As the school summer holidays start later this month, many employees will be looking forward to their annual break. Rest and recuperation, spending time with the family, trying new leisure pursuits....the list is endless.
However in our experience a significant number of individuals return after their annual break determined to jump ship - perhaps they plan to start with an alternative employer early in the New Year, or simply vow that even though things are still tough out there must be somewhere/someone else who’s better than the devil they know all too well.
Evidence of this phenomenon is the number of job adverts that appear in the September-October period, compared to the July-August weeks.
So what can forward-thinking employers do to retain their best people?
What factors need to be taken into account to minimise staff turnover?
BEING RUTHLESS
Last month I was speaking at a conference and one of the other speakers referred to the Pareto principle, and the importance of focusing on the top 20% and the bottom 20%. He commented that in times of economic uncertainty it is crucial to make the curve slightly steeper, to reward and motivate top performers whilst addressing the bottom twenty per cent.
BUT SURELY WE ARE STILL IN A RECESSION....
The patterns of employee behaviour in recession are often predictable and unsettling but survival does not necessarily create stronger bonds. Keeping the best people is tricky even in the current climate, although some organisations assume that positive economic statistics are sufficient to generate a sense of relief and enthusiasm amongst employees. Employers can spend too little time evaluating how the change from the incessant gloom to recent more positive news will be translated into employee expectations and behaviour, assuming too readily that they will be relieved and motivated by the prospect of recovery and therefore have no reason to jump ship.
In the initial phase of the recession (the descent) people seek security and keep their heads down in the hope that they can ride out the storm. Key people tend not to move unless they are forced to do so. Avoiding the possibility of jumping from the frying pan into the fire seems to be the adage.
But during this period and the subsequent phase of bumping along the bottom, weaknesses and threats to employers become apparent and people begin to think about their future economic welfare. Does the career that I thought was available here still exist? If the organisation contracts will there be the opportunities for advancement that got me here in the first place?
The tensions of the last two years may have revealed some unexpected and maybe undesirable aspects of relationships between workers and management.
In the next phase of the recession (the climb out), good people tend to move around. Companies that emerge as healthy survivors want to recruit high-calibre individuals to exploit their position. Consider how the successful traders are moving from the banks caught in the government support system – and therefore limited in the financial rewards they can offer – to those banks that are not constrained.
Companies that emerge as damaged survivors will continue to be vulnerable for the subsequent two to three years and the people concerned about their economic welfare can now see a potential escape route to alleviate their anxiety. When people encounter a natural event that threatens their safety their first instinct is to run away to a safe location. If this is impossible, they seek a position of relative safety in their current workplace. When the threat passes, they seemingly retain the instinct to escape and, now movement is possible, they take the earliest opportunity to leave the setting of their anxiety even though doing so no longer reduces a threat.
What does this mean for your organisation? Good people from damaged firms tend to move to healthy survivors that offer both increased rewards and greater security. The risk is low. Even if the move doesn’t work out, by the time they want to move again the economic climate will be even better and employment prospects brighter.
Directors need to decide whether their business is a healthy survivor or damaged. If they are in the former group then this should be explained to key employees to reassure them that they have a bright future. If the organisation has been damaged by the recession then time is needed to explain the nature of the damage and the plans in place to overcome the injury. Stress how important the key individuals are to the objectives and the rewards they can expect to receive.
TALENT
Whilst share prices were rising and profits were good many organisations became sloppy in managing their talented people; some even thought that talent was an asset which was tradable and could be bought and sold along with a business, or be bribed to shift allegiance rather like mercenary armies in history changing sides. Many thought that a policy of very high rewards, supposedly based on performance, was the way to attract and retain the sort of people they needed. Perhaps it was, but circumstances are very different now.
From time to time I use the 'performance equation': Results = Effort x Skill x Resources x Opportunity
Effort depends on leadership and motivation. Continued effort is in part a result of the way that it is rewarded by recognition, tangible reward and increased opportunity. While it can be easy to measure short-term results, it can be difficult to identify who has really contributed to those results, and how they get them. But there is also latent talent. It is important that organisations identify those people who could do more, or whose abilities are underused.
Organisations are constantly evolving to take advantage of the different world, such as moving away from export sales to Greece. They may need to reduce some operations and extend others, with a need for talented people to make those changes and work in new conditions. People will have to move from one function to another, and perhaps learn new skills. In a major recession there is a need for considerable care to avoid losing people you really want to keep or in whom you have made a substantial and recent investment.
Whether those changes are big or small they have to be led by top-management who have to show where they will lead the organisation in the changed world. Talented people are usually those who are most likely to find new jobs, and are unlikely to stay if they doubt if top-management do not show real leadership.
