Talent is the critical success factor to any organization. Talent pool management is the most challenging area to any organization. The challenge of finding, attracting, developing and retaining the right talent is taking up a major part of management and once the right talent is found the next demanding job is to retain that talent Retaining employees involves understanding the intrinsic motivators of them which many organizations unable to identify. The reason is “Individuals differ greatly in this regard.
A company should exert some effort and undertake some analyses to determine the nonmonetary interests and preferences of its key employees, and then attempt to meet these preferences in action. ” In this context organizations need to dig novel approaches to retain the most effective manpower. Looking carefully into many organizations-Retention strategies are very competitive, Companies try to provide their best to retain the employees of their competitors. In this conceptual paper the author has attempted to bring out employee retention approaches, strategies for knowledge workforce, for achieving competitive advantage.
Need to address Employee Retention: Organizations have to bear massive costs associated with attrition or turnover and, while some of these are not visible to the management reporting or budget system, they are none the less real. The ‘rule of thumb’ appears to be very inaccurate indeed and, while it depends upon the category of staff, it is probably better to estimate around 80% of salary as a truer rule of thumb – and this will be on the conservative side. The following are the different costs incurred to any company due to attritionRecruitment Costs.
The cost of advertisements; agency costs; employee referral costs; internet posting costs. The cost of the internal recruiter’s time to understand the position requirements, develop and implement a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct interviews, prepare candidate assessments, conduct reference checks, make the employment offer and notify unsuccessful candidates. This can range from a minimum of 30 hours to over 100 hours per position. Calculate the cost of the various candidate pre-employment tests to help assess candidates’ skills, abilities, aptitude, attitude, values and behaviors.
Training Costs Calculate the cost of orientation in terms of the new person’s salary and the cost of the person who conducts the orientation. Also include the cost of orientation materials. Calculate the cost of departmental training as the actual development and delivery cost plus the cost of the salary of the new employee. Note that the cost will be significantly higher for some positions such as sales representatives and call center agents who require 4 – 6 weeks or more of classroom training. Calculate the cost of the person(s) who conduct the training.
Calculate the cost of various training materials needed including company or product manuals, computer or other technology equipment used in the delivery of training. Lost Productivity Costs As the new employee is learning the new job, the company policies and practices, etc. they are not fully productive. Use the following guidelines to calculate the cost of this lost productivity: Upon completion of whatever training is provided, the employee is contributing at a 25% productivity level for the first 2 – 4 weeks.
The cost therefore is 75% of the new employee’s full salary during that time period. During weeks 5 – 12, the employee is contributing at a 50% productivity level. The cost is therefore 50% of full salary during that time period. During weeks 13 – 20, the employee is contributing at a 75% productivity level. The cost is therefore 25% of full salary during that time period. Calculate the cost of mistakes the new employee makes during this elongated indoctrination period. New Hire Costs
Calculate the cost of bring the new person on board including the cost to put the person on the payroll, establish computer and security passwords and identification cards, telephone hookups, cost of establishing email accounts, or leasing other equipment such as cell phones, automobiles. Calculate the cost of a manager’s time spent developing trust and building confidence in the new employee’s work. Lost Sales Costs Calculate the revenue per employee by dividing total company revenue by the average number of employees in a given year.
Whether an employee contributes directly or indirectly to the generation of revenue, their purpose is to provide some defined set of responsibilities that are necessary to the generation of revenue. Calculate the lost revenue by multiplying the number of weeks the position is vacant by the average weekly revenue per employee. In this context It is very important to understand continuous efforts are to be put forth to retain employees. The present paper focuses on providing insights in the following Concept of Employee Retention Inculcating Culture of retention Developing Retention strategy
Concept of Employee Retention: Key employee retention is critical to the long term health and success of any business. Employee retention matters. Organizational issues such as training time and investment; lost knowledge; mourning, insecure coworkers and a costly candidate search aside, failing to retain a key employee is costly. Various estimates suggest that losing a middle manager costs an organization up to 100 percent of his salary. The loss of a senior executive is even more costly. Employee retention is one of the primary measures of the health of your organization.
If you are losing critical staff members, you can safely bet that other people in their departments are looking as well. Concept of Employee Retention should be very clearly understood by organizations. It’s not just retaining a single or few employees but it’s the future of retaining competitive sustainability of most effective manpower-key asset of any organization. In most organizations Retention strategies are paper struck but not applicable in the purview of employee desk. The retention strategies should be designed such that the retentive forces are maximized and the debilitating forces minimized.
