and have them ignore your competitors¶ recruiters and head-hunters: 1. Know why top quality employees leave Your best employees change jobs for a reason± and it¶s rarely only for more money. 2. experience and skills. if they ever contemplate leaving. Managers don¶t have the time or resources to lavish attention on everyone. The top one-third of your employees should receive 90% of your retention attention. Consider performance. you¶ll know what buttons to push to retain them. Remember. Consider the following: I¶m not appreciated: ³I make a valuable contribution and I get no thanks. Identify and focus on your real achievers Have you determined which people are the most valuable to your business? Who can you counton daily to follow through on projects and deliver results? Make a list and consider these timely tips: Don¶t confuse activity with performance: Those constantly on the phone. more perks or better benefits. stretched and tested so I can show off my talents. Often they leave because their satisfiers are not being met in the current job. The secret is to spend time with these key people so that you know what are their ³satisfiers´ ± thethings that make them happy. not noise: The quiet ones are not necessarily daydreamers ± they may be too busy getting things done to talk too much. In this way. I¶m bored: ³I want to be challenged.problem-solvers or decision-makers.

and a sense of belonging. I respond positively to good supervision.´ I want to work for an insightful manager: ³As a prized employee. your goal should be to do everything possible to keep your best employees for as long as you can. 4. Work proactively to retain your best employees As a manager. Talk to these people in turn. Raise the bar: Hold high expectations and don¶t be surprised if your employees live up to them.´ I want to grow: ³Here I have limited opportunities for growth and the development of new andvalued skills. Promote from within: It¶s a powerful morale-booster. The following strategies can assist in the retention of your best employees: Set challenging goals and reasonable deadlines: Outstanding workers thrive on challenges. I want a career. 5 . Give full credit for achievement and effort: Recognition is a reward in itself for workers who take pride in what they do.´ 3.I have no career prospects here: ³I¶m a cut above the rest but I can see no opportunity for advancement. Reach agreement with each key employee on how to approach their needs through a concrete strategy for the future. and begin to prepare individual retention plans that will help tie each key employee to your business.´ I¶m just a small cog in the overall machine: ³I seek a sense of purpose. not just a job. asking them what they want from the business in the short and long term ± ³What will it take to keep you motivated and part of our family?´ From this employeefocused conversation comes a vulnerability report which leads to a retention plan. Develop a retention plan for each top employee Once you identify your best people and recognize that they have different needs or satisfiers. You need to consider what you are willing to do to retain each key employee. Be quick with praise. of contributing to something bigger than myself. you must develop a strategy to show that you are intensely interested in them and their future within your business.

honest and upfront: Keep key employees informed ± what¶s going on and coming up ± both good and bad. Encourage risk-taking and innovation: Allow failure once in a while. Preach. the dot. teach and practice teamwork: Celebrate each other¶s success. Be committed to excellence: Don¶t accept second-rate workmanship. You won¶t always win. Cultivate organisational culture: Build workplace values of hard work.com start-ups and twenty-somethings. fair play. Let employees participate in making decisions: This is particularly relevant to the decisions that directly affect them. Further information The following fact sheets provide further information on these issues: Develop a succession plan Leadership . Media Gulch. with Silicon Valley. Pay attention: Listen and act on employee suggestions. Have fun at work. Encourage experienced workers to become mentors for new employees. Promote life-long learning: Make continuous growth your catch cry. Be open.Delegate authority: Encourage key employees to take on added responsibilities. Fight to get whatever they need to do their best work. Folks are finding jobs then losing jobs and 6 . with the market down and up and down. honesty and mutual respect. we live in the California.introduction Motivate employees Sixty-six Ways to Retain Employees and Gain Commitment in this Wild and Crazy Nonprofit Job Market Compiled by Baillee Serbin Here we are. but you¶ll engender a lot of loyalty in the process. Set your employees up for success: Be their advocate.

for a quickie nap Helping employees dealing with the stress of these painful times.   . and are fair.gazillions of dollars coming and going. where employees can select those benefits that they need. and windows that open. and have guessing contest. etc. We want to gain commitment from our current employees and provide a healthy work environment for our staff. with war and disasters. or want to add to your methods of retaining great employees: WORK/LIFE BALANCE AND CLIMATE Help staff design a healthy work/life balance for themselves Implement Good Management Practices Keep your promises Maintain positive employee relations Hire a meeting planner for special occasions Make the workplace a more fun place. and Make sure there is time for Celebration. and Play Ergonomicallycorrect equipment and offices Fifteen Minute Shoulder massages Environmentally clean and correct office space and use of products. one day a year. and a win/win. proactive approaches you already have in place. Praise and positive feedback Halloween Costume Day ³Thank You´ Board Valentines¶ Day: Board with all employees¶ baby pictures. Maybe include ³cafeteria style´ benefits. with the winner receiving a box of chocolates Wellness Program Pot Luck Lunches Bring children to work. with relaxing tapes and alarm clock. and grief counselors and Employee Assistance Programs. We nonprofits had unfilled jobs just one year ago and now we are considering tightening our belts with layoffs and downsizing. or health clubs. to see the office and play Pets in the office COMPENSATION & BENEFITS Each year make sure that salaries are competitive and priced consistently AT MARKET VALUE and be sure to provide fair ³merit increases´ Make sure that benefits are competitive with market. if possible Outdoor activities. such as child care for parents. to see how many creative. The following list can be used as a check-list. Yet there are still some job openings waiting to be filled. like planting trees in the park near your office combined with a picnic Freshen up the environment Snooze Tent: a roomy 4 person tent. through meetings. Joy.

