Dear Planning for the Future:
It is good that you are focusing on employee retention. When people leave because organizations have failed to engage them, it costs money—sometimes as much as 200 percent of a person’s base salary. Furthermore, the close and causal links between employee engagement, customer satisfaction, operating efficiency and business profitability are well documented. Finally, turnover is a growing issue, with voluntary turnover in the U.S. increasing from 19 percent in 2002 to 23 percent in 2006, according to the Bureau of Labor Statistics. As a result, companies that don’t focus on employee retention may find themselves playing catch-up.
By contrast, the 2 percent turnover you reported clearly shows that you are actively managing retention. Below are some best practices for retaining staff, based on our research:
Lead from the front. Employees’ confidence in the ability of senior management is one of the most important predictors of retention. Employees want to feel proud at being part of a successful, well-led company, where they feel the business is in good health for the future and therefore worth an investment of their time. Therefore, look for ways to make leaders more visible to employees through regular interactions, rather than e-mails or “one-off” scripted meetings.
Invest in your staff. Employees who are not improving their skills are at risk of compromising their future employability. As a result, if you are not providing an environment where employees grow and develop, expect them to look elsewhere. Build on the success of your technician development program to identify similar skill-enriching initiatives.
Develop people management skills. Through coaching and regular performance feedback, managers can help employees identify their development needs, enhance their performance and shape their career paths.
Ensure support for success. A proportion of your good performers may simply be looking for an enabling work environment where barriers to doing their job effectively are low. Too many barriers can lead to frustration and, ultimately, turnover. As a result, you should look at the optimum organization design, management structure or processes that are needed in your workplace to support success.
It’s not all about pay. Contrary to popular belief, pay and benefits are rarely the main reason why people leave an organization. Still, it is important to keep abreast of the market and make sure you are paying at least market rates.
The above are just a few ideas. Which ones work best depends on your organization. Therefore, the first step to managing retention is to understand what motivates your employees and to use this insight to create the right kind of organizational culture. In short, ask employees what is important to them, listen to what they say and, most important, act on it.
SOURCE: William Werhane, Hay Group Insight, Chicago
LEARN MORE: Career development exerts an impact on employee performance.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.