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RETAINING YOUR VALUED EMPLOYEES
With unemployment rates so low, employee retention is gaining the spotlight. During the last two months there have been a number of articles and publications addressing the problem of employee retention. If your company is losing its best employees one by one, soon you may not have the people you need to run your business.
The current situation will make finding the right replacement employee difficult. At 5%, unemployment is at its lowest level in almost eight years. Economic growth is at 4%, and 1.5
million new jobs were added in 1996 by small businesses. Labor shortages are happening in nearly all industries, from high-tech to marketing and sales, from engineers to fast-food and factory workers. Small employers will be especially hurt as they are expected to come up short in staff needs by at least 10%.
How are workers reacting? Statistics from a survey of 2,000 employees by the Loyalty Institute, which is part of Aon Consulting in Chicago:
 80% said they would recommend their company as the best place to work.
75% said they intend to remain in their jobs for the foreseeable future.
40% said they would make a switch to a similar job with a new employer for only slightly higher pay.
So how can a business retain the employees that it needs? According to a 1997 Retention Practices Mini-Survey of employers, conducted by SHRM, good pay, career opportunities and
fair treatment were key initiatives for keeping good employees.
Why do employees resign? According to a SHRM survey:
37% said voluntary resignation among their employees increased during the past 5 years.
89% said higher pay offered by the other organization was the most common cause for resignations.
85% cited dissatisfaction with
career development.
79% reported perceptions
of not being appreciated.
74% cited job burnout.
71% noted difficulties balancing work and life issues.
Employee retention strategies are the best way for companies to address this problem. However, the old retention plans that provided a standard pay and benefits package are likely to be unsuccessful in the current environment. SHRM spokesperson, Barry Lawrence, offers the following tips:
- Make sure employees' salaries are in line with industry and regional standards.
- Prevent employee burnout by improving work processes.
- Spread the work around and add employees when necessary.
- Give employees educational opportunities so they can learn skills for career development.
- Train supervisors on how to provide proper feedback and coaching so employees continually improve.
- Open doors of communication so employee concerns can be vented and addressed. Create an atmosphere of trust.
- Help employees balance work and life through programs such as flextime and condensed work weeks.
- Have a positive environment in which you frequently give out well-considered thank-you's and recognition.
- Build rewards for supervisors and managers who keep good employees. Have other incentive plans and rewards that are attractive.
- Build commitment and implement programs to make workers understand that their ideas make a difference. When people can relate their work to the larger picture, they have a greater sense of purpose.
- Offer competitive benefits package such as those that may include health care, 401(k) plans, disability, parking, and educational assistance plans. However, beware of anything that can become an entitlement. It can become expensive and you may not need it.
- Retain employees from the start. Create an environment where people want to work. Realize that retention of valued people is a long-term process.
HRM Update
PAYING ATTENTION TO WORKER RETENTION
With the economy booming and the ranks of unemployed workers growing thin, employers are having increasing difficulty maintaining appropriate staffing levels. As a result, employers are starting to focus on employee retention at all levels, even among middle managers who have been a favorite target of layoffs in recent years.
Companies did not anticipate the growth their companies are experiencing now or the management retirements, and they did not leave any bench strength. Companies are hiring to meet growth as well as to replace those who left. But the first step is to ensure that the valuable workers they have do not go elsewhere.
In addition, a number of companies are realizing how much employee departures cost them. In two years of studies, the Saratoga Institute found that turnover among non-exempt employees costs the equivalent of one-half year's salary and benefits, and turnover among exempt workers costs a minimum of one year's compensation. The direct costs of turnover identified include those associated with the termination process, the period when the job is empty or a
temporary worker fills in, hiring and orientation, and the period of the learning curve for the new worker.
Why People Leave
The general assumption among some employers is that employees quit over money, but research does not bear that out. If an employer pays the market rate, employees will not leave just to get a couple thousand dollars more.
The overriding reason employees look for another job is that they are unhappy. Factors that have become increasingly important in determining employees' job satisfaction include
the degree of autonomy they have at work, the availability of promotion opportunities, the quality of workplace communications, and the potential to learn and acquire new skills.
Time and again, work culture makes the difference. Employers that want to hold onto valued workers need to provide good management and decent working conditions. Employees leave when they do not have good managers or when there is an inhibiting environment, a lack of respect, and a lack of consideration.
The balance between work and personal commitments can also determine whether workers stay with an employer or move on. The accommodation of employees' competing work and life demands is crucial, particularly among those employers intent on controlling turnover among women, who commonly give family as the reason for leaving a job. The issue of work/life balance also applies to employees without families, such as members of Generation X who are not willing to work long hours.
Retention of Women Targeted
The problem of excessive turnover among female employees was specifically addressed by Deloitte & Touche LLP, a Wilton, Conn.-based professional services firm, through a program called the Initiative for Retention and Advancement of Women.
A year long study with focus groups of former female employees was conducted and the findings dispelled D&T's belief that women were quitting to start families. Rather, they were leaving to join other firms or start their own companies because they could not get ahead at Deloitte & Touche.
Recommendations resulting from the study included the following:
Bulletin to Management
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