gift them with four consecutive days off Implement flexible scheduling Implement Job Sharing Help pay for the ³daily commute´ to work. pre-tax dollar arrangement to pay for child care and elder care and alternative health practitioners.M. once a week if possible. project. once a month Cross train staff. or event. or extra ordinary helpfulness Offer lunch for two as an extrinsic reward for work well done above and beyond the call of duty. If Staff has worked for four months on a big initiative. schedule staff meetings regularly with your department. and once a month for full staff meetings. so employees can learn new skills Telecommuting possibilities Keep employees well informed. like providing multiple H. choices Convert to self-insured dental and vision plans Add short-term disability insurance for your staff Add long-term disability insurance as a benefit Add group long-term care benefits Add group voluntary whole life insurance benefits Sweeten the retirement pot Paid Maternity/Paternity Leave for three months Provide Domestic Partner benefits Child care vouchers or on premises child care Informally hand out two tickets to a current movie for great ideas. practicing teamwork and leadership exercises Team parties at the leader¶s house Paid community service days. 8 . through public transportation pass subsidy SUPPORT Create Real Team Work Kayak half day. such as chiropractors and acupunctures Modify your medical insurance plan to allow for more choices for the employees.O.Section 125.

R. and can see a project through to completion from start to end Establish a tuition reimbursement plan Send top performers to professional meetings out of town Mentor employees Provide Succession Planning Provide Career Pathing. and current Engage in corrective action. This process gives the employee a chance to see the real mission at work. for staff to see jobs that might be available for advancement. but also be constructive Make sure Performance Reviews are timely and fair using the S.Break bread together at events such as a catered lunch or potluck breakfast. Relevant. Attainable. and what the requirements are for that job. as well as how the organization functions.net] 9 . A meal with the top leadership just for communications and fun Provide Management Trainings and New Learning Brown Bag Lunches Opportunities for autonomy and brainstorming If you have more to add to this list.A. Measurable.6538 baillee@earthlink. [415. Make sure your employee handbook is clear. opportunities for staff to see possibilities of advancement within the organization. mentoring and specific types of improvements with timely deadlines Implement Excellent Orientation Practices: Provide a week-long orientation process where the new employee works along side each department for a few hours. and how to train and prepare for that job . top down and bottom up Offer Strategic Planning with employee input Include employee input and suggestions in yearly Budgeting Process Be honest in Performance Reviews.[Specific.383. please email or voicemail me so I can keep updating and expanding the list. with opportunities for the employee to improve with coaching. Emphasize Great Communications. and Timely] System PROFESSIONAL GROWTH Breed Talent!!! Projects where employees have autonomy. Provide a ³Job Description Binder´ of all of the jobs in the organization.T. easy-to-read.M.

s human capital is critical to success. Recruitment and Retention: A Brave New World Just a few years ago.s challenging business climate. But the stakes are higher now that the margin between success and failure is razor thin. At the same time. training and retention efforts. they will need to build airtight business cases for any proposals to spend money on initiatives related to recruiting. Is your approach to recruiting and retention aligned with your company. Retaining these workers in an overheated job market was a serious challenge. In this environment. 10 . In today¶s climate. recruiting and retaining the right people is just as important as before. While the business landscape has changed dramatically.s strategic goals? This article explores the key principles and business processes that will help drive long-term business benefits. and the departure of a star performer can impact financial results that investors are watching more closely than ever. as job growth in Europe and the United States outpaced the supply of employees. This article is one in a series from Microsoft Office System that explores issues and perspectives facing human resources executives. HR leaders need to develop businessprocesses that allow their teams to be more efficient and productive. most human resources professionals were grappling with the serious challenge ofrecruiting qualified workers to fill available positions. Lower headcounts mean that each new hire is thatmuch more crucial to the firm¶ssuccess.BEST PRACTICES: RECRUITING AND RETAINING TALENTED EMPLOYEES In today. HR is expected to deliver business results on a much tighter budget. management of your company.