Why do people stay put anyway? In my experience there is usually a mix of reasons, including inertia, domestic convenience, location, understanding how things are done, conditions, unwillingness to learn new skills, opportunities for advancement, growth of experience and employability, implied future progress and reward
MOTIVATION/ENGAGEMENT
Real motivation comes from the leadership shown by the top management team at every opportunity it obtains to display its capabilities. While the timing and scale of the recession could not have been completely predictable, the signs had been apparent for some time. Leadership is essential to get out of trouble. There must be no evidence of ‘negative leadership’ from the top-management team. No-one must be rewarded for clear failure and there must be no excessive redundancy settlements either.
In a recent project we completed these are the eight approaches we recommended to raise morale:
1. Don't sugar-coat the truth. Open communication is better than silence and secrecy. Discuss the organisation's current situation and future viability with your people. Invite workers to brainstorm about how lessons learned during past downturns could be applied now.
2. Listen to your people. Sharing news with your workers is important, but so is listening to them. By giving them a chance to voice their concerns and ask questions, you'll be able to accurately gauge the overall attitude in the workplace. Because some employees may be reluctant to speak up, you'll need to tune in to subtle cues as well. Stroll through your workplace - do you hear laughter, or are people working in grim silence? Do employees seem enthusiastic or muted? Their behaviour will provide important clues about the prevailing mood.
3. Assign work strategically. Re-evaluate each team member's responsibilities and do some fine-tuning so the unit can work more efficiently. Make this a collaborative process - ask your people how best to distribute the workload. There may be duties or projects they would like to tackle, and giving them manageable new challenges can be motivating.
4. Protect people from overload. Be realistic about your employees' limits. If you sense that your employees are overwhelmed, take action before they reach a state of burnout. Determine which projects are urgent and which can be put on hold or redistributed. Or consider bringing in freelancers to work on projects on an as-needed basis to provide additional support and relieve pressure.
My sister in law works for a London-based law firm who were concerned that so many talented lawyers were leaving the profession, and launched a programme to capitalise on those who did not have a taste for the long hours required by many City firms. The firm now has a pool of 16 freelance lawyers, which includes part-time actors, mothers-to-be, film makers and entrepreneurs. They are sent out to work directly with clients and the firm hopes to increase the number of freelancers to 50 within two years. In addition they have devised an impressive hybrid fee-earning model, combining elements of outsourcing, locum agencies and secondments.
5. Provide a challenge. Challenge needs to be individually aligned but boredom is a major cause of people leaving. Providing challenge does not necessarily mean bigger jobs but it does mean new things to think about, goals or targets and a sense of purpose and contribution. Being able to see yourself working in the company in 'x' year’s time is important for people – if they cannot envisage this they leave.
6. Invest in training. On the whole this motivates employees and encourages them to stay with the organisation.
7. Talk about higher purpose. How do your organisation's products or services make your customers' lives safer, happier, healthier or easier? Is your organisation involved in philanthropy or corporate social responsibility initiatives? Remind your employees that they are making meaningful contributions not only to the organisation, but also to the community as a whole.
8. Focus on the future. Although you might not be able to make binding commitments or promises, now is a good time to talk with your employees about their career paths. Speak to them about how to make their jobs more satisfying, assist them in reaching their professional goals or provide opportunities for advancement.
Engagement is no longer seen as a trendy HR buzz word, but instead is something that high quality organisations have been doing instinctively for a very long time. They tend to pick up on hooks that tie their people to them at a deeper level than the formal contractual/financial, fostering a culture of loyalty and promoting the employer brand in a positive way. Clarity in respect of goals, values and beliefs is vital. It will mean that from time to time good people leave who do not share them but this is a good thing in the longer term. Top-notch managers make people feel part of a team and understand how their job fits in and contributes – good objective-setting processes and communication will achieve this.
RE-DEPLOYMENT
A trend we have identified through the recession has been the interest in ‘internal transfers’, with workers protecting themselves by learning additional skills and employers putting people in direct ‘money-making’ roles rather than let them go. Examples we have seen include where employees are being redirected to areas where they can add more value to the business, such as credit control and sales. As an alternative to redundancy some managers were trying to extract more value from subordinates by training them in more than one role, and using internal restructuring as an opportunity to transfer core skills across their business.
