Dear Workforce How Do We Measure the Return on Investment of Keeping Top Performers
Dear Wondering About Retention:
Most companies today recognize the value of attracting and retaining a strong, competent workforce. But most also don’t fully appreciate how they can improve retention rates.
When surveyed, employees indicate their top reasons for leaving a position are:
• Not getting along with their direct supervisor.
• Desire for more money.
• Need for better work/life balance.
• Lack of career growth, challenging assignments.
It’s noteworthy that three of the four top reasons are nonfinancial. Employers can do much to address these issues, but frequently only pay lip service to significantly enhancing the employee experience. If employers paid this little attention to their customers’ experience, they would likely be out of business.
So, what’s an enlightened employer to do?
• Actively demonstrate that you value the unique needs of each employee.
> Tailor your HR and benefit programs to your workforce (flexible work schedules, choices in health plan options, PTO banks, etc.).
> Publicly recognize outstanding performance and employee achievements.
• Teach supervisors how to be good coaches and managers.
> Provide ongoing training on issues such as handling conflict, delivering difficult messages and conducting effective performance discussions.
• Ensure alignment between business goals and employee rewards.
> Appropriately mix base and variable pay.
> Unambiguously link performance to rewards.
> Clearly delineate between rewards for top and bottom performers.
• Nurture the employee ecosystem.
> Make sure employees understand what the organization values.
> Practice what you preach—hold managers accountable for their actions and for tolerating or ignoring unacceptable behavior.
> Focus attention on high performers; deal effectively with marginal performers (Is an “up or out” philosophy right for you? Or, is a culture of mediocrity acceptable?).
> Ask top performers what makes them successful at your organization and why they stay.
> Ask employees what is and what is not working and act on their input.
Commonly used solutions today include prehire assessments, variable compensation programs and links between the performance management and compensation systems (both strategic linkages and automated, processing-type linkages). Planned enhancements over the next year typically include the implementation of learning management systems and online skills/competency tracking systems.
Forward-thinking companies do a reasonable job of tracking the key performance indicators of retention—which have historically covered employee satisfaction levels, turnover rates and benchmarks for similar organizations—and worker productivity metrics. However, these measures do little to illuminate why retention issues occur. These basic measures should be expanded to track items such as employee satisfaction with specific areas of their job (their work, their supervisor, their pay, their commute, their co-workers); turnover rates should be evaluated by employee level, tenure, speed of advancement, performance rating, sex, age and other factors.
The key is to progress from simply tracking data to understanding information to determining cause and effect. Then you can affect your bottom line.
SOURCE: Paulette Welsing, Capital H Group, New York, November 29, 2006. This response originally appeared in Dear Workforce on January 18, 2007.
LEARN MORE: Aside from retention, HR executives may need to calculate their hiring costs.
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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.