Is your approach to recruiting and retention aligned with your company. The new holistic approach to workforce management is often referred to as human capital management (HCM Best Practices: Recruiting and Retaining Talented Employees BEST PRACTICES: RECRUITING AND RETAINING TALENTED EMPLOYEES Source: Cap Gemini Ernst & Young.s strategic goals? This article explores the key principles and business processes that will help drive long-term business benefits. 11 . HR executives face pressure from both management peers and employees to evolve a new. This article is one in a series from Microsoft Office System that explores issues and perspectives facing human resources executives The Human Capital Revolution A key business lesson of the Information Age.is that strategic value is shifting from tangibles . inventories. employee attitudes toward work have undergone a radical transformation in just a few short years. more strategic approach to recruitment and retention. Widespread layoffs. factories. management of your company.s human capital is critical to success. Saratoga Institute In today. corporate financial scandals and the dramatic decrease in public perceptions of global security that followed September 11. Attracting and retaining thebest people is no longer simply about compensation. physical infrastructure to intangibles.Just as the business climate has shifted. As these trends interact with deeper economic shifts.s challenging business climate. 2001 have all contributed to a re-evaluation of career and life priorities among many employees.

human capital is perhaps the most vulnerable to erosion. based on the exploitation of ideas.You cannot separate a person from his or her knowledge.As noted in an article in London-based finance publication The Economist.human capital.increasinglyvaluable intangibles .said Becker. that attract the bestcandidates to start with.employers of choice. The very definition of human capital is that it walks out the door every evening. which increasingly involve HR organizations in their implementation.Economies are increasingly based on knowledge . Becker. who coined the term .. health. rather than material things.what is new is that a growing chunk of production in the modern economy is in the form of intangibles.. Though recruiting and retention are separate 12 .I would start out with some obvious things that are still sometimes forgotten: the basic resource in any company is the people. anonline publication about learning in the New Economy. . Among companies. which include intellectual property. and exits permanently with an employee who leaves a company... Knowledge management efforts.explains it this way in his book of the same name: .The very definition of human capital is that it walks out the door every evening. . and exits permanently with an employee who leaves a company. . or values the way it is possible to move financial and physical assets while the owner stays put. Becker¶s statement serves as an excellent checklist for the approaches that leading companies use not only to keep the employees they have.The most successful companies and the most successful countries will be those that manage human capital inthe most effective and efficient fashion. skills. Nobel Prize winning economist Gary S. In a recent interview with LiNEZine. and customer relationships . brand value. but Becker¶s work shows that reducing the number of people who leave voluntarily is critical. but also to set themselves apart as . .. are one approach to mitigating human capital losses. Becker restated his famous formulation in a novel way. .

an interactive solutions consultant with global HR communications and solutions provider TMP Worldwide. Dave Lefkow. employee retention requires business processes that combine measurement.including !Centralizationof HR efforts. developing specialist practices within recruiting allows innovation around key functions like workforce planning. These three efforts are interrelated and each puts a premium on having an infrastructure that allows efficient teaming. Once the principles of human capital management are established internally. but also brings together expertise formerly distributed throughout the organization to create a center of excellence. As basic HR processes like applicant tracking become ubiquitous. hiring process management. experts offer clear direction on a number of practical steps that will help advance recruitment and retention success. As process improvements to support these efforts are implemented. training and collaboration. process management and collaboration. ! Focused recruiting. Similarly. he observes several trends . Centralizing he recruiting team not only allows economies of scale. business analysis and others. Examining companies like Nike and Microsoft that he cites as having leading recruitment efforts. !Specialization.issues that each require specific business processes. Aided by centralization. it is important to measure recruiting success against overall business goals and communicate these metrics within the HR organization and the larger enterprise.shared throughout the organization . and the least likely to be in the general pool of job-seekers. HR staff can spend more time on activities focused on identifying successful professionals who are most likely to offer your company high value. Beyond the top-line strategic value of proper management of human 13 . offers several insights in a recent article in specialist online publication Electronic Recruiting Exchange. For example. is one business unit moresuccessful in closing offers with high value candidates? Knowledge of this success is a key step in replicating it throughout the organization. canunite your efforts. a strong understanding of the principles of human capital management .

