Executives are spending more time investing in the career development of employees. Why? They want to retain their talent. This is smart thinking as the cost of retention is less expensive than recruiting in today’s tight talent economy. Now is the time to put in place excellent retention practices.
Recruiting is the number one concern of CEOs in the most recent Conference Board Annual Survey. PwC’s 2017 CEO survey reports that chief executives view the unavailability of talent and skills as the biggest threat to their business.
According to The Wall Street Journal, Pitney Bowes Inc. conducts talent reviews to identify the development needs of its employees as part of its retention strategy, says Stanley Sutula, chief financial officer of the Stamford, Conn.-based shipping-services company. The company then aims to give workers new experiences and skills, as well as feedback about their performance and their potential, he adds.
“Once somebody comes in, says I’m not perfect and I’m leaving, it’s too late,” Mr. Sutula said. “Getting them involved in something different often keeps [the] creative juices going and they feel more fulfilled.”[i]
Other companies are expanding their benefit offerings to retain employees. National Grid PLC recently introduced a student loan repayment plan that helps shoulder some of the burden for employees with college debt, says Peggy Smyth, CFO of the U.S. division of the U.K. utility company. National Grid offers a range of other benefits, including paid parental leave, pet insurance, and an elder care policy.[ii]
Most organizations don’t understand that full cost of their turnover. According to the US Department of Labor Bureau of Labor Statistics, 3.6 percent of US workers leave their jobs every month. While many companies know their annual turnover rate, they don’t know the true cost of it, which includes the loss of productivity, overtime costs to make up for the employees who left, the cost of training new employees and the full recruiting expenses. All told, I have found turnover can cost 16% of the annual salaries and benefits costs for retail workers, 50% for engineers, and 200% for executives.
Retaining your employees, which may cost you one to two thousand a year, is less expensive than recruiting.
Now is the time to put in place career development plans to develop and retain your employees. It starts with providing competitive pay.
Below are my recommendations:
- Tell your high potential employees in one-to-one private meetings that you value them and that they have an essential role in the company. Many companies take their best people for granted. While their immediate leaders have told their top talent of their value and career potential with the company, senior management also needs to meet with its best employees to acknowledge their outstanding contributions, ask them what roles they want in the future, and tell them of the company’s plans for future growth and how they fit in with it.
- Have a career discussion with all your employees—and follow up on the plans you set. Be sure your managers meet with all your employees and especially your high potential and critical technical employees and ask them how they feel about their jobs and working for the company. Ask them what they like about the company, don’t like, and if they had a magic wand what they would change. Ask them what they want to be doing in a year, three years, and five years? First, having this conversation shows your interest in the employee and that you want to find out what it will take to keep them for the long term. It will also help you prioritize the type of assignments, development, and career moves that it will take to retain these employees. Having the conversation is a good beginning, but be sure to follow up, beginning the next month.
- Offer effective onboarding to improve your retention and help new hires achieve full productivity faster. A 2014 study by BambooHR found that 31% of employees quit their job in the first six months. Many companies believe effective onboarding is having an employee handbook online and an online Applicant Tracking System or Payroll/HRIS system that enables the new employee to input their personal information such as an address, contact information, and W-4 tax information and benefit selections. These steps are only the beginning. You also need to give excellent on-the-job training and provide employees with coaches so they can learn the culture and how work gets done. Emphasize the importance of building relationships, and early career development. Effective onboarding also means making sure the employee’s workstation, PC, other devices, and system access are available and working on the first day on the job.
- Provide benefits that millennials increasingly want now such as flexible work arrangements, paid time off (including paid parental and elder care time off), tuition debt assistance, 401(k)s with the company matching employee contributions, and subsidized healthcare.
While companies need to continue their recruiting efforts, the smart CEOs and HR leaders will also keep a strong focus on retention.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults and provides hands-on support to improve recruiting and retention, cultures of innovation, and train agile leaders and teams.
Overcome your obstacles to these issues by subscribing to his weekly blogs. Go to http://www.victorhrconsultant.com. to subscribe. Watch for his book, Hack Recruiting, to be published soon.
[i] Tatyana Shumsky (June 13, 2019, 10:31 AM, ET), “CFOs Emphasize Career Development to Boost Employee Retention: Showing people how their contributions advance corporate strategy, and how the company can help them grow, can make it easier for companies hold on to talent, CFOs say,” The Wall Street Journal. https://www.wsj.com/articles/cfos-emphasize-career-development-to-boost-employee-retention-11560436302?mod=hp_minor_pos8
[ii] Ibid.