Professional Documents
Culture Documents
Success today requires a good bit more than good attendance. Yet, multiple studies
in different countries and across industries show that employees who are
passionate about their jobs and the organizations in which they work are in the
minority. Some of the Survey conducted by little organization revealed that
approximately 19% of the employees are highly engaged The Corporate Executive
Board, looking at levels of retention across 50,000 employees around the world,
placed only 11 percent in what they dubbed “true believer” category. Towers
Perrin’s recent “Talent Report” is slightly more optimistic, finding just 17 percent
of the 35,000 employees surveyed to be highly engaged. 40 to 70 percent of
employees can be classified as neutral, middle of the road, or agnostic. Worse yet,
an alarming 10 to 20 percent of employees are actively “disengaged”—just putting
in their time or, worse yet, undermining or badmouthing their organizations and
bosses. The economic impact of low retention can be staggering. The global survey
shows that 34 per cent of the employees in India are fully engaged and 13per cent
disengaged. As many as 29 per cent are ‘almost engaged’.
The general principles of employee retention have been around for decades.
During the past five years, though, there has been a surge in the popularity of
employee retention.
There are four primary drivers.
3. Popular appeal. Remember the reengineering wave? Even those who used it as
more than just a guise for massive layoffs found it painful. Six Sigma
implementations are invaluable to business performance, but most companies are
finding them too complex to implement well.
Retention is a different matter altogether. While it still takes patience to
implement, retention gets to the “hard stuff” by focusing on the “softer stuff.” As
one manager said:
“It’s about appealing to the head and the heart.” Retention is about creating
passion, it’s about focusing on what people do well, and it’s about development
and recognition. Some have called employee retention a form of positive
psychology which, on the whole, is an easy pill for organizations and their
employees to swallow.
4. Overwhelming impact. The human resources function has been under pressure
for decades to prove that it makes a difference. While CEOs may espouse the
importance of their workforces in their annual reports, when times get tough, HR is
among the first to get the budget axe. A lack of convincing evidence on the value
of HR initiatives. HR professionals are scrambling, according to a recent
Conference Board report, to prove that their activities and investments are both
efficient and positively influential to business strategy. The positive relationship
between retention and performance (documented in hundreds of studies, with the
evidence mounting every day) provides a way for HR to prove its contribution. It’s
a fact: The higher the level of retention, the higher the performance of the business.
The research is not inconclusive, not limited to one country or industry, and not
contained to a few hundred people—it’s overwhelming.
Growth
and development - An exciting position, with plenty of opportunity for
growth, learning, and advancement for employees is always helpful in retaining
employees.
Support and recognition - Giving those rewards and recognition. In many
instances, employee retention start just as soon as an employee is hired. If a
company sees an unusual amount of potential in a new hire, management could
make them feel appreciated right off the bat. In a way, this practice can be
considered a combination of recruitment and retention tools.
Employee Participation in decision making is also a very effective retention
activity in the organization.
Aligning
effort with strategy—Retention begins with employees’ clear
understanding of what they should be doing on the job. Each employee needs a
solid job description and a clear set of performance expectations.
Empowerment—Empowerment
is a feeling of job ownership and commitment
brought about through the ability to make decisions, be responsible, be measured
by results, and be recognized as a thoughtful, contributing human being rather than
a pair of hands doing what others say.
Teamwork
and Collaboration - In the context of retention, teamwork and
collaboration require good relationships both within the work group and across
work groups. Many organizations have strong teams with members who work well
with each other.
ASSESSING RETENTION
Over the past eight years, The Gallup Organisation has been conducting exhaustive
studies of employee retention to try and answer these fundamental questions. One
of a handful of retention evangelists, Gallup has promoted the value of measuring
employee retention through a series of books, seminars and programmes; it has
also taken the lead in identifying and managing the factors that impact retention
levels. In order to rate the retention of a workforce, first Gallup assesses employees
to determine whether they are engaged, not engaged or actively disengaged.
Engaged employees are the stars in a company. Passionate about what they do,
they feel a strong connection to their company and perform at high levels every
day while looking for ways to improve themselves and the company as a whole.
