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Avoiding Six Dangerous Retention Mistakes Most Companies Make Steve Puckett, SPHR Director, Corporate Human Resources.

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Presentation on theme: "Avoiding Six Dangerous Retention Mistakes Most Companies Make Steve Puckett, SPHR Director, Corporate Human Resources."— Presentation transcript:

1 Avoiding Six Dangerous Retention Mistakes Most Companies Make Steve Puckett, SPHR Director, Corporate Human Resources

2 Introduction Employers facing Talent Paradox – Relatively high unemployment (peaked in 2010) – Increasing shortages in areas where attracting and retaining employees is most critical – Loss of high-potential talent Spike in voluntary turnover after a downturn – Employees advancing careers – Poor morale due to cost cutting measures – Gen Ys comparing notes

3 The Cost of Turnover Can be significant and can result in… – Loss of productivity – Lost institutional knowledge and relationships – Added burdens on employees who must take on more work

4 The Cost of Turnover Direct Placement Costs – Accrued paid time off and replacement costs – 50-60% of annual salary Indirect Placement Costs – Disruptions to team-based work – Lost clients – Decreases in overall service or product quality – % of annual salary 12-40% of Pre-tax Income No longer a problem for just large employers

5 Voluntary Turnover During turbulent times best employees are the ones who leave – As first – Bs second – Left with Cs Poor performers hold on to paychecks until unemployment eligible

6 4 Paths to Turnover Employee is dissatisfied with job Employee has better alternatives Employee is following a plan Employee is leaving without a plan

7 Additional Factors Organizational commitment and job satisfaction Quality of the employee-supervisor relationship Role clarity Job design Workgroup cohesion

8 Focus Shifted from Talent Retention to Cost Reduction 2/08 Corporate leaders priority – Retention of top talent 2/09 Cost reduction/survival – Top talent retention fell to #8 Once again, retention on our radar screens – Retention of top talent is even more critical as economic conditions improve…

9 The Six Most Dangerous Retention Mistakes 1. Focusing on Retention Programs vs. Retention Processes 2. Supporting a Fear-Based Workplace 3. Confusing Employee Engagement with Employee Destruction 4. Not Supporting a Multi-Generational Friendly Workplace 5. Not Holding Supervisors Accountable for Retention 6. Not Narrowing the Front Door to Close the Back Door

10 Critical Retention Mistake #1 Focusing on Retention Programs vs. Retention Processes

11 Drive Retention from the Top, Because Executives Have Greatest Impact Include turnover cost in annual report Include in strategic plans and report monthly Rewards for meeting goals Consequences for missing goals HR must encourage managers to lead with influence rather than authority Leave authority to senior management - CFOs must be on board

12 Think! Sales Service Quality Safety Retention = $ Profits $

13 10 Strategies of Rethinking Retention - Richard Finnegan 1. People quit jobs because they can Companies make it too easy to quit No effort to hold on to our best 2. Employees stay for things they get uniquely from you Build a retention brand different from others 3. Supervisors build unique relationships that drive retention/turnover Employees stay for bosses Employees leave because of bosses 4. Hold supervisors accountable for achieving retention goals Add to other measurable objectives

14 10 Strategies of Rethinking Retention (cont.) - Richard Finnegan 5. Develop supervisors to build trust Relationships Trust Information Success 6. Narrow the front door to close the back door Focus as much on hiring process as retention 7. Script employees first 90 days Predict how long employees will stay The most critical time during employment 8. Challenge policies to drive retention (support/hinder) 9. Calculate turnover cost to galvanize retention 10. Drive retention from the top Executive buy-in is a must

15 Design Job for Engagement Capture the minds and hearts of employees – Avoid the Sunday blues Challenging assignments – The absent Millennial Goals with feedback Provide for personal growth and development Full partnership career development process – Career interest forms