value contributors is a logical place to start.high Q12 scores have also experienced lower turnover.. if your budgetis limited a retention 14 . Companies are increasingly tailoringrelated but separate programs for rank-and-file workers and high performers.soft:. The Gallup Organization.capital..12 Questions. the quantitativenature of the study helpsground subsequent discussions betweenemployees and managers indata.Gallup reports that in benchmarking their use with over 1.if your budget is limited. May appear . this in itself canlead to higher retention. organizations with . are beginning to ask companies about retention plans that focus on the employees whose hard work can make or break a company¶s short-term earning and long term success. For example. highest.000 divisions or work units. Analyst Monica Barron with IT consulting firm AMR Research notes that institutional investors. . process-based retention program to stop the losses and enable human capital value creation. better productivity. also offers diagnostic tools that can assist HR professionals in gauging employee alignment and engagement. a retention program that focuses on the highest-profile. a strong retention program can offer dramatic cost savings and productivity gains. While looking at retention across the board makes good financial sense. better customer loyalty or other manifestations of superior performance. which helps defuse tension andproduce actionable results.along with data on business results . higher sales growth..5 million employees in over 87.Turnover is a serious business problem in every industry and requires a strategic. Continualtracking of these attitudinal metrics .s . have you received recognition or praise for doing good work? Do you have a best friend at work? In the last year. Some of Gallup. In the last seven days. Moreover. There are numerous approaches to measuring the many factors that impact employee retention. ever more aware of the human capital value of high-performing employees.helpsemployees understand that their satisfaction is valued. have you had opportunities at work to learn and grow? However. wellknown for its polling and market research..

one of the most vital elements of employee . Business leaders in India are increasingly concerned with the challenges of recruiting and retaining talented employees. Pacific Bridge Consulting. highest value contributors is a logical place to start.S. Beyond 15 .an encouraging sign that the learning¶s of human capital management can help raise global workforce standards. . reports that retention is also an increasing focus of both state-owned enterprises and foreign firms operating in China. a U.based human resources consultancy focused on Asia. Vij sums up the logic of human capital management by adding.compensation. Pacific Bridge notes that to an even greater degree than in other nations.S. This means that companies in China must make real efforts to engender employee loyalty. Several Indian companies offer examples of comprehensive retention programs that include employee stock option plans (ESOPs).designed to retain our best talent by enhancing the feeling of ownership. . Templeton Asset Management (India) launched one such program: Templeton India CEO Rajiv Vij stated that the program is . andretention is treating employees well. reports that the Indian mutual-fund industry has been a leader in creating ESOPs designed to help address the problem. and commitment to the firm.program that focuses on the highest-profile. a U. despite a population of over one billion. The business benefits of these approaches are reaching into the developing world.-based not-forprofit research and educational organization.. but is in fact a worldwide issue. at a time when the industry as a whole is facing an attrition problem. The Workforce Stability Institute.People are the key asset for us.. .. feeling of belonging. In an indicationthat cultural differences play animportant role in creating effective retention plans. Recruiting and Retention for a Global Workforce The need to increase recruiting and retention effectiveness is not just an issues in the United States and Europe. ..Business leaders in India are increasingly concerned with the challenges of recruiting and retaining talented employees.

Our Assessment: Opportunity in Value Creation True competitive advantage increasingly will be gained by integrating employee retentionprograms into a holistic human capital management framework that includes ongoing training and management. . Political and economic issues in China make stock-option programs for Chinese employees challenging. the real challenge will be to drive these insights deeper into integrated processes. As these global developments make clear. Human capital management provides an opportunity for thought leadership about the links between job satisfaction. For companies that stay ahead of the curve.Attracting. and retaining talented people can be the stuff of competitive advantage. Over the past several decades.these .. based on an infrastructure that maximizes the productivity of individual contributors and HR teams. compensation programs that involvepersonal and team incentives are increasingly important in China.arguably one equal to thatof the CFO..HR Leaders will have amuch more strategic roleto play in the years ahead. HR leaders will have a much more strategic role to play in the years ahead. employee alignment... employees. Leading global consulting firm McKinsey & Company sums up the opportunity for HR executives this way. and the human resources executives that fuel 16 . productivity andvalue creation. Along with this strategic role comes bottom-line responsibility. and HR executives will need processes to measure their results against overall business goals and share best-practice information within the organization. developing. arguably one equal to that of the CFO. human resources executives have been steadily increasing their ability to drive business results while positively influencing the quality of work life among their companies. but this has not stopped companies like Lucent and Intel from developing innovative incentive programs that offer similar rewards tied to corporate performance. Therefore. As this understandingspreads around the world.soft . sophisticated employee recruitment and retention programs are increasingly seen as integral to business success. competitive advantages will accrue to those companies that maximize the benefits of strategic human capital management more quickly than the competition can. retentionefforts.

that success.LiNEzine. Inc.com/management/ Q12_system.gallup.officeteam.pacificbridge.com Gallup Performance Management Systems www.com/office Workforce Stability Institute www.com 17 .employee.com LiNEzine www. www. Best Practices: Recruiting and Retaining Talented Employees Microsoft 5 Additional Resources Microsoft Office System www.org OfficeTeam www. the rewards will be significant.asp Pacific Bridge.com Electronic Recruiting Exchange www.erexchange.microsoft.

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