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Retention Strategies That Respond to Worker Values

July 8, 2001
Finding and keeping great employees has never been so critical, but the wayto get the job done has changed dramatically in the past few years. That’sbecause employees view their work differently than they used to, a fact thathas given rise to an overall shift in workplace values. Understanding this shiftis essential to building a strong company while saving on payroll. Ignoringit will cast you on the other side of the divide.

    Why bone up on employee values? Because if a heated-upeconomy in the past decade helped thrust so-called knowledge workers into thedriver’s seat, a slowed-down economy isn’t about to eject them. Fourother factors have strapped them securely into their position of potency: theglobal market, worker empowerment, changing demographics, and a determinationto make career sacrifices for a better work/life balance.

    Traditionally, raises and promotions have been theincentives offered to workers to stem turnover. But with the rise of globalcompetition and wages, combined with a collapse of hierarchies and the accompanyingshrinkage in the promotion pool, HR directors have been forced to turn to amore organic crop of incentives. What they have learned is this: so-called softbenefits are not only less expensive but also more effective.

    If the reward is cash, it generally takes 5 to 8 percentof an employee’s salary to change behavior, according to the American Productivity& Quality Center in Houston and the American Compensation Association. Ifthe reward isn’t cash, it costs about 4 percent.

    As baby boomers retire, there simply won’t beenough warm, educated bodies to fill all the positions available. Immigrationis not the solution. Most other westernized countries are heading into theirown skilled-labor shortages. And nonwesternized countries are short on educatedworkers. Since 60 percent of boomers are planning early retirement, the skilled-laborgap will begin building to a crisis by 2005 even if the economic slowdown continues.

    “Wise companies will not let any short-term downturnalter their efforts to become one of the most desirable places to work,”says John B. Izzo, a West Coast-based retention strategist and speaker.

    HR directors can’t change demographics, but today’scompanies can respond to the fourth factor affecting the employer-employee powerdynamic. As workers face a pace of change unprecedented in history, and as “empowerment”and the need for risk-taking coupled with longer hours and less leisure timehave increased their risk of burnout tenfold, employees have begun to draw linesin the sand.

    Studies show that today’s workers resist tyingup their self-identity with their work identity. Instead, they’re exploringways to balance work and leisure, family and community time. Their values areshifting discernibly. What employees want isn’t entirely new, but whatthey’re willing to give up to achieve their goals is intensifying. Allof which makes the following strategies highly appealing for finding, keeping,and engaging great staff:

  1. Be proactive in offering employees a better work/life balance
    Time spent on the job in a given year has increased by 163 hours in thelast 20 years; that’s roughly one month per year. At the same time,leisure has declined by one-third. Workers today are willing to sacrificetwice as much pay as they were just seven years ago to achieve a work/lifebalance. And 55 percent of 18- to 34-year-olds say the option of takingextended leaves or sabbaticals is a key workplace benefit.

    Companies have found they can increase productivity, revenue, or bothby 20 percent by simply implementing a work/life-balance program for staff.Likewise, experts in the field say it’s possible to reduce turnoveras much as 50 percent by introducing any of the following: dependent-careleave, child-care subsidies, elder-care programs, counseling and referral,and flexible working hours.

  2. Promote a sense of a deeper cause
    Today’s workers yearn to be motivated by more than a company’sbottom line. Firms that are good corporate citizens or that rewrite theirmission statements to promote a sense of a deeper cause have an edge-thoughonly a small percentage of companies have paid attention to this reality.Merck, the pharmaceutical company, says it aims “to preserve and improvehuman life.” Another loyalty-builder is allowing employees to volunteerin the community on company time. Surveys show that, faced with a choiceof making more money or earning “enough” doing work that makesthe world a better place, 86 percent of today’s workers will choosethe latter.

    The corporate manifestation of a noble cause takes many forms-from showingvideos about how important the company’s service is to customers, to“going green.” A Fairmont Hotels maid says it takes more timeto recycle, for example, but “doing the recycling is the most importantpart of my job and makes me feel like I did something important in my day.”

