Bonuses, holiday days, office parties, and flexible working are many of the tools in a business owner’s arsenal revolve around rewarding employees for a job well done and motivating them to produce similarly stunning results in the future. But surely the leaders who dole out these types of perks are only focusing on half of the picture.
There are “two issues generally going on with employees at any given time: there are ‘shoves,’ things that demotivate people, and then there are ‘tugs,’ the things that motivate you, that tug at you to stay at the organisation,”. While these factors will differ for every employee, leaders often make the mistake of focusing on the motivators without adequately considering what rubs people the wrong way.
We often talk about retention and keeping people within a business, but during this period of slow growth are companies taking advantage of implementing “positive turnover” into their retention strategy?
What is “Positive turnover”?
In a Business setting, the goal of employers is usually to decrease employee turnover, thereby decreasing training costs, recruitment costs and loss of talent and organisational knowledge. By implementing lessons learned from key organisational behaviour concepts employers can improve retention rates and decrease the associated costs of high turnover. However, this isn’t always the case. Employers can seek “positive turnover” whereby they aim to maintain only those employees who they consider to be high performers.
A business needs to ensure that any attempts to implement “positive turnover” is done carefully, as if not done with the appropriate benchmarking criteria then it could become discriminatory to employees.
For a while now I have done research into what people within HR and Businesses believe by retention. The following statement summarises what the average view is:
Employee retention is the effort by employers to encourage current employees to remain employed with the organisation. Programs such as learning and development, rewards, and recognition, succession planning and providing policies and practices that address their needs are examples of ways of retaining employees.
I believe that although this is true it also fails to properly define true retention. Retention is often overlooked regarding knowledge and skills. It is impossible for a business to retain the employees forever. Businesses need to ensure that their retention plans also achieve to retain knowledge and skills, with the right training plans and mentoring in place businesses should be able to ensure nothing is lost from the business.
Like most things with HR I believe it’s important to get the balance right, if done correctly the employee, mentor and business will benefit and become more competitive.
Given the economic pressures most businesses are facing at the moment most would assume that a retention strategy would be the last thing on a businesses mind? Yes most of the time the news is full of businesses going into administration and struggling, but I believe that a few businesses have proved how vital a retention strategy can be. Some businesses have had to adapted by reducing the number of hours each employee works to reduce overheads during the dip in sales. Working out the costs of redundancy and rehiring/training when the time is right it makes perfect businesses sense to look long term and have adaptive strategies to suit.
Recently I’ve come across some businesses that seem to approach different strategies altogether, with blinkers on and being driven by money they seem to make quick decisions that suit their needs that month. A month or so later the business is trying to fix the issue by bringing in a consultant to bridge the gap! Why pay more money and have to try and fill the gap of skills lost when you could better plan, not only long term does it save money but it shows to your employees that you won’t just terminate their contracts as a quick solution. Working with your staff and together to solve business issues will lead them to feel empowered and more productive.
A lot of people carryout projects and work around retention and employers often spend a lot of time and money thinking up complicated business wide retention schemes. I am a believer that one of the best retention techniques a company can adopt is sitting down with employees once they know they are unhappy or thinking about leaving and being able to discuss the situation over. This gives a clear view of why the employee is making the decision.
Talking to staff on a one to one basis provides the opportunity to find out the issues but also resell the business to the employee whose view might have taken a negative turn over their time working at their current employers. It is only human nature to think that the grass is greener on the other side and conducting an exit interview or speaking with the employee before they have decided to leave might make them realise that they are in the best job for them at the current time.
The average daily commuting time has dropped to a 10 year low to 47.5 minutes. There are many reasons why the daily commute could have dropped but having employees living closer to their place of work has many benefits for both the business and employee. A lot of the time little decisions and pieces of information often get over looked when people seek new employment.
It is important for a solid retention strategy that all areas that could affect the employee’s decision are identified and investigated.
A dispute between Aer Lingus and its cabin crew over working hours has been resolved after the company agreed to more “family-friendly” rosters. The airline industry is a heavily regulated sector and recruiting new recruits to fill gaps if employees had chosen to leave and if the dispute had not been resolved would have come at a high price to the company. Retention is a very important issue within the airline sector, working with employees and hopefully being able to provide working rotas will help manage employee expectations through these difficult times, especially when employees know pay rises and other benefits will not necessary happen or have already had them capped.
Recently employees at Blackpool Council have agreed to a voluntary pay cut to reduce compulsory redundancy. The initial figures of compulsory redundancy was thought to be about 1000, but has now been reduced to under 400 due to the agreements from the staff. It is a good short term retention measure to keep hold of good employees but in the long term it will need to be closely managed and the employees rewarded for their help dealing with a difficult situation. Will it work in a real business environment long term? Employees are often willing to accept short term measures for the long term success of a business but if the business does not respond and recognise what staff have done it could turn into a potential major thorn in the side of the council.
Fingers crossed for staff at Blackpool Council that the pay cut works and gets them through this difficult time.
Paul Levett commercial director for SHL Group sent a letter to People Management commenting that he is very concerned that major UK employers have cut their graduate recruitment schemes. Paul states that graduate trainees are the future managers and leaders, brought in fresh and eager to learn. I am a graduate only graduating from university a few years ago, I agree with the statement but don’t think that it fits with all graduates. I know a lot of graduates who believe the time they spent at university warrants the graduate scheme and the schemes are commonly seen as a set fast track route to the top without much effort.
Paul also states that with business commentators starting to talk of “green shoots”, it is crucial that employers continue to invest in talent. I agree again with the statement but I don’t agree that graduates are the only people to be able to offer this, there are a lot of talented people who never go to university. I believe that graduate schemes should not exist and that there should be one common “fast/acceleration” route giving the employer the option to add employees that have been identified during employment or direct from school/collage. Having one talent identification scheme can also be linked easier to an affective retention strategy.
People Management featured an article within their Law At Work section on 27 August 2009 about rehiring redundant employees. The article was very interesting calling the employees “boomerang employees” and stating that many US companies are already rehiring employees previously made redundant. The article is quite positive about the benefits of doing such practices and that it works in the businesses favour during recessions through various quotes such as “Rehiring ex-staff can be a quick and sensible fix. They know the business, have the right skills and usually require only a basic refresher course to get back up to speed.” It all sounds promising but I think it is a horrible mistake to think this, as any future retention scheme will be very difficult to sell to the employees.
The employees will have a bad view of the company affecting the culture, they know that the company will hire and fire as needed for short term gains. The cost of making someone redundant and then hire them again will mean that the business has spent quite a bit of money when it might of been able to better plan its HR resources ; save time, money and giving employees a positive image of the employer.
Planning a retention strategy is not just about the short term, when devising schemes and planning other aspects of HR practices retention should always be in the back of the employers minds to make sure it does not get neglected and lead to a negative impacted on the business.
The new pay code for city bankers is featured regularly at the moment; even I have mentioned it before in my blogs. The argument against the code is generally that it will drive away talent, but will it really? Other business sectors have high flying executives that get bonuses, they attract the elite or are very talented.
Retention is not just about money, it takes a lot more to develop a truly complete package than just a monitory reward. Big rewards do work over a year but developed over a long term i.e. 5 years there are plenty of other things that can be included. Job satisfaction is another away of retaining staff, the banking industry is well known for being stressful taking some stress out of the bankers role might appeal to some.
It’s all about building the complete retention package that works for both the employee and employer.