Not engaged employees, according to Gallup, are the company zombies who show
up every day and put in just enough effort to meet the basic requirements of their
jobs. Without passion or innovation, these employees neither commit to the
company’s direction, nor do they work against it.
Actively disengaged employees are those who present a big problem for
businesses. Negative by nature, these people are unhappy in their work and they
compound their lack of productivity by sharing this unhappiness with those around
them. They are the proverbial bad apples who revel in their discontent while
undermining the accomplishments of others; as a result, not only do they achieve
little themselves, they also prevent others from being productive too.
Hierarchy of Retention
Employee Retention at Each Level
In addition, employee segmentation is an important method to utilize when
evaluating employee retention at each level. For instance, the factors that engage
the most productive employees in an organization may not be the same as the
factors that engage the least productive employees. Those employees who receive
the highest rankings on their performance reviews may tend to express higher
levels of job satisfaction when they are presented with challenging opportunities
that allow them to grow and learn. Those that receive the lowest rankings might be
more focused on issues surrounding work/life balance and job security. While
some factors, such as good communication, are important among all employees,
the attempt to focus on the full spectrum of factors that engage the entire
workforce may cause an organization to omit some of the factors that are the most
important to the company's most productive people.
Employee Satisfaction Does Not Equal Retention
While organizations may be aware "through the grapevine" that employees are
unsatisfied, it's the reasons for the dissatisfaction that elude them. While employee
satisfaction is important, it's not the end game — it is only one piece of employee
retention. Satisfaction is imperative in that, for those individuals who are top
performers, satisfaction may be derived from their achievement orientation, their
ambition, or their sense of responsibility.
On the other hand, the attempt to satisfy an under-performer who will only be
content with a lightened workload may not be a worthy cause. Again, the focus is
on ensuring that those individuals who have been identified as top performers and
high potentials are engaged in the organization.
As stated, employee retention incorporates employee satisfaction, but also includes
the essential elements of pride, commitment and loyalty in the organization.
Engaged employees aren't concerned with meeting the minimum requirements to
complete a task, they are focused on what they can do to better the company.
Essentially, they take ownership in the company despite whether or not they
actually own a share of stock.
Drivers of retention
A two-way relationship between the employer and employee
The importance of the individual being able to align themselves to the products,
services and values of the organisation
The ability of the organisation to communicate its vision, strategy, objectives
and values to its staff so that they are clearly understood
Management give staff sufficient ‘elbow room’ and autonomy to let them fulfil
their potential
The employer is highly effective at engaging in two-way communication with
its staff, in particular encouraging upward communication
Lastly, that management from the top to the bottom of the organisation are
committed leaders’ and that the key role of the immediate line manager/supervisor
is recognised as one of the most important conduits to achieving effective
employee retention.
Elements of Retention
Some researches conclude that personal impact, focused work, and interpersonal
harmony comprise retention. Each of these three components has sub-components
that further define the meaning of retention. Personal Impact-Employees feel more
engaged when they are able to make a unique contribution, experience
empowerment, and have opportunities for personal growth. Past research concurs
that issues such as the ability to impact the work environment and making
meaningful choices in the workplace are critical components of employee
empowerment. Some research on retaining talent found that the perception of
meaningful work is one of the most influential factors determining employees’
willingness to stay with the organization. Focused Work-Employees feel more
engaged when they have clear direction, performance accountability, and an
efficient work environment. Aside from the personal drive and motivation to make
a contribution, employees need to understand where to focus their efforts.
Without a clear strategy and direction from senior leadership, employees will
waste their time on the activities that do not make a difference for the
organization’s success. Additionally, even when direction is in place, employees
must receive feedback to ensure that they are on track and being held accountable
for their progress. In particular, employees need to feel that low performance is not
acceptable and that there are consequences for poor performance.
Finally, employees want to work in an environment that is efficient in terms of its
time, resources, and budget. Employees lose faith in the organization when they
see excessive waste. For example, employees become frustrated when they are
asked to operate without the necessary resources or waste time in unnecessary
meetings.
Interpersonal Harmony-Employees feel more engaged when they work in a safe
and cooperative environment. By safety, we mean that employee trust one another
and quickly resolve conflicts when they arise. Employees want to be able to rely on
each other and focus their attention on the tasks that really matter. Conflict wastes
time and energy and needs to be dealt with quickly. Some researches also find that
trust and interpersonal harmony is a fundamental underlying principle in the best
organizations. Employees also need to cooperate to get the job done. Partnerships
across departments and within the work group ensure that employees stay informed
and get the support they need to do their jobs.
