Last week we discussed the steps in a Retention Management Plan, it breaks down into the three following steps
Study what is happening
Create standards and benchmarks for your firm
How many people are leaving: Turnover Rate = average number of employees/number of employees leaving x 100.
Also track types of turnover. These breakout data help you identify “turnover hot spots” to focus on.
Tracking who is leaving and why
Understanding the relative costs and benefits of the current turnover will give you a clear idea of how much the costs associated with turnover outweigh the benefits associated with turnover.
Bench-marking: Deciding what the right amount of turnover is for your firm.
Strategic Needs Assessment Planning: Planning around chosen benchmarks.
Take action based on your findings
Broad-based strategies are based on general principles of retention management and are intended to help reduce turnover rates across the board. For example, “Decrease annual turnover in our company by 7%.”
Targeted strategies are designed for organization-specific turnover drivers and are intended to address organization-specific issues. Often, these strategies are also used to influence turnover among certain employee populations. For instance, “Increase the retention rate of skilled carpenters by 10%.”
Implementing Your Plan and Evaluating the Results
The third phase of retention management is implementation of your plan, while the fourth is evaluating the plan’s results.
This week we’ll take a closer look at the differences between broad-based and targeted strategies and the various ways to integrate both into your Needs Assessment Planning.
As we’ve seen, broad-based retention strategies are directed at the entire organization or at large subsystems and are intended to address overall retention rates. Examples might include providing across-the-board market-based salary increases, changing your company’s hiring process to incorporate retention related criteria, and improving the work environment.
The data to help you proceed can come from several sources, including:
(1) Retention research and studies conducted by others
(2) Industry best practices
(3) Bench-marking surveys
Retention research can shed valuable light on the primary drivers of turnover in organizations. In our blog post from a few weeks ago you saw a summary of the predictors most consistently related to turnover and the relative strengths of those relationships.
A World at Work survey of HR professionals found the following top ten retention initiatives in use are:
62% Market adjustment/base salary increase
60% Hiring bonus
49% Work environment (e.g., flexible schedules, casual dress, telecommuting)
28% Retention bonus
27% Promotion and career development opportunities
24% Above-market pay
22% Special training and educational opportunities
22% Individual spot bonuses
19% Stock programs
15% Project milestone/completion bonuses
Professional associations such as SHRM can also be useful sources of best practice data. The SHRM website offers a wealth of survey data, research reports, tool kits, white papers, and other resources related to retention practices.
Finally, bench-marking surveys can also provide useful data for developing broad-based retention strategies. For example, organizations regularly conduct compensation and salary reviews to know where they stand in terms of tangible rewards relative to those offered by other companies.
This kind of information can be invaluable as you consider system-wide changes or new reward structures intended to influence overall retention. You can also collect benchmarking data on retention initiatives from consortia that conduct such studies.
At times, HR practitioners need to determine more specific drivers of turnover in their organization. To develop a targeted strategy, you can gather data from several sources, including:
Exit interviews: Exit interviews are used to collect data on why employees are leaving an organization and are popular because they generate immediate data on why an employee is leaving. They can also help an organization salvage a valued employee.
Despite their popularity, exit interviews have raised some concerns about the data they uncover. Research suggests that many departing employees are reluctant to cite negative aspects of the organization that have contributed to their decision to leave (such as dissatisfaction with their supervisor).
Exit Interviews tend to cite positive external factors that lie outside the organization’s control (for example, better opportunities elsewhere) as causes for their departure.
In one study of exit interviews: 38% of employees reported leaving because of salary and 4% because of unsatisfactory supervision. In a questionnaire posed to these same individuals 18 months later, only 12% reported leaving because of salary, whereas 24% cited supervision as the cause.
Why the distortion? People may want to avoid doing anything that might end the employment relationship on a negative note, especially if they believe they may need references from the company in the future. They may also find it easier to give the impression that there is little the organization could have done. That way, the interviewer will be less likely to try to retain them.
Post-exit surveys: Exit interviews are conducted just before or just as employees are leaving. At these times, employees may find it most difficult to be objective and candid. For this reason, consider using post-exit surveys to collect similar information after an employee has left your organization. Typically, you would gather this data through a telephone survey. As you would during an exit interview, use a neutral source and structured format, and emphasize confidentiality.
