Talent retention has moved onto the radar screens of corporate executives. Nearly 70 percent of executives say that they view talent retention as important or extremely important, according to a survey of 391 companies conducted by TalentKeepers, a consulting firm specializing in employee retention based in Maitland, Florida.
The study shows that there is justifiable reason for the executives’ ranking. In 2005, nearly 60 percent of the companies participating in the survey reported employee turnover rates of 11 percent to 40 percent. Most of the executives also said that they are not expecting turnover to improve soon.
The financial impact of employee attrition was also included in the results, and the numbers associated with those costs create additional fodder for executive agendas.
More than 40 percent of the responding companies reported direct costs of $5,000 to $20,000 to replace a single employee, and 33 percent responded that the indirect costs--those business costs associated with the impact of turnover--were more than $10,000 per employee.
Turnover was 44 percent in the first year of employment, according to the survey. One of the first steps to reducing quick turnover rates is to "know your tipping point," according to Dick Finnegan, chief client services officer for TalentKeepers. Finnegan defines the tipping point as the length of employment where turnover most frequently occurs. He says employers should discover the reasons for the resignations and focus on changing those because extending the average tenure of employees by even a few months can reduce recruitment costs.
"Looking at the problem as not just an HR problem but a business problem is one of the ways to solve it," TalentKeepers COO Chris Mulligan says.
Leaders are the key
Most companies have traditionally relied on pay and benefits as the primary drivers of retention. But pay and benefits alone are not effective, according to Mulligan.
"People will join companies for organizational factors such as pay, benefits, reputation, then the job itself. Lastly they join for leaders, especially in entry-level positions," Mulligan says.
"In as few as 90 days, the order of importance flip-flops, and now trust in their leaders is the single biggest reason that people stay," Mulligan says.
Mulligan says that training first-line managers on trust-building skills such as keeping commitments, apologizing for mistakes and accepting responsibility for company policies are the first steps to create a culture of trust and employee engagement.
"Hold the first-line managers accountable for turnover and empower them to make a difference as a systematic means to increase retention," he says.
Training, empowerment and accountability are vital, as most line managers in the survey said that they did not feel they had the necessary empowerment to positively affect turnover rates.
GE Healthcare Integrated IT Solutions, a technology solutions provider for the health care industry headquartered in Barrington, Illinois, employs a leadership philosophy that "encourages leaders to feel empowered and to take ownership," says Dan Goitein, HR leader for the firm.
He says that the leadership development program focuses on creating employee engagement through trust-building training, providing mentors, toolkits and a systematic approach to regular feedback sessions to help leaders connect with their employees.
With businesses continually scrutinizing their ROI, Mulligan says that companies should continue to invest in their leaders because their skills can directly affect retention and the bottom line.