Sun Microsystems
At Sun the virtual nature is partly due to flexible working practices. While flexible
working arrangements are a plus for many employees and reduces facility costs for
the organization, that flexibility comes with some downsides like; isolation,
loneliness and an increase in personal distractions. Isolation, especially when
paired with the demands of work in an increasingly competitive environment, can
wear down the sense of connection, commitment and excitement about any job.
Thus a critical challenge for managers of virtual teams is how to keep remote
employees engaged.
At Sun, the concept of employee retention starts right from the top:
· The CEO interacts with Sun employees through WSUN, a forum on Sun’s
intranet. He uses this to sustain an active an ongoing dialogue on the corporate
goals and direction. Through this interactive on-line resource he also solicits their
feedback and opinions
· Other senior management members engages with employees on technology
directions through his personal blog
· Business Unit Heads and Executive Vice-presidents have a target of holding six
‘town halls’ with employees every year across the globe
· At the country level, Senior Management is tasked with constantly engaging
employees through various forums, communication media and events to build
excitement and passion including some that also reach out to the employees’
families.
Conclusion
The competition for talent means that we have to be very good at attracting,
motivating and retaining talent. Our talented human capital is our biggest asset and
liability and we need to measure how well it’s adding value. Retention is an
increasingly important human capital metric because:
• Retention levels correlate with business performance
• Measuring Retention tells us how well we are doing in the competition for
talent.
• Driving Retention levels higher improves our ability to attract, motivate and
retain talent and so generates value from our human capital investment.
Retention is not a simple matter. Nothing is more dangerous than measuring
retention without making the commitment to act on the feedback. Retention has to
be a leadership driven initiative from the most senior level all the way to the front
line. No one affects an employee’s retention as much as his or her immediate
leader. Engaged leaders coach proactively for success, inspire loyalty and trust,
and build an environment in which employees are motivated and engaged. To
foster an environment of retention, organizations need strong systems and
strategies that promote and support retention.
Hiring and selection systems that measure motivation and the propensity for
retention, leadership training in certain skills (coaching, influencing others,
managing change), performance management and accountability systems that
provide direction, support, and objective assessments—all work together to
provide a foundation and environment in which retention can flourish. Ultimately,
retention lies in the heart of the employee.
Measuring motivational and job fit during the hiring process ensures that you
select people who can and want to find meaning in their work. Some people have
personal characteristics that correlate with higher levels of retention, and those
characteristics can be screened for during the hiring process. Once you’ve hired the
right people, retention can be either fuelled or hampered by the work environment
and quality of leadership. In the end, the rewards are many. A fully engaged
workforce is a loyal workforce—expect turnover to drop. In addition, an engaged
workforce will give the extra effort your organization needs to remain competitive.
Employee retention is no longer just a buzzword or a management fad. It’s no
longer a fancy tool which can be taken off the shelf, dusted and pressed into
service; rather it’s a strategic imperative which can’t be taken for granted. As
customers increasingly demand enhanced levels of service and value for money,
alienating the hearts and minds of the employees is no longer possible without
organisational demise. Thus, the onus is now on the organizations to make the first
overture.
FINDINGS
1. To engage the workforce, most of the organization surveyed periodically
recognise employees and provides flexible working hours.
6. Majority of the sample are loyal towards their organization and they also
recommend their friends and relatives to join the organization.
RECOMMENDATIONS
1. As contrary to what managers believe that decision making is the most effective
tool, the employees still prefer rewards and recognition. The Managers should
focus on the rewards and recognition schemes in their organization.
2. Practically people don’t give much importance to stress management programs,
work life balance and retirement plans so there is scope of improvement in this
area.
3. To increase employee retention, the organizations should: -
a. Provide variety: Tedious, repetitive tasks can cause burn out and boredom over
time. If the job requires repetitive tasks, look for ways to introduce variety by
rotating duties, areas of responsibility, delivery of service etc.
e. Get to know employees' interests, goals, stressors, etc. Show an interest in their
well-being and do what it takes enable them to feel more fulfilled and better
balanced in work and life.
