Overview: Retention And Recruiting Are Two Sides Of The Same Coin

Retention is the flip side of recruiting.

If an organization can retain good employees the benefits to that organization are multi-fold. If it cannot retain employees its recruitment costs, as well as the resulting drag on productivity, will increase proportionately. The only exception to this is when recruitment is strictly the result of increased growth.

Recruiting new employees is costly, and turnover is costly.

In fact it is estimated to cost between 50 - 150% of an employee's annual salary to replace them. The cost to replace an employee includes expenditures for both recruiting and training the new employee as well as the loss of productivity while the position is open and during initial training.

But increased costs are not the only reason that retention is more profitable that recruiting. When retention is above average, organizations will usually realize greater customer satisfaction, employee productivity, and profitability overall.

To retain top talent and key employees in an increasingly competitive job market, employers need to do more than just increase payroll and expand benefits.

They will need to create a work environment that reflects their employees' "life-stage" needs and values and will be required to understand what motivates and inspires the loyalty of their most high-performing employees.

What is different now is that in many cases it is not the status of a large private office or a substantial paycheck that keeps people working for an organization. It is often the opportunity to work for a company that cultivates strong workplace relationships and inspires a sense of balance and/or purpose that will be deemed important in an employees decisions about whether to stay or leave a company.

As the labor market tightens in the future retention becomes increasingly important for a number of reasons.

We will discuss some of those reasons in this article, as well as some things that employers are doing now to increase the retention of their most valuable asset... their employees.

Key Elements Of Retention

• Work-Life Balance
• Employee Engagement
• Supervisors
• Benefits

     - Work-Life Balance

A growing proportion of employees are viewing work-life balance considerations as critical to their decision on whether to join or remain with an employer.

Some studies show that almost six out of ten employees consider that the quality of co-worker and/or customer relationships to be one of the top factors they will look at when deciding whether to join or remain with an employer.

Demand for better work-life balance usually runs a close second as the most important recruitment and retention criterion of many in the workforce now.

There is evidence that younger employees aged between 21 and 30 often consider work-life balance as the single most important consideration when deciding whether to join or remain with an employer - even more important than the opportunity for financial growth and advancement or skill building and professional growth.

Some elements that may be part of work-life balance are such things as flexible time off, working at home, and working less overtime.

     - Employee Engagement

The connection between increased levels of employee engagement and improved staff retention is well documented.

A study last year done by consultants Towers Perrin found that only one in seven employees worldwide are fully engaged with their jobs and willing to go the extra mile. This represents a large reserve of untapped employee performance potential and a powerful area to focus in on for retention purposes.

It is important to note that highly engaged workforces are better at attracting jobseekers since success leads to more success and dedicated employees can often act as positive spokespeople for a company.

Strategies to maintain and develop employee engagement are currently not receiving enough attention from many employers. This is an area where an employer can gain a distinct competitive advantage in retention efforts.

     - Supervisors

The number one reason reported by employees for leaving a company is because of poor relationships and/or communications with their supervisor.

A supervisor represents the company to the employee and the supervisor has influence over what the employee does or doesn't do. If a supervisor isn't recognizing and rewarding an employee's efforts the employee will usually become disinterested and be less motivated.

If the supervisor isn't providing regular learning opportunities or is somehow contributing to the employee feeling as if they don't fit in or are not valued for the work they do, then the employee will usually become disengaged and begin to look for employment with another organization.

Training of supervisors in these areas is important, and an oversight of supervisor's relationships with their employees can be significant in retaining good employees. As workforces become more diverse through cultural and age related factors these relationships cannot be left to chance but should be dealt with in a manner leading to positive results.

     - Benefits

Employees often feel that benefits offered by an employer serve as a measure of the value that the employer places on them. In addition to making an employee's life easier benefits often symbolize how much a company cares about its employees.

Larger companies (with over 25,000 employees) usually offer the widest array of benefits to their employees, and most agree that the benefits they offer are an important reason why employees come to work for them.

However, with the significant cost of providing benefits not all employers can afford to offer the full array of benefits to its employees.

To compete in this situation smaller companies can still offer a variety of benefits, but focus on those that are less expensive yet are still meaningful to the employees. Paying close attention to what employees want and are asking for and then providing those benefits can be very effective. Sometimes things that actually cost less can be perceived as being more valuable if they are what the employee actually wants.

For example, long-term care benefits may be valuable, but are not necessarily perceived to be so for young employees, whereas childcare benefits or flexible time off is. Other innovative benefits some companies are using are buying and selling vacation days, concierge services, and dog walking.

Careful structuring of benefits and weighing the relative cost of them can be an important tool for retention of employees, the key being to provide those benefits that are actually wanted by the employees and perceived by them as being the most valuable.

New Trends In Retention

• Total Compensation Benefits
• More Communication (Including Information About Benefits)
• Better Analysis Of Key Jobs & Skills
• Metrics For Projections

     - Total Compensation Benefits

It's only been in the last 5 or 10 years that companies have put together the whole value of their total compensation package and expressed it in ways that employees and prospective new hires can understand and compare.

Broad-based equity plans mushroomed in the 1990s in part because of the "tech bubble" and "dot com" craze where there was fierce competition for key employees. Eventually, total compensation got a boost from the incredible success of information technology companies.

