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 With all the talk now about the end of cradle-to-grave employment and how often today’s workers change jobs, some managers may feel that retention is a lost cause. Employees will go away and you can’t stop ‘em, right? Wrong. There are, in fact, many ways to keep them. One set of tips came from Diane Arthur, president of Arthur Associates Management Consultants, at a recent American Management Association seminar. She began with a discussion of the overall process—understanding what makes employees want to stay, why they may want to leave, and fostering a "retention environment"—and then focused on more specific techniques, such as alternative work arrangements.
Two sides of the same coin
Why do people stay, and why do they leave? The knee-jerk reaction is that these are two different questions—employees stay because it’s a great company, but they leave for their own personal reasons. That’s a nice, comforting rationale, because it lets the company off the hook. But the truth is, say Arthur and others; employees leave because the company isn’t giving them what it would take to make them stay.
They’ll stay if they’re motivated by management, given opportunities to learn and grow, shown that their contributions are needed, and convinced that they are valued and appreciated. They’ll leave if too many of those demonstrations are given short shrift or neglected entirely. Arthur states the foundation: Recognize and reward employees in personal, timely, thoughtful ways tailored to both the individual and his or her performance results.
That’s the what; what’s the how?
For example, she related, MacDonald’s restaurants created a "Speedy Bucks" program in which gift certificates are used as a timely reward system for all employee levels. Managers who perform well are given certificates for Nordstrom, American Airlines, or Ritz Carlton hotels, while "crew" workers receive credits good at Wal-Mart or J.C. Penney. MacDonald’s results prove the program works, since turnover is down even in this still-tight labor market.
Programs like those reward not just star performers but also what management consultants William M. Mercer Inc. called "the heart of the workforce" in a recent survey. More than half the responding companies reported that they were focusing as much on rank-and-file employees that Mercer described as "reliable, competent, and consistent performers" as on top producers, who compose only about 15 percent of any employee body. Since the general population so greatly outnumbers the stars, performance improvements among these workers will bring better bottom-line results to any company. Individual rewards appropriate to all levels include incentive compensation and stock options.
Results of three other national surveys—from Hewitt Associates, the American Compensation Association, and the Conference Board—jive with Mercer’s findings, especially on the subject of employees’ pay. Even at executive levels, significant compensation increases are coming from bonuses, not base salaries. The most common forms of so-called variable pay, according to Hewitt, are special recognition awards (offered by 54 percent of respondents), business incentives (53 percent), individual performance awards (45 percent), and stock options or ownership programs (36 percent). Another technique to motivate workers you want to keep is to administer pay increases—be they bonuses or permanent increases—more often than once a year, perhaps as often as every quarter, in functions that HR finds difficult to staff. This approach addresses Arthur’s recommendation that rewards be timely.
Help employees work when and where they want
Like Arthur, however, Mercer consultants stress that the real key to retaining employees is fostering mutual trust, loyalty, and connection to the organization—feelings not always engendered by cash or stock awards.
Arthur asserts that alternative work arrangements—schedules and agreements that allow employees to balance their careers with family life and other interests—are extremely important to today’s workforce. Telecommuting is the most common alternative: For employers, it lowers costs, boosts productivity, expands the potential recruiting audience, and facilitates diversity by allowing people who cannot commute to join the staff. For employees, it avoids typical office interruptions, enables people to work during "off hours" while caring for children or elders during the normal workday, and permits them to dress as they please. For both employer and employee, eliminating the daily commute reduces traffic congestion and motor vehicle accidents.
Another alternate arrangement is job sharing, in which (generally) two employees divide the time and responsibilities of one full-time job. Typical job sharers are parents, older workers, and students. Benefits of the scheme include a broader range of skills available for the work, more energy from both workers than either might have alone, reduced absenteeism, and less on-the-job time spent on personal matters by both.
The familiar flextime allows employees to work a full complement of the same hours each week but modify the schedule to vary from the usual 9 to 5. For example, a few employees might work from 7 a.m. to 3 p.m., while others arrive at noon and leave at 8 p.m. One advantage for employers is that an office can feature extended coverage. Compressed work weeks are a variation on this theme: Workers are on the job for four longer days instead of five shorter ones, leaving a day a week when they can attend to personal business and avoid the commute. Sabbaticals, in which long-term employees take off for six months or a year without pay to obtain further education or pursue other interests, are still another option. And so-called V-time, or temporarily reduced work schedules, usually involves allowing one or more full-time employees to switch to part-time for six months or a year.
Arthur also encourages succession planning, a method of grooming top performers for positions of greater responsibility. While that sounds like a program designed to achieve strategic business goals, it turns out that it’s also a very effective way of rewarding employees that management has identified as must-keeps; in short, it functions as a good retention program. Arthur describes a typical program this way:
- Identify your top performers, using such metrics as productivity, competencies, and ability to work with a team.
- Maintain their profiles in a database.
- Work with each to map out an ambitious career path.
- Help each one manage his or her career.
- Assess each for individual vulnerabilities to be lured away, and act to strengthen their commitment in appropriate ways.
- Frequently discuss with them how their current job responsibilities relate to their long-term goals.
- Negotiate ways of expanding or refining their jobs to fill in missing skills or appeal to special interests.
How it’s done at one company
At Capital One, a large financial services company headquartered in Falls Church, Virginia, one foundation of an extensive retention program is semiannual surveys of employees’ opinions and experiences at the firm. Spokesperson Diana Don reports that survey questions cover a broad range of issues, from whether or not the staff member understands the company’s vision and goals to specific details about his or her work environment. Sample results are that 91 percent of employees say the company is a fun place to work, and 95 percent report they have confidence in senior management. (According to consultants at Hewitt, the nationwide benchmark for such confidence among employees is only 75 percent.)
Capital One has grown very rapidly in recent years, hiring 4,000 new employees in 1998 and 5,000 in 1999. A key business goal after such an extensive and expensive recruitment effort, is to hang onto the talent and energy the company acquired. Along with surveys, other ways of "listening to associates" include "Town Hall meetings," in which top management of Capital One meets with all employees in one of the firm’s 10 locations, and "Village meetings," in which all employees in a location meet with local managers to ask questions and discuss the state of the business.
As a result of employees’ responses in all these forums, HR identified education, training, and development as a top priority. Some of management’s responses include enhancing the tuition reimbursement program to provide 100 percent payback to staffers, establishing what the company calls IT University to offer the latest computer programming and other high tech training, and creating a division in HR that’s devoted to competency-development planning. Based on specific competencies identified as necessary for each function, each employee works out an individual Development Action Plan to further his or her interests and correct deficiencies. Each is provided with a customized package of books, courses, and other material available from a wide variety of vendors and targeted to the employee’s particular goals. Such tools can range from an inexpensive workbook to help the individual assess his or her conflict management style to a nine-month course in heading up effective work teams.
Don speculates that however important training and development are among the 15,000 Capital One employees, other concessions to workers’ wishes are also meaningful. For herself, the adoption of a "business casual" dress code that applies not only five days a week but also to headquarters employees was a genuine bonus.
Reprinted from "What to Do About Personnel Problems (in Your State) with permission of the publisher, Business & Legal Reports, Inc. Copyright 2000, BLR. To request a free issue or trial subscription to this service, which features individual editions for all 50 states, call 1 800 727-5257.
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