4. As we have got a very good response from employees so the companies should
have the retention strategies to retain the employees.
CONCLUSION
Employee retention continues to remain a top priority at many organizations and
one that companies increasingly view as a driver of business strategy. Business-
critical knowledge can walk out the door when an employee leaves the company.
While employee retention figures have long been used by companies as a measure
of their performance in developing an effective organization, this view of
employee retention is not only outdated, but these figures may not be
comprehensive enough to truly determine the organization's effectiveness.
The business strategy of employee retention actually lies with employee retention;
retention is an outcome of retention. What most organizations fail to realize is that
employee retention is the biggest retention factor they have control over. Engaged
employees not only stay longer with the organization, they are more productive,
more conscientious, make fewer errors, and take better care of customers. The
business strategy of employee retention must incorporate methods that achieve a
high level of employee retention among the organization's top performers, not
necessarily the entire workforce.
Examples of Employee RetentionApproaches
A successful employee retention strategy helps create a community at the
workplace and not just a workforce. When employees are effectively and
positively engaged with their organisation, they form an emotional connection with
the company. This affects their attitude towards both their colleagues and the
company’s clients and improves customer satisfaction and service levels.
There's more than one way to improve the level of employee retention in a
company. In fact, there are many different things that companies not only can do,
but need to do.
Most organisations have a range of practices to improve the retention level of their
employees. One of the pitfalls of any employee retention programme is a failure –
whether real or perceived to follow through on the initial that the company is felt
by their employees if your organisation is to succeed you must look use as many
different approaches as you can. Here is a round-up of some of the best
approaches. Employee retention approaches for new employees. Best practice
recommends starting right at the selection or recruitment stage with:
· The right person and giving them a realistic job preview
· A strong induction and orientation programme
· Rigorous training and development, from technical to soft skills to leadership
development programmes.
· Regular technical/soft-skill updates.
· Certification programmes to drive people towards excellent performance
Employee retention approaches for all employees. Beyond initial recruitment and
induction, employee retention activities can be broken into a number of groups.
These include:
· Communications activities
· Reward schemes
· Activities to build the culture of the organisational
· Team building activities
· Leadership development activities
Communications activities
These help employees find out what is going on within the company outside of
their immediate team. They also help to create an environment of trust and
openness within the organisation where they are able to talk openly. Employees
who feel they are listened to are able to express dissatisfaction and work together
to resolve their causes, without it affecting their performance. Good examples of
communications approaches include:
· Communication forums to provide regular feedback to all people, including team
meetings, conferences and “away days”
· In-house magazines
· On-line communications, including discussion boards and blogs by company
personnel including senior management
· Monthly updates on corporate goals and directions
· Regular employee opinion and satisfaction surveys
· Active soliciting of employee feedback, including opinions and pet peeves
Reward schemes
Reward schemes are an important part of a company's overall employee retention
programme. Studies have long shown that, while money in itself is not a
motivating factor, the absence of financial reward can be a significant demotivator.
Thus the role of reward schemes in boosting employee retention is:
· to remove barriers to satisfaction in the organisation;
· to provide a framework for rewarding everyone in the organisation for their
performance.
· to give those who are motivated by financial gain an opportunity to achieve
this.Typical approaches include:
· Compensation and benefit programmes
· Stock ownership and profit sharing
· Recognition programmes
· Idea collection schemes linked to rewards for idea generation
· Long service and good performance awards
Activities to develop the culture of the
organisation
Giving employees a feeling of belonging is crucial in creating a thriving
organisation that people feel committed to and others want to join. Common
approaches includes:
· Clear and humane HR policies
· Pro-social corporate objectives and
Corporate Social Responsibility
· Equal opportunities policies and practices
· Initiatives to maintain the quality of worklife and a balance between
personal/professional lives
· Developing a safe, clean and inspiring work environment
· Demonstrating a commitment to employees’ well being
Team building activities
Culture-building activities are great for generating a feeling of belonging, but all
organisations are build out of smaller teams who can get on and work together.
Popular approaches include:
· Small team recreational activities, such as bowling, skating, trips to the cinema
(or the pub!)