PAY & BENEFITS
Very few HR professionals I meet have not faced the situation where a manager demands that an individual get a huge pay increase because they have just announced they are leaving for another job at a much higher salary. It is normally a tricky dilemma. The manager is thinking short term (the project will be delayed, the sales targets missed etc). HR thinks about the impact on other people, the need to avoid creating a culture where people threaten to leave in order to negotiate pay increases, the damage to the relationship between the leaving individual and the company (there is always the niggle in the back of the mind of someone retained by a last-minute pay hike that they had been cheated in the past).
This whole scenario is avoidable. This is what retention is all about – keeping the people and keeping to your organisation values (which generally do not support of the idea of bribing someone to stay). Prior to looking at the 'how to keep them' side of the equation, I advocate a review of the 'who to keep' side, on both the individual level and the organisational. Individual is straightforward – quality processes are needed to identify both the high performers and high potentials (these are different and organisations need both to be successful).
The organisation level is about aligning the staffing strategy to the business strategy and challenges. One of the questions that I typically ask in these situations is:
Are you looking for employees that stay for a long time and grow and develop with the organisation, or are you looking for a higher level of natural churn in order to keep up with technological changes, increase organisation flexibility etc? This strategic context needs to drive the core elements of the retention strategy.
So, if the best way to retain people is to stop them thinking about leaving, what are some of the things you can do to achieve just this?
At the strategic level, the organisation’s approach to reward and the value given to the different elements (base pay, benefits, variable pay/bonus and long term incentives) needs to be aligned to the type of people you wish to attract and how long the organisation 'generally', assuming good performance, want people to stay. So high benefits (particularly those that improve with service) generally attracts a lower-risk taking, longer-term employee.
Plan individual salaries over a three- to five-year horizon. Thus as well as having an annual salary review we recommend that managers think about salary trajectories for every member of staff over the three- to five-year horizon – have they hit a plateau, are they going to increase steadily, are they looking at significant growth (quite common for someone moving up the organisation)? Share these directional thoughts with people so you can manage expectations.
Do a sense/relativity check on your salaries. Performance pay reviews can sometime mean there is too much emphasis on the pay increase as opposed to the pay, and there may be individuals who 'slip down the pay curve' without it being spotted. In my experience they are frequently the ones who face significant pay increases upon leaving (and lead to the dilemma referred to above).
At a recent workshop I attended the facilitator commented on the effect of share options on retention. In her experience with public companies they had been a resounding success, with thousands made by employees in receipt of the National Minimum Wage. However she pointed out that problems arose when the options had been cashed in, and the company was taken over resulting in share options in the new company being ‘under water’.
DATA LOSS/THEFT
A recent study in the US found that more than half of people take company information with them when they leave an employer, after interviewing nearly 1,000 Americans who had been laid-off, fired, or changed jobs within the last year. They said they took the information to help them in getting another job, to help start their own business, or in revenge.
The data included information such as customer data, employee information, financial reports, software tools and confidential business documents. Only 15% of employers checked what documents and files people took with them when they left.
Knowledge is the only business asset not to have seen its share price fall recently, so it's vital for organisations to leverage it. The problem for most organisations, however, is that knowledge is locked away in people's heads and can't be easily accessed by other individuals.
Employee performance is being hampered by not being able to find the information they need to carry out their job role. This extends from a customer service representative who can't answer a customer query effectively through to a project manager who reinvents the wheel every time they encounter a new challenge because they can't easily find someone else in the organisation who has negotiated a similar issue.
These weak links impact operational performance. Human capital management policies will undoubtedly come under more scrutiny in the months to come and it's vital that HR ups its game and ensures that its prized asset, knowledge, is being fully utilised. Business strategists know well that making information more accessible will optimise their resources, so the key challenge is in finding a practical way of using technology to make knowledge both better managed and more accessible.
When every member of staff is armed with the correct tools and given access to the right information for their broader job remit, search tools can cause a marked shift in an entire working culture. This could allow businesses to do more than just 'weather the storm', but actually flourish in the face of an uncertain economic climate.
A word of caution, though; enterprise search tools become the secret weapon of successful companies only when they form part of a wider strategy for progressive working practices. Drive for change amongst senior management amounts to nothing without the buy-in of the wider workforce and that extends to every last person with access to the company server.
CHARTERED INSTITUTE OF PERSONNEL & DEVELOPMENT (CIPD)
Employers are choosing to focus on retention rather than recruitment in response to current resourcing issues, found the most recent CIPD Recruitment, Retention and Turnover survey. The report revealed that 73% of organisations find a lack of necessary specialist skills remains the key resourcing challenge, whilst 56% of employers are tackling this by concentrating on retention strategies such as training and career development opportunities - with 75% of employers saying that 'additional training to allow internal people to fill posts' was the most effective recruitment initiative.
