February 3, 2011

Talent retention myths

Better ways to retain your valued employees

Fred Mael
Dealing with talent retention and turnover is annoying for CEOs and managers focused on growing their companies and their earnings. It’s like finding holes in your pockets just as you’re trying to stuff them with coins. A number of common myths about retention may be comforting and lull you into ignoring the problem. However, their comfort is an illusion that prevents you from discovering the true causes of turnover in your company and then taking the needed next steps to fix the problem. Here are seven common myths:
1. Employees leave primarily because they want more money, not because they are dissatisfied. I can’t compete with bigger firms who pay more, so there’s nothing to do.

Actually, they don’t leave mainly for money. An unpublished Saratoga Institute study of 19,500 former employees of 18 organizations, conducted from 1996 to 2003, revealed that 88% of employees say they leave for reasons other than money. By contrast, another survey in that same time period showed that 89% of managers believe that employees mainly stay or leave because of money. (The full Saratoga study is summarized in Leigh Branham’s book The 7 Hidden Reasons Employees Leave).

2. Employees won’t leave a good job just because they have problems with their boss or company leadership.

According to a Business Week (online) article from Feb.2, 2005, one of the biggest reasons people leave their employers is because of poor relations with their supervisors. Florida-based TalentKeepers has built their retention work on the premise that the most significant reason why employees leave is dissatisfaction with their direct supervisors. While it may not be the reason across all jobs and all job levels, other experts confirm that dissatisfaction with either supervisors or upper management plays a significant role in turnover. Despite this knowledge, managers and supervisors in most companies are still not held accountable for the departure of productive employees.

But if problems with supervisors are such a factor in turnover, why do our exit surveys done on the employee’s last day of work almost never turn up these issues?

The reason is simple: Those employees with the foresight not to burn their bridges with your company or jeopardize future positive references will make sure notto mention their problems with the boss on the way out the door. Not surprisingly, exit interviews that take place months later, when the employees are secure in their new jobs, elicit more candid admissions that the boss was an important, if not the most important, reason for leaving.

3. There is no point in increasing retention in jobs and industries with historically high turnover. Some professions or industries do have high turnover rates across all companies or work organizations. Some examples include temporary agencies, health clubs, substance abuse treatment facilities, hourly jobs in the food and hotel business, and home care employees. There may be some unavoidable aspects of these jobs that will always make them have higher turnover than other professions, such as very low pay scales and the attraction of those fields to seasonal or part-time high school or college students. Still, the view that retention should be measured only by achieving long-term stability may be shortsighted; getting many employees to stay, for example, for an average of nine months instead of three can also mean significant savings for the employer. For example, an intensive retention and talent management effort at the Applebee’s restaurant chain reduced hourly turnover from 146% in 2000 to 92% in 2003 and restaurant general managers’ turnover from 20% to 8% during that same period. The one-year gain just on retaining more managers was estimated conservatively at $1.6 million.You think this is sarcastic, don’t you? And yet there are companies that try to manage turnover this way: “Joe couldn’t hack it here” or “Sheila has ‘issues’, that’s why she left”. It makes the managers who do this feel more secure, and maybe it’s supposed to make the survivors feel that they are more resilient and have more of the “right stuff” than the departed. The problem is that after a while, the people who stay know that their friends didn’t fail, that they (in some cases) left for better jobs, and worst of all, that they themselves will be badmouthed on their way out the door. It’s a losing strategy. In addition, more and more companies are realizing that maintaining good relations with alumni has many advantages. That won’t happen if you disparage them as they are leaving.

4. When people leave your company, the best tactic to stop the trend is to badmouth the people who left.

5. Training your employees and providing other career-growth opportunities just makes them more likely to leave. No, this is the great paradox of retention. In the paradigm that existed before the 1980s, the way to bind an employee was with job stability and job rotation through the company. This made the employee as specialized as possible to the needs of his company and less marketable to others. Once lifelong employment was dead in the wake of massive mergers, takeovers, and layoffs, and once corporate raiders like T. Boone Pickens and Carl Icahn helped dissolve the implicit social contract, employees were no longer willing to be that vulnerable. When you provide employee with growth opportunities, you provide them the peace of mind that if would have to leave for any reason, they will be employable. It’s the person who feels trapped who is more likely to leave or disengage while still on your payroll. Not surprisingly, a 1999 American Society for Training & Development survey showed that for employees who say their companies offer poor training, 41% plan to leave within the year. By comparison, in those with training programs rated as excellent, only 12% had such plans.
6. I shouldn’t be concerned about turnover – plenty of good people are always looking for jobs. Maybe right now, but that’s not predicted to last. The upcoming departure of the Baby Boomers from the work force, coupled with the relative lack of skilled workers coming up to take their place, has led some analysts to predict that talent retention will be the top human resources concern in coming years. It’s a little late to encourage couples in their forties to have many more children. Raiding other countries for their knowledge workers has various drawbacks, and, in the case of health care workers, harms those countries’ healthcare systems and their economies. In coming years, competition for good employees is expected to be fierce. While these trends tend to be cyclical, the cost of turnover plus the cost of being understaffed at key positions should be good incentives to improve talent retention at your company.
7. There is one main reason why all employees leave companies. I’ll just buy the solution to that problem and then I can go back to other things. What is more correct is that there are vendors selling one-reason solutions for talent retention. It could be different benefits packages, supervisory training, employee training, recognition programs, or others. In reality, much depends on your industry, the economy, your managers, your location, your employees’ typical age and educational level, and your unique corporate culture. Your employee turnover might be the symptom of other problems in your company. The best way to tackle retention problems is to get a clear picture of what the causes are in your company through some mixture of surveys, focus groups, or delayed exit interviews. Only then should you choose one or more solutions with the best chance of reducing your turnover and increasing retention of your talent.

Fred Mael (www.maelconsulting.com) is an organizational psychologist who does consulting in areas such as talent retention, organizational culture, and performance management, as well as executive and work/life coaching. This article appeared in the August 2006 issues of Baltimore SmartCEO and Washington SmartCEO magazines.

back