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  1. Avoiding Six Dangerous Retention Mistakes Most Companies Make Presented By Jack Smalley, SPHR Director, HR Learning & Development

  2. Introduction • SHRM predicting 2011/12 employment crisis • Up to 40% turnover • Employees not satisfied with current jobs • Gen Y’s first recession • Gen X and Y ready to move on • Employers of Choice not waiting until crisis hits • Where does your company stand?

  3. Preparing for the Turnover Tsunami Wall Street Journal 5-26-10 • Feb 2010 • More employees resigned than laid off/terminated since 10/08 • End of 2 year trend • 60% of employees intend to change jobs after the recession • Employees advancing career • Poor morale due to cost cutting measures • Gen Y’s comparing notes

  4. Preparing for the Turnover Tsunami Con’t. 2010 • 34.6% of employees satisfied with wages • Down 7% from 1987 • Wage cuts, freezes, added responsibilities, unemployed spouses and X’rs Y’s moving back home • 51% interested in their work • Down 19% from 1987 • More employees feeling disengaged with their jobs

  5. Focus Shifted from Talent Retention to Cost Reduction • 2/08 Corporate leaders priority • Retention of top talent • 2/09 Cost reduction/survival • Top talent retention fell to #8 • We are already seeing the results • Retention of top talent even more critical in turbulent times

  6. Years of retention neglect catching up with employers • Sales • Service • Quality • Safety • Productivity • Why is there no focus on Retention • Retention no longer HR issue • Must have total mgmt support

  7. During turbulent times best employees are the ones who leave • A’s first • B’s second • Left with C’s • Poor performers hold on to paychecks until unemployment eligible

  8. The Cost of Turnover • PricewaterhouseCoopers Saratoga Study • Turnover cost from 12% to 40% of pretax income • $25B to retrain employees annually • That can be the amount to remain in business No longer a problem for just “large” employers

  9. Must Work Your Way Through Various Issues • Don’t know why people quit – so count only controllable turnover is inaccurate • Excluding employees who quit or fired during probation • Supervisors holding back releasing poor performers to pad their retention numbers • Message to supervisors • “You own your team”

  10. The Six Most Dangerous Retention Mistakes • Focusing on Retention Programs vs. Retention Processes • Supporting a Fear-Based Workplace • Confusing Employee Engagement with Employee Destruction • Not Supporting a Multi-Generational Friendly Workplace • Not Holding Supervisors Accountable for Retention • Not Narrowing the Front Door to Close the Back Door

  11. Four Groups Projects • Traditionalists • Baby Boomers • Gen X’rs • Millennials • Top three factors to keep you with company • Top three benefits to attract/retain your generation

  12. Critical Retention Mistake #1 Focusing on Retention Programs vs. Retention Processes

  13. Drive Retention from the Top, Because Executives Have Greatest Impact • Include turnover cost in annual report • Include in strategic plans and report monthly • Rewards for meeting goals • Consequences for missing goals • HR must change managers with influence rather than authority • Leave authority to senior management • CFO’s must be on board

  14. Employers of choice moving from retention programs to retention processes • Require full management participation • Accountability for process success • Retention must be on same page and receive same attention as • Sales • Service • Profits

  15. Think! Sales Service Quality Safety Retention = $Profits $

  16. Organizational Flaws of Retention • Retention coaching conducted by HR vs. supervisor/leader • Supervisors look up to their leaders • Organizations look at HR to solve turnover • Traditional thinking vs. Progressive thinking

  17. 10 Strategies of Rethinking Retention - Richard Finnegan • People quit jobs because they can • Companies makes it too easy to quit • No effort to hold on to our best • Employees stay for things they get uniquely from you • Build a retention brand different from others • Supervisors build unique relationships that drive retention/turnover • Employees stay for bosses • Employees leave because of bosses • Hold supervisors accountable for achieving retention goals • Add to other measurable objectives

