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Retention refers to
the average length of time employees stay with the
company. Usually
this number is calculated for each job category or job
description in the company. Given the cost of
finding and hiring good people, we want them to stay long
enough at least to recover the upfront investment we have in
them and, it is hoped, well beyond that. To get a better
picture of the retention issue, let’s look at some of the
causes of retention problems.
A Rose By Any Other Name….
First, let’s clarify
that talking about retention is just about the same thing as
talking about turnover – it all depends on which direction you
are looking at it from. Concentrating on
improving retention statistics is a more positive way and
constructive approach to the problem of high turnover, and
that’s why we’ll approach it from that
direction.
The Causes Of Poor Retention: The Big
Picture
When the economy is
good and jobs are plentiful, retention tends to be more of a
problem for a company. The presence of
readily available opportunities outside the company tends to
make people less tolerant of any dissatisfaction they may be
feeling where they are. When jobs are scarce,
people have a greater appreciation for the security of a
steady paycheck, and retention tends to be less a
problem.
The Causes Of Poor Retention: A Closer
Look
There are probably as
many factors that lead to poor retention as there are people
and circumstances. Some of these factors
are reasonably obvious, like dissatisfaction with the job, bad
chemistry with the boss, too much or too little work, a sudden
and unwanted change in job duties and assignments. If they are identified
early enough, some of these factors can be
mitigated.
Other factors that
may affect retention are less obvious but are knowable. For example, an
individual who has a very strong personal preference to avoid
conflict and differences of opinion may be transferred or
promoted from a position with very little interpersonal
conflict into a position with a new supervisor who manages by
confrontation.
This individual may find it easier to flee – that is, to
resign – than to “fight city hall.”
On the other hand,
many of the factors that affect retention aren’t even knowable
in advance. These
unknowable factors may have to do with the individual person’s
private life – family issues, health concerns, financial
problems, a change in commuting arrangements, and other
personal problems are in this category. These factors may not
surface explicitly precisely because they are personal
and a person may be reluctant to talk about them at
work.
The Dollar Cost of Poor
Retention
Measuring the cost of
poor retention is often discussed in terms of the cost of
turnover. There
are many detailed and sophisticated formulas for calculating
the cost of manager turnover, and they are almost always
expressed as “it costs at least this much….” A fairly conservative
figure is 100% of the annual salary of the position left
vacant, depending on the impact on the company of the
contributions of the person in that position. This cost figure
includes the cost of recruiting, selecting, and training a
replacement. For
executive positions, that figure can be as high as 300-500% of
annual salary.
How To Improve Retention
I wish that I could
offer you a 100% guarantee, in one easy step, of how to
improve retention, but I can’t and neither can anyone
else. Retention
depends on too many factors over which you not only have no
control, but you also usually don’t even have any knowledge of
them!
I can offer you one
fundamental fact of human nature on which to focus: WE ARE NOT ALL PEAS
OUT OF THE SAME POD. Remember that each of
us is a unique individual, treat each of us respectfully, and
you will be well on the way toward improving retention. And there’s more! You can actually use
your knowledge of how people are unique to improve
retention. Here’s
how:
Three Steps Toward Better
Retention
Step 1: The best way to avoid
turnover and aid retention is to avoid hiring individuals who
are highly unlikely to be able to perform at an acceptable
level in the open position. Get to know the
applicant’s strengths, experience, skills, knowledge, and
abilities, and try to match them to the demands of the
job. Using an
objective, validated tool to measure basic personal work
preferences and work style will help you identify people who
are likely to become “high maintenance” employees and,
consequently, high turnover risks.
Step 2: Share information
about a new manager’s personality and work preferences with
his supervisor.
Look for differences between the prospective boss’s and the
new manager’s work and communication styles. Identifying potential
“bad chemistry” issues and pointing them out to both parties
at the beginning of their working relationship enables both to
label these differences as such – merely as “you say
poe-tay-toe, and I say poe-tah-toe” differences – rather than
as character defects. Use that information
to develop a plan for the new manager’s development and
growth. Doing so
can help avoid miscommunication or misunderstandings, which
will decrease the odds that these could develop into problems
in the future.
Step 3: Use information about
the new manager’s basic personality and work style preferences
to help him create a Development Plan – a step-by-step
approach to using his assets to be as successful on the job as
possible. Most
people want to be successful at work and are willing to work
on improving areas or behavior that could otherwise hinder
their success.
Provide a structured approach for the new hire to use to work
on these areas.
In Summary
We
can’t know or control all the factors that affect retention,
so we should concentrate on the factors that we do know
about: match
people with jobs in which they have a fair or better chance to
succeed, provide them, and their supervisors, with information
and tools that will help them anticipate difficulties and work
them out, and provide the structure that will encourage new
managers to grow and improve on the job.
Remember, People are not your most
important asset!
The RIGHT People are!
To hire the best, test!
To reveal management potential, test!
To diagnose
problem behavior, test!
Best regards,
Kurt G. Helm, Ph.D.
Phone Toll Free
800-886-4356
Email: khelm@helmtest.com
Website: http://www.helmtest.com/
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© 2007, Kurt G. Helm, Ph.D. All rights
reserved. You are
allowed to use material from this newsletter in whole or in
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form: “By Kurt G.
Helm, Ph.D., of Helm and Associates, Inc. Please visit our
website at http://www.helmtest.com/ for
more information about how to avoid hiring mistakes by using
pre-employment testing as part of the applicant evaluation
procedure.”
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