Insights on Excellence | "Insights on Excellence" Archive

Boosting employee retention and esprit d'corps

by Stephen Hawley Martin
for Virginia Business
January 18, 2007

Many companies today have a great deal of difficulty attracting workers and retaining them, and according to some projections, the tight labor market is likely to get more so. A few companies must replace up to 70 percent of their work force every year, and there are industries in which the average turnover rate is 30 percent. Why is this situation a serious problem? It can cost companies dearly in lost productivity and customer satisfaction.

Here's one example. Let's say a company has to replace about 300 employees a year. If each one earns $20,000 per year on average, the cost would amount to $1.8 million ($20,000 x 30percent = $6,000 x 300 employees = $1.8 million). That's a lot of money for which the employer gets absolutely nothing but headaches. And lost productivity and a big bill for Advil aren't the only downsides. Consider the tremendous drag this creates on the organization's quality of service. It takes time for newcomers to get up to speed. The more a person does a job, the more experience she has and the better she gets at it. The truth is that new people are likely to make mistakes because they don't yet know the ropes. High turnover creates a limited pool of talent for promotion and makes business continuity a real challenge.

In most cases, money isn't the primary reason people leave. According to one expert that I've talked to, difficult bosses and lack of empowerment are the top reasons employees give for leaving a job in the United States. People simply don't like serving at a boss's whim. And they don't like not knowing what's going on in the company and having the feeling they have no control over their lives. People spend a lot of time at work, so perhaps it's no wonder an agreeable and pleasant environment can be a major factor in keeping employees happy. Without one, they are likely to jump at the chance to hurry off to greener pastures. Then the management team members scratch their heads and wonder why.

Some may never find out. When the issue of employee retention is considered, management often focuses solely on why employees leave. Exit interviews, for example, are widely used. While there's nothing wrong with finding out why someone decided to go elsewhere, this can mean the statistics used to measure employee retention show only the negative side of the equation -- the number of people who leave and why. A more important question to ask may be, "Why do employees stay?" When it comes to boosting employee retention figures, understanding what employees like about working for a company can be a good place to start.

If the company is doing some things right, can these things be done even better? Can other attractive workplace offerings be added to what already exists? Making an organization "an employer of choice" in today's competitive labor market is a lot like positioning products so they will sell well. Plus, understanding the positive things about an organization from an employee's perspective helps management understand the types of employees they should be trying to attract.

Automating the employee scheduling system and putting it online is one move that may help make some businesses more attractive to workers. Software applications now exist that allow employees to go online and enter their names on the shift they wish to work. If tenured employees have first dibs, the system can be configured to grant those with seniority exclusive access to the process during a specified period of time. Workers can also register their preferences for working certain schedules. This communication allows the employer to be a better "fit" for the employee's work-life schedule.

As everyone knows, both parents work in many families, and there are more and more single parent households. It's no wonder a work schedule that conflicts with family needs can be much more than inconvenient. That is why a scheduling system that takes into account an individual's availability gives that employee a sense of control, and perhaps even a feeling of being respected. Earlier I mentioned that an autocratic boss is the biggest reason people give for leaving a job. It seems to me that not liking a boss may have a lot to do the boss expecting an employee to work at times that may cause difficulties.

-----------------------------------------------------

Stephen Hawley Martin is a former principal of The Martin Agency in Richmond and the author of more than half a dozen books including his newest, Lean Enterprise Leader: How to Get Things Done Without Doing It All Yourself. He is editor and publisher of The Oaklea Press, a book publishing business dedicated primarily to helping business executives increase productivity.