16 Hidden Obstacles to Retention Young workers with fewer bills Growing number of entrepreneurs

17 Calculate Turnover Cost to Galvanize Retention Develop formula to calculate turnover cost Those who have CFO endorsement have greater opportunity for upper management support Call center identified turnover cost at $12K per employee – Destroyed a $12,000 obsolete piece of computer equipment to drive point – Drove home actual cost Delivery company put cost of driver turnover at $60K, same value as company truck – Showed video of totaled truck from accident to emphasize cost

18 Best practice Retention is an on-going process driven by upper management NOT a Band-aid program

19 Critical Retention Mistake #2 Supporting a Fear- Based Workplace

20 Managing Through Fear vs. Trust* * Managing Through Trust vs. Fear, a Human Workplace E-Workbook by Liz Ryan FEARTRUST The boss is always right.Who knows whos right? Lets brainstorm ideas. The most important thing I do is make sure we hit our goals. The most important this I do is remove barriers for my team (so they can hit goals). If someone goofs up, I write them up. If something goes wrong, we talk about it to get the learning.

21 Managing Through Fear vs. Trust* * Managing Through Trust vs. Fear, a Human Workplace E-Workbook by Liz Ryan FEARTRUST I need to let people know whos in charge. I need to make sure people know I have their back. Incentives & penalties make employees perform. Carrots & sticks are for donkeys. Treat people like adults & watch them succeed! We need lots of policies & controls because people cant be trusted. Why would I work among people I dont trust? We solve problems in context.

22 During economic downturns most companies focus on keeping employees with good attendance even though their work is substandard. This seems to be a better alternative to firing the employee and waiting days, weeks or months to replace. Some bosses are encouraging young workers to buy a new car, boat or other expensive item knowing they would have to keep their job to make the payments.

23 Beware Jerk Bosses Since 2003, 24 states have introduced legislation on workplace bullying, however no laws have been enacted* 9 states with 12 bills active as of 3/25/13* 37% of U.S. workers report they were a bully victim – 12% have witnessed workplace bullying* Verbal attacks from supervisors are generating six figure settlements Four times more complaints than all forms of harassment combined *According to the Workplace Bullying Institute

24 Transitioning From a Fear-Based Workplace 10 Early Signs of a Fear-Based Workplace 1. Appearances are everything Staying longer than boss Worrying less about quality of work than how theyre perceived 2. Fear-based discussions rule over work discussions Whos stock is falling/rising Preoccupied with who is invited to meeting vs. meeting agenda Predicting employee failures

25 Transitioning From a Fear-Based Workplace (cont.) 10 Early Signs of a Fear-Based Workplace 3. Distrust rules Off the record conversations Coded messages Back alley meetings Backstabbers thrive…Would this be your knife in my back? Your failure is my success 4. Numbers rule Total obsession w/ metrics Employee is sum of numeric goals Record profits and now cutting back on perks…coffee, etc. Stock price vs. People price 5. Too many workplace policies Overdependence of rules vs. common sense Lengthy, tedious policies Ordering supplies, scheduling a business trip or vacation day

26 6. Management discourages lateral conversations Fear of employees comparing notes No one has authority to authorize meetings Loss of sharing ideas…No Brainstorming Allowed! 7. Information is restricted Information leads to success Lack of transparency Knowledge = Power Destroys trust Transitioning From a Fear-Based Workplace (cont.) 10 Early Signs of a Fear-Based Workplace

27 8. Brown-nosers rule Kissing up at all levels Who said it rules over what was said Fear-based leaders surround themselves with yes men and yes women Right answer vs. truth 9. The boss is so out of touch its almost comical…The Office Focuses on keeping ones head down, taking no risks and sucking up to anyone in management

28 Transitioning From a Fear-Based Workplace (cont.) 10 Early Signs of a Fear-Based Workplace 10. Management leads by fear Most decisions made in secret Information is given in drips Company culture Be glad you have a job, stop whining and get back to work Leadership is based on keeping employees in the dark Major gap between management and employees

29 Treating Employees Fairly Requires: Distributing rewards Respect through interpersonal relationships Involving employees in difficult decision- making Offering opportunities to question decisions