Current employee focus groups: Exit and post-exit data collections focus on why employees have left. You need to be equally interested in what’s causing employees to stay at your organization. Interviews or focus groups with current employees can be valuable additional sources of information for developing targeted retention strategies.
While these methods can shed light on the reasons employees may leave your organization, understanding why they have opted to stay along with factors they consider most important for remaining is even more important.
You can get the most from current employee focus groups by paying particular attention to the input of employees your organization is most interested in retaining (such as high performers or individuals in high-turnover jobs).
As with the other methods discussed; be sure to use trained neutral parties and a structured format, emphasize confidentiality to the extent possible, and provide a clear mechanism for using the information generated.
Linkage research: Through linkage research, you measure employee attitudes and opinions through anonymous surveys, aggregate the responses to the business-unit level, and statistically correlate the aggregated responses with your company’s turnover rates and other important business outcomes (such as customer satisfaction, sales, and profitability). This technique can give you a clear picture of turnover rates in a specific area of the company.
How do you decide what to measure with a linkage survey? Draw from retention research and best practices, exit interviews, and focus group data from those who stay. Also, look to your own hypotheses about what may be causing turnover in your organization.
University researchers and outside consultants can further help you design and administer the surveys as well as analyze and interpret the results.
Predictive turnover studies: Employees complete attitude and opinion surveys. Then, after some period of time, typically six months or one year, you track who leaves and who stays.
The goal is to statistically examine the relationships between survey responses and subsequent retention patterns. Predictive surveys provide clear data on the strength of the relationships between specific predictors and actual turnover decisions in your organization–valuable information for determining how to craft targeted retention strategies.
However, this method requires employees to identify themselves to link their survey responses to subsequent turnover decisions. Without the comfort of anonymity, employees may be unwilling to give candid responses. Take special care to protect the confidentiality and reassure participants their supervisors will not see the responses. The use of outside researchers or consultants can help make employees feel more comfortable.
Qualitative studies: Finally, it may be worthwhile to conduct more in-depth qualitative studies. Instead of focusing on quantifying relationships between turnover and other factors, qualitative studies attempt to uncover the complex, harder-to measure decision-making processes that may underlie employee departures.
They reveal patterns or relationships that surveys don’t capture. Qualitative studies may include repeated interviews with representatives of key employee groups as well as analysis of diaries in which workers record their thoughts about the employment relationship.
These studies may also take the form of experience sampling methods, in which workers respond to repeated measures of their employment relationship at a particular point in time.
After collecting data through one or several of the above-described means, you may discover that some groups or types of employees leave for different reasons than others.
For example, suppose the data show that a particular division or location has higher and more dysfunctional turnover than others. Moreover, employees of that division or location report lower job satisfaction and less positive relationships with supervisors than workers in other divisions or locations, and these differences are related to the differences in turnover rates. These findings may prompt you to develop a retention strategy (such as supervisor training) targeted at that particular division or location.
But suppose the data reveals that employees with high demand and hard-to-replace skills (for example, journeymen electricians) are generating particularly high and costly turnover. In addition, you’ve found that departing electricians are especially unhappy with their compensation. You may develop a targeted retention strategy that calls for changing their compensation to reflect the current labor market rates.
In both of these cases, a targeted strategy will be far more cost-effective than a system-wide one.
You can likewise use turnover data to craft targeted strategies for retaining high-value employees, such as (1) star performers, (2) women and minorities, and (3) new generations entering the workforce.
The research highlights three primary conclusions for how organizations can best retain these workers:
Performance-based rewards can increase retention among high performers (and may increase turnover among low performers).
Top performers in jobs or occupations with extensive visibility or easily documented performance accomplishments are more at risk for turnover.
The ability of well-designed pay for performance plans to reduce harmful turnover can more than offset these plans’ increased costs.
In addition to developing retention strategies targeted at star performers, your organization may want to develop targeted strategies for retaining a specific group of workers, take care to understand the unique drivers behind their employment decisions.
Next week: A Menu of Retention Practices
Text above was taken from SHRM Foundation’s Effective Practice Guidelines Series Retaining Talent.