Retention strategies should not be orchestrated in isolation but must form part of the overall strategies for strengthening the pull on the talent, which in fact include sourcing, staffing and development strategies in addition. Retention policies should be highlighted on par with other policies; this gives employee a perception that they are highly valued. Deloitte Touche Tohmatsu is an organization of member firms devoted to excellence in providing professional services and advice. Deloitte Touche Tohmatsu is focused on client service through a global strategy executed locally in nearly 150 countries.
It gives high importance in building Talent. The following is the step wise plan in building talentProactive approach in retaining its manpower. Step 1: Identify those roles, groups and individuals critical to theorganisation’s performance Step 2: Understand the outside market, and where skills are inshort supply (and likely to remain so) Step 3: Factor in your future growth plans – establish a resourceplan to accompany your business plan / strategy Step 4: Based on this analysis, identify where there are gaps that may cause issues. Step 5: Review other human capital programmes (e. g. performance management, rewards and recognition etc.
In order to ensure an integrated approach. Step 6: Review the HR systems and reports available. Ensure that the organization’s deployment and integration of systems and tools enable its long-term talent management strategy. It concludes that when an organization’s talent management process evolves in the manner described in this briefing, organizations will be reluctant to go back to the stop-gap measures of recruiting and retention. Managers may be amazed by how often the talent they need resides right under their noses – or the noses of colleagues in a different part of the organization.
Inculcating culture of Retention: First and foremost aspect is to highlight that –Retention strategies should not be isolated and culture of retention implies the length of holding your employees so far. How capable an organization is in retaining its employees? Culture of retention should prioritize the following Introduce your employees that your organization holds high degree of attachment towards them. Inculcate the culture in your employees saying-Retention of employee is not a segregated task anymore-not only H. R task its part of the whole family.
Involve employee more in planning retention strategies as coworkers understand better than supervisors. As work environment plays pivotal role in inculcating culture of retentionWork culture welcomes the culture of retention-Here are some ways you can create culture of retention. Don’t view any role within the organization as “ordinary”. Everyone should be given the opportunity and the goal of being extraordinary. Create a mission your team can take pride in, not one they have to memorize. Give them a reason to think their job is important. Don’t strangle people by micro-managing or bury them in policies and procedures.
Give them the necessary guidelines and tools, then get out of the way. Celebrate activities, not just performance. Celebrate progress, not just results. Allow your employees to play, have fun and experiment. Encourage them to contribute to others (employees, customers and the community) in extraordinary ways. Developing Retention Strategy: Organizations should have a proactive retention strategy which helps in reducing employee turnover. Retention strategy should focus on the followingIt is desirable to plan employee retention strategy by an organization, which should cover following aspects.
Reciprocity is the key. Employees are investors in the company and expect a return on investment. Retention must be part of the organization’s DNA. Successful organizations have woven retention and engagement deeply into their structure. Loyalty is never a given. Loyalty must be earned; even satisfied employees sometimes leave. Organizations must be seen as employers of choice. You have to compete on compensation and benefits, but WIN on culture, learning and development. Mergers, downsizing and bankruptcies. require leaders to re-motivate employees, both during and after the crisis.
Stars include more than just the top 10% — or 1%! Stars are people at any level who bring value to the organization. High-potentials must be carefully managed. It’s not uncommon to watch high flyers become willing victims of talent theft. A recovering economy spells choice. As the economy recovers, talented people will be even more in demand and will have greater choices. Talent will become harder to find, and even harder to engage. Each generation has different reasons for staying. For the first time in modern history, there are four generations working side-by-side in most companies.
Generational differences continue to pose new challenges to today’s employers. Make diversity an engagement and retention opportunity. One organization chose to weave key Love ‘Em strategies into their diversity initiative. Mentor widely and in both directions. Build learning relationships in all directions and hold all partners responsible for the success. Train intelligently. Provide on-going retention training in manageable bites – make it a continuous effort and find ways to size the retention plan to the specific demographics of the organization.
Create a development culture. “Career development is the right thing for the organization (identifying and developing future leaders), the right thing for the employee (creating a development environment), and a key retention component. ” Recognize managers who keep employees. Meaningful recognition remains a potent energizer for employees and managers alike. Create the internal headhunter profile. When employers integrate retention efforts into the culture, headhunters have a difficult time prying talent out of the organization.