  18. 10 Strategies of Rethinking Retention Con’t. - Richard Finnegan 5. Develop supervisors to build trust • Relationships Trust Information Success 6. Narrow the front door to close the back door • Focus as much on hiring process as retention 7. Script employees first 90 days • Predict how long employees will stay • The most critical time during employment 8. Challenge policies to drive retention(support/hinder) 9. Calculate turnover cost to galvanize retention 10. Drive retention from the top • Exec buy-in is a must

  19. Design Jobs for Engagement • Capture the minds and hearts of employees • Avoid the Sunday Blues • Challenging assignments • The absent Millennial • Goals with feedback • Provide for personal growth and development • Full partnership career development process • Career interest forms

  20. Hidden Obstacles to Retention • Young workers with fewer bills • Growing number of entrepreneurs

  21. Calculate Turnover Cost to Galvanize Retention • In past, HR has developed formula for turnover cost • Those who have CFO endorsement have greater opportunity for upper management support • Call center identified turnover cost at $12 K per employee • Destroyed a $12,000 obsolete piece of computer equipment to drive point • Drove home actual cost • Delivery company put cost of driver turnover at $60 K same value as company truck • Showed video of totaled truck from accident to emphasize cost

  22. High Tech RetentionSHRM White Paper 5/2000 • What is more critical than recruiting IT talent? • Answer: Retaining IT talent • Average IT employee stays 18 months at current job in good times • New IT grads will have12 employers during career

  23. 6 Elements to Retain IT Workers • Salary • Must be competitive • Constant survey of IT salaries/benefits in your area • IT turnover 100% to 150% of annual salary • Challenge • Best way to lose IT personnel • Answer: Bore them • Challenging work • New projects • Keep software updated

  24. 6 Elements to Retain IT Workers Con’t. 3. Training & Development • On-going training • Cutting edge technologies • Educational assistance = higher retention • Educational assistance beyond IT field 4. Flexibility, lifestyle perks & cool stuff • Compressed work weeks • Telecommunicating • Job sharing • Flexible shift schedules • Small amounts of flexibility can score big points • Solicit lifestyle desires

  25. 6 Elements to Retain IT Workers Con’t. 5. Appreciation & Rewards • All disciplines seek recognition • If cash strapped • Extra vacations • Time off 6. Culture • Employee friendly • Manager “Is the Company” • LIVE IT !

  26. Continued Nursing Shortage • Bureau of Labor Statistics predicts 233,000 additional nursing jobs each year through 2016 • Only 200,000 pass RN test annually

  27. Wellness Programs as a Retention Tool • 45% employees at Mid and Small size companies report they would stay at job longer if they had wellness programs • 26% said they would miss less work • Why? - Principal Financial Well-Being Index SHRM 1/20/10

  28. Top Reasons Employees Support Wellness Programs • 30% Reduce personal health care cost • 30% Longer, healthier lives • 28% Receiving employer incentives • 28% Reduce stress ---------------------------------------------------------------- • 15% of employees have access to fitness facilities • 11% in 2008

  29. Partner with your talent supplier • Create a pool of contingent workers in peak periods to give more balance to core employees

  30. Best practice retention is on-going processes driven by upper management NOT Band-aid programs

  31. Critical Retention Mistake #2 Supporting a Fear-Based Workplace

  32. Fear-based employees cannot contribute • “Management by fear” is a hard habit to break • SHRM 7/1/10 • Job satisfaction holding among older employees • Declining among X’s and Y’s • Gen X’s and Y’s • 2008 Job Dissatisfaction 11% • 2009 Job Dissatisfaction 19%

  33. During economic downturns most companies focus on keeping employees with good attendance even with substandard work • This is better alternative to firing employee and waiting days to replace • Some bosses are encouraging young workers to buy new car, boat or other expensive items knowing they would have to keep job for payments

  34. Beware “Jerk Bosses” • 13 states have legislation pending on “workplace bullying” • Verbal attacks from supervisors are generating six figure settlements • 37% of U.S. workers report they were a bully victim • Four times more complaints than all forms of harassment combined

