Focusing on the Right Areas to Improve Employee Retention

Focusing on the Right Areas to Improve Employee Retention
~8-10 min read~
 
One area of organizational development that continues to challenge and demoralize leaders on a regular basis is employee retention. Despite a favorable hiring market (have you heard about all those millennials with college degrees?), many companies continue to have difficulty keeping their people from leaving. Statistics show that since 2010, 'quits' have been trending up year over year, with little end in sight. 
 
There is no shortage of tips and tricks for trying to incentivize employees to stay: pay, benefits, perks, etc. These are not bad tips - generally people like more money, better benefits, and a trip on the company jet. But if you are having issues with your retention and you think these things will fix the problem...they won't. They are little more than band-aids.
 
Does that sound counter-intuitive? Take a second and think back about some of your previous jobs where you've left the company. What was the chain of events that pushed you to leave? In some cases, it might have been money or benefits. Studies have shown that pay is a threshold: there is a certain amount that people need (it differs from person to person) in order to be comfortable, but after that point it produces diminishing returns. The same goes for benefits. But if I had to guess I would say that there was some other combination of issues and difficulties that led to you deciding to leave a previous employer. 
 
Here is a much more common scenario: a potential employee sits down to have an interview, and the interviewers ask some questions about where they went to school, what kinds of jobs they've worked in before, etc. The company knows they need some more man power, but they aren't quite sure what the job is going to look like, so the potential employee is given inaccurate information about their job - what is expected of them, what their scope of authority is, how their role fits into the big picture.
 
Six months after they are hired, these issues are still unresolved, and there is no clarity about what the employee should be working on or why it even matters. To make matters worse, though the leaders talk about the importance of culture and values, the ones that hang on the wall are not lived out. Their supervisor rarely communicates with them, except to tell them they did something wrong. Demoralized, the employee talks to HR to understand what is going on, and is met with a shrug, a sigh, and the words 'I understand. This is how it's always been, and there's nothing I can do to change it.' 
 
There are two outcomes for this scenario, both of which are supremely negative for your company. First, the employee leaves, taking their talent and the resources you spent hiring them out the door as they go. Another option is that the employee decides to grind it out for a bit. They do their work, but barely. They put about half of their desire and talent into their job - just enough to get by. Consequently, any new hires that come in learn from this person that 'nothing changes' and there's no need to do anything any differently.
 
And the cycle continues.
 
Will pay fix this toxic circle? Or benefits? Or perks? 
 
No. They wont. What drives an employee to leave a job is much more complicated than that. If you are having issues with retention, it would be worth your time to think about the areas below.
 
Vision - why does your company exist? what is it that you aim to do? how will you be doing it 5, 10, 15 years from now? All of these questions revolve around 'vision', and they are more important than you think to your employees. Employees, like most anyone else, want to be inspired by what they do. They want to know that the work they are doing contributes to a bigger picture - a vision - that is having an impact. It doesn't have to be 'we are ending world hunger', 'we are ending warfare', or some huge, audacious claim. It could be something much more simple, like 'we work everyday to keep the electricity on for our customers' or 'we create new products to help working mom's have a better life'. If you don't have a vision for your company, then your employees probably don't either. 
 
Direction- how many of you get up and buy a plane ticket without thought to where it is going or why you are going there? Probably not many of you - it would be foolish to do that. It is the same with your employees. If your people have no clue where the company (and by extension, themselves) are going, they are probably going to hop off the at the very first layover stop. And who could blame them? People in your company want a clear direction: 'we are going to Denver for some skiing and craft beer.' If there is no direction, no one knows the destination or has any clue about the pathway to get there. Why would an employee choose to stay with your company if they don't know where it is going and how it is going to get there? 
 
Leadership- these first two areas, vision and direction, are the responsibility of your leadership, particularly your executives. These are the people that shape and guard the vision, as well as decide where your company is going and how to get there. If we only stopped at those two major responsibilities, that would be a huge job. But leaders are required to do so much more: communicate the vision and direction to the rest of the company, ensure technical performance in their area of expertise, manage a large staff and allocate resources, deal with interpersonal conflict, assemble teams and facilitate their work.
 
Not too long ago, employees would follow these people based solely on their positional authority. Now, it takes a high level of emotional intelligence and persuasion to bring people along, to develop their skills and talents, and to manage their performance. It all rises and falls on leadership. 
 
Hire right the first time - organizational culture has a very long memory, and many times processes or systems continue to survive long after their effectiveness. This is something I have found to be very true about the interview process in many companies. For the most part, they are still conducting interviews the same way they have for years, despite all the millions of changes that have happened in just about every other part of the company. If you're still asking the same 10 questions that you've always asked, you will continue to gather subpar talent.
 
Here are a few pointers:
 
First, before thinking about the potential hire, think about the job itself: are the expectations and responsibilities clear? what kind of behaviors and motivations does this role require to be done effectively? after some reflection, is this job even needed, or can we split up responsibilities in another way? (This is called 'job benchmarking')
    
Second, match your job benchmark to potential employees. How does this person behave, and does their behavior seem to line up with the needs of the job? What motivates this person, and does their motivation line up with the type of work this job calls for?
 
Finally, use assessments and ask interview questions around the data from the assessments. A good assessment, such as the DISC or Driving Forces, will be a monetary investment, but it will be pennies on the dollar compared to constant turnover or hiring subpart/unfit talent. 
 
Development - here's the thing about good employees: they expect development. That could mean skills training, continuing education, or new resources or tools to do their job more effectively. If you are looking at development as simply a cost, something you have to pay for, you are looking at it with the wrong attitude. Let's say you pay for a couple of your VP's to go to a continuing education seminar hosted a few hours away. It will probably cost you a couple thousand dollars for a hotel and some money in per diem. The potential upside, however, is an energized executive team that comes back fresh with new ideas and strategies on how to make your company more efficient.
 
Furthermore, they learned about some important new regulatory issues and long-term trends for your industry, thereby ensuring your survival going forward. When looked at from this perspective, it seems like a no brainer. By the way, the impact of development is not only felt at the top levels of your organization, but all throughout it. Developing your people leads to higher skill levels, increased motivation and morale, and greater productivity. 
 
Have great managers and supervisors - there's a saying in talent management circles: 'people don't leave jobs - they leave managers.' A bit simplistic, perhaps, but we see it play out all the time. If you think about it for a minute, it makes total sense. A persons supervisor/manager is the person who has the most immediate authority over the employee. They are responsible for holding them accountable, for developing their skills, and for managing their performance.
 
Moreover, think about how much time employees spend with their supervisors. If that person is a bad communicator, or has poor managerial skills, or is just a jerk, that is going to have a dramatic impact on the people under them. Managers have a huge impact on the people they lead - probably more than they really know.
 
Also, a quick tip: as many executives learn the hard way on their way up, managing people requires a very different skillset than mastering a technical or systematic role. Companies tend to elevate people based on their technical performance without considering their interpersonal skills, diplomacy, decision making, and the like. Avoid this!
 
What I've been talking about - vision, direction, development, hiring, elevation - all of these are aspects of your corporate culture. Employees will stay with a job for a whole host of different reasons, many of which you, as an employer, can't control. But an employee will leave an organization almost always because of the culture - and that is something you most definitely can control.
 
So take some time and think about these areas of your business. Dig in and get dirty - be as objective as you can be. You'll most likely find your cause somewhere in the above list. And if you're tired of it not working and need some help getting it fixed, give us a call - we'll find a solution that works for you!