· Social activities, such as family gatherings and barbeques
· Community outreach activities such as volunteering and fund-raising.
Leadership development activities
A great organisation needs not just a great leader,but people with leadership skills.
This stimulates good performance, boosts creativity and eases succession planning.
Good practices include:
· Effective Leadership
· Effective Performance Management
· Fair evaluation of performance
· Empowerment through effective delegation
· Coaching and mentoring activities to give honest feedback by supervisors and
peers
· An open and transparent culture to empower people and develop entrepreneurs
Employee retention inaction:
Sun Microsystems Employee retention becomes that much more critical in such a
virtual or global environment.Employee retention is imperative for an organisation
like Sun as they operate in virtual teams across the world:
At Sun the virtual nature is partly due to flexible working practises. While flexible
working arrangements are a plus for many employees and reduces facility costs for
the organisation, that flexibility comes with some downsides like; isolation,
loneliness and an increase in personal distractions Isolation, especially when paired
with the demands of work in an increasingly competitive environment, can wear
down the sense of connection, commitment and excitement about any job. Thus a
critical challenge for managers of virtual teams is how to keep remote employees
engaged.
At Sun, the concept of employee retention starts right from the top:
· Scott McNealy, the CEO, interacts with Sun employees through WSUN, a forum
on Sun’s intranet. He uses this to sustain an active an ongoing dialogue on the
corporate goals and direction. Through this interactive on-line resource he also
solicits their feedback and opinions
· Other senior management members like Jonathan Schwartz, the COO, engages
with employees on technology directions through his personal blog
· Business Unit Heads and Executive Vicepresidents have a target of holding six
‘town halls’ with employees every year across the globe
· At the country level, Senior Management is tasked with constantly engaging
employees through various forums, communication media and events to build
excitement and passion including some that also reach out to the employees’
families.
Origins
Employee Retention is the extent to which workforce commitment, both emotional
and intellectual, exists relative to accomplishing the work, mission, and vision of
the organization. Retention can be seen as a heightened level of ownership where
each employee wants to do whatever they can for the benefit of their internal and
external customers, and for the success of the organization as a whole.
Studies by Consultants
Engaged employees care about the future of the company and are willing to invest
the discretionary effort.Engaged employees feel a strong emotional bond to the
organization that employs them. (Robinson)
Emotional attachment
Only 31% of employees are actively engaged in their jobs. These employees work
with passion and feel a profound connection to their company. People that are
actively engaged help move the organization forward. 88% of highly engaged
employees believe they can positively impact quality of their organization's
products, compared with only 38% of the disengaged. 72% of highly engaged
employees believe they can positively affect customer service, versus 27% of the
disengaged. 68% of highly engaged employees believe they can positively impact
costs in their job or unit, compared with just 19% of the disengaged. Engaged
employees feel a strong emotional bond to the organization that employs them.
This is associated with people demonstrating a willingness to recommend the
organization to others and commit time and effort to help the organization succeed.
It suggests that people are motivated by intrinsic factors (e.g. personal growth,
working to a common purpose, being part of a larger process) rather than simply
focusing on extrinsic factors (e.g., pay/reward).
Involvement
Eileen Appelbaum and her colleagues (2000) studied 15 steel mills, 17 apparel
manufacturers, and 10 electronic instrument and imaging equipment producers.
Their purpose was to compare traditional production systems with flexible high-
performance production systems involving teams, training, and incentive pay
systems. In all three industries, the plants utilizing high-involvement practices
showed superior performance. In addition, workers in the high-involvement plants
showed more positive attitudes, including trust, organizational commitment and
intrinsic enjoyment of the work.The concept has gained popularity as various
studies have demonstrated links with productivity. It is often linked to the notion of
employee voice and empowerment.
Commitment
It has been routinely found that employee retention scores account for as much as
half of the variance in customer satisfaction scores. This translates into millions of
dollars for companies if they can improve their scores. Studies have statistically
demonstrated that engaged employees are more productive, more profitable, more
customer-focused, safer, and less likely to leave their employer.