Some of the novel strategies areHave proper segregated retention plan for different level of employees –executive level, middle level, higher level. In any organization the employees may be broadly classified into four broad categories in terms of their performance and potential. There are people who are woefully inadequate in both dimensions, who we may call ‘strugglers’ and there are the ‘under-performers’, whose performance falls below their potential. This constitutes about one fifth of the total human capital at our disposal and these people obviously qualify to be the first candidates for the pink slip.
The other two segments comprise of the ‘solid pros’ and the ‘stars’ who are at the higher end of the performance continuum. The former may be relatively lower in their potential as compared with the latter, but contribute immensely to the company’s overall performance. We could call this as the ‘talent’ segment. This is the segment we do not want to lose. We’ve got to protect this group from the pull of all non-retentive forces and that needs effective retention strategies that have to be kicked into high gear.
Retention strategies have to be viewed holistically against the total systemic framework of talent management that encompasses the ‘talent’, the ‘corporation’ and the ‘environment’. Attrition and retention should be seen as reciprocal phenomena, which have an inverse relationship with each other. Recruitment and needs for downsizing must also be considered in conjunction. An understanding of the inherent considerations of an individual who wishes to join a company and continue to stay, and potential compulsions, which push him away, would help.
List of priorities where employee concerns to work in an organization. Employers became dominant and committed on organizations motivating factors (Herzberg) such as: Good working environment Feeling of achievement. Recognition. Challenging work itself. Career advancement. Increased responsibility. Opportunity for growth as a person. Improvement in quality of work life. However the primary concerns sometimes go unnoticed in many organizations. Exit interviews are only finding reasons but not the means to retain their best talent.
Organizations need to understand the above do not apply to all levels of employees-for instance If one examines the entire life cycle of an employee within an organization, starting from recruitment till superannuation through phases of induction, settling down, contribution, growth, maturity and rise to top levels, the retention strategies have to be selectively and appropriately applied to the phase to which the employee belongs. While transformational strategies like mentoring, coaching, training, etc. are eminently suitable for people in induction, settling down and growth phases, fulfilling the higher order needs, ego gratification, etc.
Should be predominantly successful for senior positions. Cultural strategies, however, are over pervasive across all phases. Conclusion: In order to be able to orchestrate and implement effective retention strategies, the first step should be to understand the scope of the retention problem that is unique to one’s organization. The target group, which is crucial to the company’s operations and success, should be identified and the strategies are directed appropriately. It is a paradox that the companies which invest heavily in recruitment and development and make a good job at that, are prone to more risk of poaching.
A sound sensing and tracking system to assess the volume and causes of attrition by performance level could be useful. The ability to identify good performers, who are prone to leave for any job or management, related issues and timely intervention to address these issues, could be effective. Restructure Retention Strategies linking with the followingEmployee value proposition: This implies to what employees values to work in an organization The most significant things valued areBrand image Learning environment. Span of Career progressions Performance incentives Individual recognition Compensation Brand Image
Celebrate your profits/achievements with your employee. Make them feel they are in the best place in the world. Learning Environment Always empower your employee. Dont delegate-Let them delegate Span of Career progressions Recognize the key performers-provide them a clear span of Career progressions Individual Recognition Reward the employee for the best service provided by them. Performance incentives Provide achievers cost effective incentives-not always linked to monetary aspects Compensation package- Provide a Unique feature to your compensation package putting in place innovative so that your competitors do not drag your best employees.
Compensation schemes. Some working strategies areForm Employee retention committee to motivate & inculcate sprit of belongingness. Reward the employees who have longevity in your organization. Succession planning Make the employees aware of their career tree. Celebration of the performance. Turning exit interviews to Recruiting interviews.
Family orientation This would encompass building and sustaining a compelling brand image with an appealing culture and inspiring values, tailored to the talent segment that one seeks to attract and retain, offering great jobs and career opportunities, building an effective learning framework, investing in work place infrastructure, moving on poor performers, instituting effective reward and recognition programmes, putting in place innovative compensation schemes.
But most importantly, when the organization is successfully able to convey the message that it cares for employees, retention works best. “There is no reason that companies cannot retain and/or rebuild favor among employees,” Challenger says. Finally organizations need to be possessive about the employees-The stronger organization’s possessiveness –the longer are the employees are retained.