Once total compensation grew to include voluntary benefits with no actual monetary value the term "total rewards" was added to the benefits vocabulary. Work-life benefits such as flextime and telecommuting are examples of this.

Virtually any benefit, tangible or intangible, can be assigned a dollar value and included in an employee's total compensation.

To be competitive in recruiting and retaining good employees, employers may now demonstrate the full value of the benefits they are offering by pricing and establishing the value of total compensation programs in a way that facilitates side-by-side comparisons.

     - More Communication (Including Information About Benefits)

To effectively retain good employees communication with them can be a key factor.

You cannot over communicate with relevant, timely, interesting, and appropriate information since employees need to be kept informed. It helps make them feel valued and keeps them "in the loop". Have you ever heard employees complain that their company communicates too much? Don't forget to develop "feedback" as part of your communications strategy. Without feedback you don't know if you are being effective.

How you provide the communication depends on your organization. It may be through employee meetings, memos, newsletters, e-mails, or one-on-one from a supervisor - but the main thing is to communicate in several ways to ensure that everyone receives and hears the information.

Often employers can fail to ensure their employees feel like they are a value or asset to the company because the employees feel they don't know much of what is going on. It is important to share the company goals with employees in a meaningful way and directly link each of them to the responsibilities they have that will help everyone reach those goals. If employees don't know what is going on and why, they may invent something in the "rumor mill" that is false but nonetheless destructive to your program.

This will help ensure employees know that what they do will contribute to the success of the company and exactly what is expected of them to do their part in the team effort. It will help make them feel how their work is valued and that others depend on them.

This is especially important in the supervisor/employee relationship role.

And finally, it can be very beneficial to communicate the value of the benefits your company is offering. The most valuable benefits in the world don't mean much if the employee is not aware of them and/or how they fit into their total compensation.

Communicating with employees about the value of their benefits, and asking for and following up on suggestions for ways to improve the quality of their life, can greatly improve your retention efforts.

It takes some work and organizational planning to do this effectively, but will cost employers far less than the price of loosing good employees and paying to replace them through expensive recruiting and training efforts. Besides, poor communication leading to higher turnover will only repeat the process again and again unless it is ultimately mastered.

     - Better Analysis Of Key Jobs & Skills

In a study of more than 300 companies, IBM's 2005 Global Human Capital Survey found that 60 percent of human resources executives at mature organizations had trouble even identifying what skills and experience were crucial to the company's mission.

Many companies have not studied their workforce and have not identified areas where they may lose workers with important skills or knowledge. The loss of crucial experience and skills can be very costly to an organization if not identified and prepared for in advance.

Retaining these key employees whenever possible becomes a high priority, but without sufficient knowledge of exactly which employees are "key" their loss can cause significant problems.

Sometimes organizations tend to equate their top talents with key positions, yet this may not always be the case. They focus on higher profile people in the organization but may not realize that these people may not always be the hardest to replace, or even the most important.

Sometimes the vulnerability is in a job that's hard and not very glamorous, where young talent isn't attracted much. For example, people working on an oilrig doing maintenance in a difficult environment, away from their families for up to six months at a time, can be harder to replace than other, more "prestigious" positions. A loss of those employees who are accustomed to this type of work can cause more problems than first meets the eye. It may not seem like an important "skill", but can be a very important job that a company cannot effectively function without.

Accurately identifying key jobs and skills can help organizations prepare for and focus on retention of those employees holding those jobs. Being caught by surprise and unable to fill these positions when they are needed can be a bigger problem than most companies realize.

     - Metrics For Projections

Detailed analysis of metrics can allow some companies to accurately forecast years in advance their demands for talent and key labor.

Forecasts can be made by analyzing historical data in database files and then using a series of mathematical algorithms for turnover trend analysis by location, position type, salary, tenure, and division etc.

These trends can then be projected forward through another series of algorithms while adding numbers for the expected workforce needed for future capital projects, new systems, and services. Training programs and succession plans can also be developed in advance.

Having this knowledge can help an organization zero in on priorities and ramp up retention and recruiting efforts to deal with the projected shortfalls.

Ways To Increase Retention

There are many ways to increase retention.

Below are some examples of what others have done and can be used to stimulate ideas that might be appropriate for employers to use in their own circumstances:

• Flexible Scheduling
• Job Sharing
• Business Casual Dress
• Diversity Initiative
• Job Rotation
• Sign-on Bonuses with Delayed Payment
• Relocation Payback Agreements
• Training / Education Payback Agreements
• Spot Cash Awards
• Exit Interviews
• Paid Internships
• Salary Increases
• Retention Bonuses
• Career Counseling
• Shorter Waiting Periods for Benefits
• Tuition Reimbursement
• Stock Options
• Subsidized Child Care
• Concierge Services
• Sabbaticals
• House Cleaning Stipend
• Take Out Dinners
• Care Packages for Family
• Project Celebrations
• Thank You, Birthday, Christmas Cards
• Employee Involvement
• Computer Subsidy or Purchase
• Employee Recognition Programs
• Employee Opinion Survey
• Work-Life Programs
• Educational Assistance for Children
• Mentors / Coaches
• Vacation Stipends