  35. Transitioning From a Fear-Based Workplace10 Early Signs of a Fear-Based Workplace • Appearances are everything • Staying longer than boss • 7:30 to 5:30 employee • Perception is more important than reality • Fear-based discussions rule over work discussions • Who’s stock is falling/rising • Preoccupied with who is invited to meeting vs. meeting agenda • Predicting employee failures

  36. Transitioning From a Fear-Based Workplace Con’t10 Early Signs of a Fear-Based Workplace 3. Distrust rules • Off the record conversations • Coded messages • Back alley meetings • Backstabbers thrive • Your failure is my success 4. Numbers rule • Total obsession w/ metrics • Vending machine, ear plugs • Record profits and now unpaid lunches • Stock price vs. People price 5. 6,417 workplace policies • Overdependence of rules vs. common sense • Ordering a stapler • Coffee cup receipts • 15 page parking policy

  37. Transitioning From a Fear-Based Workplace Con’t10 Early Signs of a Fear-Based Workplace 6. Management discourages lateral conversations • Fear of employees comparing notes • No one has authority to authorize meetings • Loss of sharing ideas 7. Information is restricted • Information leads to success • Why some managers restrict information • Knowledge = Power • Destroys trust

  38. Transitioning From a Fear-Based Workplace Con’t10 Early Signs of a Fear-Based Workplace 8. Brown-nosers rule • Kissing up at all levels • “Who said it” rules over “what was said” • Fear-based leaders surround themselves with “yes men” and “yes women” • Right answer vs. truth 9. The boss is so out of touch it’s almost comical • Even though they are clueless, they constantly remind you who is the boss

  39. Transitioning From a Fear-Based Workplace Con’t10 Early Signs of a Fear-Based Workplace 10. Management leads by fear • Most decisions made in secret • Information is given in drips • Company culture “Be glad you have a job” • Leadership is based on keeping employees in the dark • Major gap between management and employees

  40. Treating Employees Fairly Requires: • Distributing rewards • Respect through interpersonal relationships • Involving employees in difficult decision-making • Offering opportunities to question decisions

  41. Critical Retention Mistake #3 Confusing Employee Engagement with Employee Destruction

  42. Employee Engagement • Employees who are so committed to their jobs that they want to give Discretionary Effort

  43. 3 Buckets of Employee Engagement- N. Davis, Editor, HR Magazine - G. Sherrill, VP HR, Wal-Mart • 17% actively disengaged • Unhappy • Undermining co-workers • 54% not engaged • Sleepwalking thru workday • Putting in time w/o passion • Fence sitters • 29% work with passion “Do you want your 54% hanging around your 17%? Disengagement cost U.S. economy $300B loss productivity annually

  44. 6 Essentials for World Class Employee Engagement • People Senior leaders who excel at • Listening • Knowing and cherish relationship with employees • Outstanding communication • Work Providing resources for employees to over-achieve • Full Service Recognition • Competitive pay • Recognition for each generation • One size does not fit all • Opportunities • Succession planning • Training • Career development

  45. 6 Essentials for World Class Employee Engagement Con’t. 5. Quality of Life Issues • Targeted benefits • Flex schedule 6. Company Culture • Live your practices • Diversity • Company reputation • Performance management *Every employee must understand • How their job impacts organization’s success • Irrelevance

  46. Employees First and Customers Second- Vineet Nayar HCL Technologies • Key is holding management equally accountable to employees • Live in a world of democratic form of government BUT • Autocratic nature of business

  47. Customer Service Focus Must Include Internal Customers • Employees first, Customers second • Satisfied employees display better customer service

  48. How Not To Engage Your Employees • Company President • Not listening to employees • Hires a $100K consultant • Consultant listen to employees • Makes same recommendations • Not embracing 50-50 meetings • 50% informing • 50% listening

  49. Employees Stay Because of Things They Get Uniquely From You • Write down 5 employees in your company who are critical to your success • Write answers to these questions for each employee • Could this employee leave you for a better job? • Has the employee ever considered looking? • Now write down reasons you feel they have stayed TangibleIntangible Shift New skills Schedules Good supervisor

  50. Critical Retention Mistake #4 Not Supporting a Multi-Generational Friendly Workforce