30 Critical Retention Mistake #3 Confusing Employee Engagement with Employee Destruction

31 Employee Engagement Employees who are so committed to their jobs that they want to give… Discretionary Effort

32 3 Buckets of Employee Engagement - N. Davis, Editor, HR Magazine - G. Sherrill, VP HR, Wal-Mart 1. 17% actively disengaged Unhappy Undermining co-workers 2. 54% not engaged Sleepwalking thru workday Putting in time w/o passion Fence sitters 3. 29% work with passion Do you want the 17% hanging around your 29%? Disengagement costs U.S. economy $300B in lost productivity annually.

33 6 Essentials for World Class Employee Engagement 1. People Senior leaders who excel at Listening Knowing and cherishing relationship with employees Outstanding communication 2. Work Providing resources for employees to over-achieve 3. Full Service Recognition Competitive pay Recognition for each generation One size does not fit all 4. Opportunities Succession planning Training Career development

34 6 Essentials for World Class Employee Engagement (cont.) 5. Quality of Life Issues Targeted benefits Flex schedules 6. Company Culture Live your practices Diversity Company reputation Performance management *Every employee must understand How their job impacts organizations success

35 Employees First and Customers Second - Vineet Nayar HCL Technologies Key is holding management equally accountable to employees Live in a world of democratic form of government BUT Autocratic nature of business

36 Customer Service Focus Must Include Internal Customers Employee first, Customers second Satisfied employees display better customer service

37 How Not To Engage Your Employees Company President – Not listening to employees – Hires a $100K consultant – Consultant listens to employees – Makes same recommendations Not embracing meetings – 50% informing – 50% listening

38 Employees Stay Because of Things They Get Uniquely From You Write down 2-3 employees in your company who are critical to your success Write answers to these questions for each employee – Could this employee leave you for a better job? – Has the employee ever considered looking elsewhere? Now write down reasons you feel they have stayed Tangible…shift, schedules Intangible…new skills, good supervisor

39 Critical Retention Mistake #4 Not Supporting a Multi-Generational Friendly Workforce

40 Traditionalists (Veterans) Born before 1945 Long term careers Loyal Tech-challenged Like structure Respect authority Law & order Hard work…max effort Duty before pleasure Honor

41 Baby Boomers Born Motivated by position, perks and prestige Competitive Goal-oriented; equate work & position with self-worth Independent Prefer to meet face-to-face Believe you have to pay your dues to get ahead in the workplace

42 Generation X Born Technologically savvy Like informality Learn quickly Work/life balance Embrace diversity Like to work independently Like casual work environment Short attention spans

43 Generation Y (Millennials) Born after 1980 Communicate through texting, social networking, Family-centric Embrace diversity Expect to advance quickly Attention craving Participation vs. accomplishments Good at multitasking

44 Major Increase in Employment Replacing Exiting Boomers 1 Personal Financial Advisors 2 Dental Hygienists 3 Civil Engineers 4 Market Research Analysts 5 Computer Systems Analysts 6 Physicians and Surgeons 7 Computer Appl. Software Engrs. 8 Management Analysts 9 Accountants and Auditors 10 Registered Nurses Top Job Opportunities for Next 10 Years* The best paying, fastest growing jobs will grow up around one of the richest and fastest growing segments of the population: the retiring Baby Boomers. *24/7 Wall St.

45 Generational Expectations of Succession Planning TraditionalistsMy dedication and service have been rewarded. Baby BoomerIts about time! Ive paid my dues. Gen XWhat do you mean I cant be promoted yet? I have delivered the results for which you asked. Gen YWhats my next career move? Ive been here for 12 months and havent been promoted yet.

