The top strategies to improve retention will probably astonish you. More and more companies are struggling with employee retention in the face of an eight-year recovery, low unemployment, and labor shortages. Human Resources can drive company value by implementing retention strategies.
First, understand that employee retention requires a talent mindset and takes a comprehensive approach. Gimmicks and one-off quick fixes won’t solve a retention problem. Reactive approaches won’t cut it either. If you wait for your best employees to resign with a new offer in hand, your success rate in retaining them will be low. Even if you win the first retention battle with an employee, without comprehensive changes, you will probably be back in the soup in 6 to 12 months, when the employee tells you about another offer.
Here are seven strategies to retain and motivate your workforce to do their best:
- Understand the true cost of turnover. Most of the human resources organizations I work with know their overall turnover rate, but they can’t express it in accounting terms their executives can relate to. For example, turnover can cost 16% of annual salaries for retail workers, 25% to 50% for engineers, and over 200% for executives. No chump change. Nail the cost of turnover to the business. Articulate it. Drive value.
- Executives need to continually communicate the company’s vision, higher purpose for humanity, and innovation strategies. Nothing motivates people like purpose. When the company’s purpose aligns with an employee’s intrinsic motivators, it’s golden. I have always found, by my own analytics, when executives speak about company purpose and the focus areas for innovation, employee morale and engagement soars. Retention remains high. This is not a strategy, however, that works all by itself. It needs complimentary talent strategies.
- Provide competitive pay and benefits to everyone, and premium pay to your best people. Employees expect to be paid competitive rates, Millennials and Boomers alike.[i] In a tight labor market, employees will leave companies for employers that pay them more, often easily getting a premium package of 15% or higher.[ii] If you haven’t benchmarked your pay structure and benefits package against a large database that matches your company’s labor competitors and jobs (not just your industry competitors), this is a good time to start. In addition, you should pay your best workers a premium, at least 10% above the market, for their superior contributions. If you don’t, someone else will.
- Implement and use talent management analytics. Do you know who your best employees are for every job family within your organization and what competencies, education and experiences make them the best? Do you know broadly across your organization your retention risk? Do you have strategies for the employee development, pay increases, promotions, incentives, and stock necessary to retain your best people? Do you have a cogent methodology to proactively implement these strategies before your best employees resign? This is the age of digital technology and artificial intelligence. Many organizations already have the necessary data for talent management analytics within their payroll and HRIS systems. The tragedy is, they don’t invest in using the data. It’s time to start using technology to drive smart talent strategies, decisions and value for your organization.
- Understand the importance of having a collaborative and dynamic company culture. Collaborative, dynamic cultures are faster at making improvements, are more innovative, and enjoy better financial performance.[iii] In addition, employees, particularly Millennials, prefer these cultures.
- Promote agile leaders who are comfortable with virtual technology and diverse workforces.I define leadership agility with the acronym A2C2E2. Agile leaders can relate to workers who have a different background from their own and can align their teams to the company’s purpose, mission and strategies. Agile leaders are constantly communicating and clarifying changing business realities, goals and operating norms. Finally, agile leaders are empathic, build relationships and empower their employees to perform at their best. They use one-on-one meetings to provide ongoing performance and development feedback and coach their employees to overcome obstacles and do their best work.
- Change your performance management system, from demanding compliance to promoting collaboration, teamwork and achievement.Millennials expect collaboration, teamwork and opportunities for personal development. Companies cannot have dynamic, collaborative and innovative cultures without performance management systems that promote and reinforce these characteristics. If you haven’t changed your 1990s-based performance management process, it is time to step into the 21st century.
Are you going to win the war for great talent in this tight labor market? I would love to learn what strategies you are using, and how they are driving value for you organization. Join the discussion.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on innovation, talent management, developing agile leaders and teams, and other strategic initiatives. Questions? Please e-mail Victor at email@example.com or visit www.victorhrconsultant.com. For innovation visit www.InnovationOne.io.
[i] Pat Didomenico, (March 14, 2016, 12:23 PM) “What do millennials want from a benefits package?” The H R Soapbox, Business Management Daily. Found at http://www.businessmanagementdaily.com/45868/what-do-millennials-want-from-a-benefits-package; And The Employee Benefits Research Institute, found at https://www.ebri.org/; and Christina Merhar (Oct. 9, 2015, Noon), “What Are the Most Important Benefits to Employees?” Small Business Employee Benefits and HR Blog. Found at https://www.zanebenefits.com/blog/the-most-important-benefits-to-employees.
[ii] “Escape to Comptopia: 2016 Compensation Best Practices Report,” Payscale Research Report. February, 2016. Found at https://hub.payscale.com/i/645228-payscales-2016-compensation-best-practices-report?utm_source=Marketo&utm_medium=Newsletter&utm_campaign=Mar2&utm_content=cbpr-flipbook&mkt_tok=3RkMMJWWfF9wsRonuavPeu%2FhmjTEU5z17%2B4oWqGwgp141El3fuXBP2XqjvpVQctqPL7YDBceEJhqyQJxPr3BLdcN
[iii] Dr. C. Brooke Dobni, (2011), “The relationship between innovation orientation and organisational performance,” The International Journal of Innovation and Learning, Vol 10, No.3 Pages, 226-240. Other references include the Booz and Company Global Innovation Study, 2010, and Arthur D. Little Innovation Survey, 2005.