  3. Offer opportunities for professional growth and development
    The employee of today has little job security, is restless by nature, andlives in the era of personal growth. He or she seeks both personal and professionalnourishment. The most successful information-technology companies spend7 to 10 percent of their payroll on training, compared with the standard2 to 3 percent. Mentoring is becoming ever more popular, not only becauseit is often more effective than training (up to 70 percent of employee knowledgeis obtained informally on the job) but also because it can help revitalizeolder workforce members matched with younger employees.

    A 1999 Gallup poll named the lack of opportunities to learn and grow asa top reason for employee dissatisfaction. Kinko’s, Inc., took thisinformation to heart and implemented a training program that gave coworkersa training path and career direction. The result? Turnover tumbled from78 to 50 percent.

    Even more impressive is the mid-sized insurance company that gives employeescareer-development accounts toward courses, personal coaching, or careercounseling amounting to 2.5 percent of their annual salaries. A softwareconsulting firm recently cut turnover 35 percent by sitting down with employeesat the hiring stage and helping them determine realistic time frames fortheir career-advancement expectations. It also offered formal career-developmentdiscussions several times during an employee’s first year.

    “The work environment and sense of team spirit have subtly becomemore critical elements,” says Stacy Sullivan, head of HR at Google,where turnover is almost nil. “Many companies do not realize that theyhave control of their retention issue if they take the extra step to ensurethat their employees are working on interesting work, and feeling that theyare adding value, learning continuously, and challenging themselves to domore.”

  4. Treat employees more like partners
    While executives tend to believe that corporate hierarchies have been busted,employees beg to differ. A 1999 Watson Wyatt Canada survey indicated that61 percent of senior managers felt that they treated employees as valuedbusiness partners, whereas only 27 percent of the employees agreed. Thereality is that workers today are no longer satisfied with empowerment;they want a sense of ownership. That means they expect to make suggestionswithout regard to age or rank, be included in generous profit-sharing plans(team bonuses are especially effective), and work in an environment thatis free of such symbols of entrenched hierarchy as rigid titles and executiveoffices.

    Above all, they want regular feedback. A 1998 Gallup poll found that workerswho felt that their opinions counted were the most likely to contributetheir full energy and dedication to their jobs. Unfortunately, less thanhalf of workers report receiving regular communication from their supervisorsregarding work performance.

  5. Help workers to find community in the workplace
    Longer work hours, smaller families, later marriage, more mobility, andconsumerism have all but squeezed out the traditional pillars of community-church,extended family, and neighborhoods. Meanwhile, technology, flexible workhours, and contract work have reduced the opportunities for chats at thewater cooler. Workplaces that proactively accept the mantle of communitybuilding by creating more opportunity for interaction-from Friday nightbarbecues to “pool with the president” nights-will experiencehigher retention.

    Businesses determined to woo the best talent today are metamorphosinginto community centers, with recreational facilities and programs aimedat building community spirit. As Pete Makowski, CEO of Citrus Valley HealthPartners, outside Los Angeles, says, “People are reaching out morefor a sense that the organization is a caring place that provides a senseof deep community.”

    It’s not all just talk. In 1997, 40 employees of Baptist Health Systemsin Miami who were confronted with personal crises received donations ofpaid time off from fellow employees. The effort was coordinated by the company.Marriott International has set up a 24-hour hot line to help employees withfamily and personal problems.

  6. Start rebuilding trust
    Since the downsizing of the 1980s, fewer employees have positive attitudesabout the workplace. Only 37 percent rate the level of honesty in theirworkplaces as high or very high. Only 14 percent agree that people trusteach other. While 54 percent of senior managers think the level of trustbetween corporate ranks is good, only 27 percent of employees agree. Theysay that entrenched hierarchy is one of the key barriers to rebuilding trust.

    TD Industries in Dallas addresses the trust issue by cross-training employeesto ensure that people can keep working during slowdowns. The company’sturnover rate for new hires is 15 percent. By comparison, the constructionindustry average for new hires is 100 percent.

    Trust can come crashing down in an instant, but it takes years to rebuildit. An Arthur Andersen study identifies the key factors of an ethical cultureas leadership, consistency and fairness, open talk about ethics, and employees’perception that ethical behavior is rewarded.

Workforce,July 2001, pp. 37-41 -- SubscribeNow!