46 How Generations View Change Traditionalists BoomersGen XersGen Ys Somethings Wrong CautionPotential Opportunity Improvement

47 Using Social Media to Engage Workers Gen Y will make up 36% of U.S. workforce by 2014; 46% by 2020 – Opportunities for career progression – Opportunities for personal development – Collaborative work environment – Flatter them; motivate them Employers must embrace social media to enhance learning opportunities

48 Washington Post Survey 3400 Surveyed Employee Retention Desires 1Telecommuting54816% 2Educational Assistance % 3Flextime % 4Benefits37511% 5Bonuses % 6Fitness % 7Money3349.8% 8Other Perks3028.9% 9Time Off2276.7%

49 Critical Retention Mistake #5 Not Holding Supervisors Accountable for Retention

50 Hold Supervisors Accountable for Achieving Retention Goals All levels of supervisors should have retention goals Should be weighted same as productivity, safety, other goals Talent Keepers recent survey – Only 14% supervisors have retention goals

51 Holding Supervisors Accountable for Achieving Retention Goals Top methods for setting retention goals Transitioning from consoling counseling to accountability counseling Consoling conversation – Sad we lost Susan – Really going to miss her – It may take weeks to replace her – I am sure you will do a great job Accountability conversation – How did we lose Susan? – She earned highest rating – What could/should we have done to save her? – What changes will you make to prevent from this happening again?

52 In reality, many supervisors would say Susan was not as good as we thought

53 In Order to Own Your Team Supervisors must be part of the hiring process – You hire it – You coach it – You are responsible for outcome and results Adjust retention goals for economic downturns Compare to the best, not the rest

54 Supervisors Build Unique Relationships That Drive Retention #1 factor in retaining employees is immediate supervision Best working conditions, world class benefits, employer of choice branding – Will be over-shadowed by ineffective supervisor Average benefits and pay may be overlooked for great supervisor relationships Employees join companies for things but stay for people

55 Supervisors Build Unique Relationships That Drive Retention (cont.) Yahoo Hot Jobs Survey – 70+% of employees surveyed were interested in getting a new job due to dislike of boss Florida State University study on supervisors – Failed to keep promises (39%) – Failed to give credit when due (37%) – Gave silent treatment to employees (31%) – Made negative comments about employees to other employees (27%)

56 What Employees Seek from Leaders Trustworthiness – 79% Cares about others well being – 67% Encourages development of talent in the organization – 56% Highly visible to employees – 42% Manages financial performance successfully – 42%

57 Treating Employees Fairly Requires 1. Fair distribution of rewards 2. Heightened awareness of interpersonal relationships 3. Involving employees in decision making 4. Offering opportunities to question decisions

58 Develop Supervisors to Build Trust with Teams According to 80% of employee surveys, TRUST is the most important factor employees seek from supervision… Relationships lead to Trust leads to Information leads to Success

59 Behaviors of a Non-Trusted Supervisor Kiss up vs. kiss down Rumor central – Caught up in employee rumors Employees clam up – Employees polite but not engaging – Conversations very short Complaints bubble up – Most complaints hidden – Playing favorites – Bullying – Retaliatory behavior

60 Behaviors of a Non-Trusted Supervisor (cont.) Fewer individual meetings – Group and one-on-one – Meetings cut short – Tight agenda – Meetings postponed/cancelled Employee survey scores nose dive Production suffers – Productivity declines – Blame game – No accountability Increase in turnover

61 TurnoverRetention Traditional ThinkingProgressive Thinking Most important supervisory skills for retention: communication, feedback, coaching Supervisors who cannot build trust have little credibility regardless of other skills To reach their positions, supervisors/managers have already learned their trust skills Some supervisors are trustworthy and some are not Trust begins with relationships Only one chance for making a good first impression

62 Employee Retention is a Significant Factor to be Considered for Managerial Promotions Traditional ThinkingProgressive Thinking Supervisors cannot control all reasons employees leave Like sales – supervisors strongly influence results Pay & other policies are outside supervisors control Supervisor can impact pay decisions Supervisor wont fire poor performers to pad retention numbers Manage supervisors towards right decisions Supervisors are a small part of a big problem Supervisor takes ownership of team Wegman Food Stores, Rochester, NY (#10 Fortunes 100 Best Employers) Requires front line management accountability for retention