Employees with the highest level of commitment perform 20% better and are 87%
less likely to leave the organization, which indicates that retention is linked to
organizational performance. For example, at the beverage company of
MolsonCoors, it was found that engaged employees were five times less likely than
non-engaged employees to have a safety incident and seven times less likely to
have a lost-time safety incident. In fact, the average cost of a safety incident for an
engaged employee was $63, compared with an average of $392 for a non-engaged
employee. Consequently, through strengthening employee retention, the company
saved $1,721,760 in safety costs in 2002. In addition, savings were found in sales
performance teams through retention. In 2005, for example, low-retention teams
were seen falling behind engaged teams, with a difference in performance-related
costs of low- versus high-retention teams totaling $2,104,823.3 (Lockwood).
[edit] Life insurance industry
Two studies of employees in the life insurance industry examined the impact of
employee perceptions that they had the power to make decisions, sufficient
knowledge and information to do the job effectively, and rewards for high
performance. Both studies included large samples of employees (3,570 employees
in 49 organizations and 4,828 employees in 92 organizations). In both studies,
high-involvement management practices were positively associated with employee
morale, employee retention, and firm financial performance. Watson Wyatt found
that high-commitment organizations (one with loyal and dedicated employees) out-
performed those with low commitment by 47% in the 2000 study and by 200% in
the 2002 study.
Productivity
In a study of professional service firms, the Hay Group found that offices with
engaged employees were up to 43% more productive.
The most striking finding is the almost 52% gaps in operating incomes between
companies with highly engaged employees and companies whose employees have
low-retention scores. High-retention companies improved 19.2% while low-
retention companies declined 32.7% in operating income during the study period.
For example, New Century Financial Corporation, a U.S. specialty mortgage
banking company, found that account executives in the wholesale division who
were actively disengaged produced 28% less revenue than their colleagues who
were engaged. Furthermore, those not engaged generated 23% less revenue than
their engaged counterparts. Engaged employees also outperformed the not engaged
and actively disengaged employees in other divisions.[1] It comes as no surprise,
then, that engaged employees have been statistically linked with innovation events
and better problem solving.
Generating retention
Recent research has focused on developing a better understanding of how variables
such as quality of work relationships and values of the organization interact and
their link to important work outcomes.84% of highly engaged employees believe
they can positively impact the quality of their organization's products, compared
with only 31 percent of the disengaged. From the perspective of the employee,
"outcomes" range from strong commitment to the isolation of oneself from the
organization. The study done by the Gallup Management Journal has shown that
only 29% of employees are actively engaged in their jobs. Those "engaged"
employees work with passion and feel a strong connection to their company. About
⅔ of the business units scoring above the median on employee retention also
scored above the median on performance. Moreover, 54% of employees are not
engaged meaning that they go through each workday putting time but no passion
into their work. Only about ⅓ of companies below the median on employee
retention scored above the median on performance.
There is also overlap between this concept and those relating to well-being at work
and the psychological contract.http://en.wikipedia.org/wiki/Employee_retention - cite_note-konrad-3
* Employee clarity of job expectations - "If expectations are not clear and basic
materials and equipment not provided, negative emotions such as boredom or
resentment may result, and the employee may then become focused on surviving
more than thinking about how he can help the organization succeed."
* Regular feedback and dialogue with superiors - "Feedback is the key to giving
employees a sense of where they’re going, but many organizations are remarkably
bad at giving it."What I really wanted to hear was 'Thanks. You did a good job.'
But all my boss did was hand me a check.
• A focus on data gathering rather than taking action may also damage
retention efforts. Organizations that survey their workforce without acting
on the feedback appear to negatively impact retention scores.[2
Employee Retention, Employee Retention & Talent Management Strategies
The issue of employee retention is once again becoming a major issue for many
businesses. The talent shortage that plagued employers at the height of the
economic boom has not vanished. It may be off the radar now, but it is returning
strong as ever.
What are you doing to improve employee retention?
Successful organizations realize by having an effective employee retention plan
will help them sustain their leadership and growth in the marketplace. Good
organizations make employee retention a core element of their talent management
strategy and organizational development process. Those that fail to make employee
retention a priority are at risk of losing their top talented people to the competition.
Chart Your Course International helps organizations design employee retention
programs to recruit, manage, retain and engage the best workforce available by
providing cutting-edge talent management strategies, hiring assessments,
consulting, employee retention training and talent management programs.