Encouragingly, where employers are still recruiting, 74% are turning their attention to the long term and are appointing 'people who have the potential to grow'.
"This environment offers real opportunities for ambitious and motivated employees to secure learning and career progression opportunities that might have been more difficult to come by when firms were recruiting more regularly," said Jill Miller, resourcing and talent planning researcher at the CIPD.
Perhaps more worryingly, the survey also found that only 58% of employers have a formal resourcing strategy in place. This, said the CIPD’s public policy adviser Gerwyn Davies, puts a "question mark over whether tailored learning and development is equipping employees with the necessary business-critical skills for survival".
He added: "Employers will only be in a position to offer the right training when key skills/development needs are highlighted through a formal resourcing strategy aligned to business objectives. Only then will real business impact and increased retention – as employees feel that they are being efficiently developed – be experienced."
In May we completed a three month project with a business that was suffering losses of talent to predatory competitors. They were losing one or two people per month before we started a programme of development for ‘top talent’ and retention targets but only one loss after starting (and that person was enticed back). The format we adopted was a sequence of monthly one then two day meetings with a mix of personal development and business skills. The response from the 24 people involved was excellent, and their managers have noticed performance improvements for all varying from 25%-133% performance /sales increments too.
PREVENT POACHING
Prevent poaching of top talent – Companies that manage to get the above points right stand a better chance of retaining their top talent. Or put another way; keep their competitors from poaching their top performers. The entire state of California is facing a retention challenge of mega proportions as surrounding states aggressively campaign to poach individual talent and even entire companies. Keep your competitors away from what makes you better than the rest – your people. Think long and hard about a ‘no-name’ policy and removing email addresses from the company website, bearing in mind the impact on customer service.
COMMUNICATION AND SURVIVOR SYNDROME
Where redundancies do need to take place, keep your remaining workers well-informed on what is happening with the business. Treating your best people as ‘partners’ and sharing your strategy, goals and challenges will make them feel valued and secure. This should create a feeling of trust that will result in improved job satisfaction for the ‘survivors’ that are left behind.
Don’t expect your remaining employees to pick up all of the duties of those who have been made redundant. This will create bad feeling and could make the employees that you have tried to keep want to leave
Managers should be accessible, address concerns openly, and recognise effort frequently and appropriately. There is much fodder for the rumour mill in most organisations today. Pre-empt the rumours by giving regular status updates. Say thank you. Let people know their efforts are valid, worthy, noticed and above all, appreciated.
CAREER DEVELOPMENT
Introduce clear career development strategies so that people in the organisation can see where their career is heading. Consider awarding promotions and make it clear how people should go about working towards promotion. This is particularly important if you are unable to award pay rises and bonuses that have taken place in previous years.
HEALTH & WELLBEING
It is an obvious statement, but workers who are absent through illness often resign and move on. Taking a proactive approach that recognises prevention is better than cure to cut rates of absenteeism can have a significant effect on attrition. Arranging discounts with local gyms, providing on-site massage, running healthy eating classes at lunchtime and installing showers can all help in this regard.
RECOGNITION
Recognise your workforce. The economic downturn may mean that it is not possible to award pay rises and big bonuses, so look at other ways to reward them. It may be possible to introduce a flexible working scheme or allow volunteering in work time.
Demonstrably value your employees by showing them what their strengths are. Put them in roles or give them assignments that let them flex their muscles. Give them opportunities in your strategically important functions. Then don’t forget to tell them why you are doing this – because you recognise their talents and need their contributions to succeed.
Take the time to match recognition to individual motivators and be imaginative. Use training, conferences, projects, attendance at meetings, public speaking and the like as recognition rewards. Do not fall into the trap of the 'usual suspects' – i.e. the first name that comes to the managers’ heads is put on a project, asked to present etc.
Make sure your managers take time to thank the 'low key' high performers – those that may not be high potential but are absolutely critical to the organisation's success – they can get overlooked.
TO CONCLUDE
Not every employer can be a Best Companies To Work For contender. Coupled with this scenario, some organisations are located in geographic areas that are not attractive to potential employees.
Talking to your people, undertaking surveys and regular interviews allow employers to get under the skin of their employees and really find out what makes them tick.
The answer to what makes them tick often leads to the answer to this question:
“What makes you stay?”
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Fluid
Registered Office: 2 Abbey Court, Horsforth, Leeds LS18 4SA Tel: 0113 258 7335 Fax: 0113 258 3119
Mobile: 07751 536043 Email: tim@fluidconsultinglimited.com Web: www.fluidconsultinglimited.com