63 A Great Retention Story Who was your best boss? Why? Vice President of HR – Good communicator – Held me accountable – Not afraid to offer praise and/or criticism – Became a good listener – Relationship builder – Trustworthy…did what he said he would do – Good sense of humor Supervisors build relationships based on trust…

64 Critical Retention Mistake #6 Not Narrowing the Front Door to Close the Back Door

65 Narrow the Front Door to Close the Back Door Hiring the wrong employees puts you on a direct path to turnover Tips for hiring employees who stay – Dont forget the basics Blocking Tackling – Compare to the best

66 Most Turnover Occurs Within 90 Days Set retention goals – 90 days – Annual – Adding a few months to Average Length of Service can increase ROI tremendously – Doubling length of service cuts turnover in half Do not classify the employee who quit as a slacker

67 Increasing Retention Involves Improving Employer Branding Texas Instruments – Think Big, Think Bold, Think Texas Instruments General Mills – A Great Place to Start; A Great Place to Stay eBay – You can find a lot of cool things on eBay but nothing cooler than our jobs Childrens Healthcare of Atlanta – Video of how jobs impact children's health

68 Increasing Retention Involves Improving Employer Branding (cont.) Delta – Delta employees dont just travel the world, they work to improve it Publix Supermarkets – Where shopping is a pleasure – If you think shopping at Publix is a pleasure, try working here Barnes & Noble – If you love books why not work at a place surrounded by books Hard Rock – For those about to Rock, we recruit you – Kick a– service, served fresh daily – Rock stars wanted, come perform for a packed house

69 Script the First 90 Days At one time Wal-Mart had lost 65% of its employees in the first 90 days University of Florida study states most employees form opinions in first 30 days which impact their decision to leave within 90 days – #1 on their list is disrespect from supervisors

70 Stay Interviews Employers of choice are focusing on stay interviews – Equal importance as exit interviews – Educating supervisors why employees stay, as well as why they leave – Someone cares that I stay – Concerns are addressed Supervisors must be trained how to conduct stay interviews – Not complaint sessions – Clear focus on purpose of meeting – Avoid implied contract

71 Stay Interviews (cont.) Broaden employees awareness – What do you look forward to as you come to work each day? – Which parts of your job are most enjoyable? – Which parts of your job are the most challenging? – What are you learning here and what else do you want to learn? – How do you like the people you work with?

72 Narrow the Front Door to Close the Back Door According to Bureau of Labor Statistics – The length of time an employee stays with a job increases with their age when they began the job

73 Employee Referral Programs 3M Texas Instruments Fidelity Investments McDonnell Douglas Reduced hiring cost 75-90%

74 Implement Employee Referral Program Include taxes and gross up awards – $ = $73.87 Match rewards to employee needs – Cash – Trips Present awards publicly One big prize annually

75 Build Programs to Attract Older Workers 2012 – 20% of workforce age %-75% plan on working past retirement age due to recession Beat back misconceptions – National Council on Aging Reports 97% older workers reliable AARP National Employer Team –

76 Build a Realistic Job Preview Program More than just a tour Working conditions Pay Benefits Succession planning Co-workers Use subject matter experts to build job description Schedule applicant to meet with high performance employees

77 Probe for past resignation reasons – What drove you to look – Go for detail Google professional candidates – 35% of executive candidates have been turned down due to internet information – Look for high level accomplishments/memberships in professional organizations

78 Narrow the Front Door to Close the Back Door Traditional ThinkingProgressive Thinking We source all employees who meet our qualifications We take extra effort to source older applicants because they stay longer We pay good money for employee referrals We market our employee referral program to meet employees needs We give applicants a tourWe have a formal job preview program

79 Encourage Employee Embeddedness (Is that a word?) Provide mentors Design work in teams Foster team cohesiveness Encourage employee referrals Provide clear socialization and communication about the companys values and culture Provide financial incentives based on tenure Provide unique incentives that may not be common elsewhere

80 Express Employment Professionals Wishes You Great Retention Success

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