employee innovation retention

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Years ago, I worked for an organization with a turnover problem. And this wasn’t just an isolated issue—it affected a significant amount of the 700-strong workforce and created an incredible burden on the HR staff to manage the issue. Despite small efforts here and there, little was done to change the direction of the firm and it ultimately went under, unable to keep afloat amidst the constant turmoil.

Everyone knows that employee turnover is a problem, but just how much of an issue is it, really? Today we’re going to explore the far-reaching nature of turnover and what it means for your organization. Anecdotally, I know that undesirable turnover can harm team morale, reduce revenue, and hamper innovation. But the data supports this as well. According to an article on ERE, the impact of turnover depends on the career level of the employee.

  • For entry-level employees, it costs between 30-50 percent of their annual salary to replace them.
  • For mid-level employees, it costs upwards of 150 percent of their annual salary to replace them.
  • For high-level or highly specialized employees, you’re looking at 400 percent of their annual salary.

We know that this is a challenge, but I believe there’s an even more costly aspect of turnover that most organizations don’t examine: the impact on innovation.

Innovation Impacts

In 2014 Carnegie Mellon had some of the world’s brightest robotics minds working on its campus. These people were focused on the bleeding edge of robotics technology and their research could have created new breakthroughs and advancements in the use of robotic technology for the betterment of mankind.

But then they left. 

In a surprise move, Uber lured the scientists away and brought them into the fold. This not only caused a blow to the university—it also affected each of us. The research that was performed at Carnegie Mellon would have certainly been published in academic journals and shared with the world, forming the basis for new breakthroughs in robotics and other fields. The research they complete at Uber? It’s going to be tucked away in a proprietary database for the benefit of the company’s pursuit of a robotic car fleet.

So, what does this have to do with you and your organization?

While you might not have a team of PhD-level robotics experts on staff, you do have a set of smart, intuitive professionals within your organization that are constantly creating, innovating, and experimenting. They don’t have to be on a formal team or even in the same hierarchy, but they are still pursuing new ideas and opportunities just the same. If an opportunity arises to serve customers in a new way or develop a new product/service, the people with that mindset are often the originators.  

In fact, I’ve met quite a few HR leaders that fit this description. This comes from the fact that we as HR staff have the opportunity to see across functional and organizational lines, often discovering new methods and options for performance improvement.

Wherever this talent resides, the question remains: what do we do if one of these people leaves?

We know that it’s painful to have people depart. The statistics linked above point to some of the challenges this creates, and yet the research looks mainly at the impact today, not for the future.

I’m arguing that we should see employees as appreciating assets, with a higher future value.

While it’s challenging to quantify the value of innovation and to be able to predict what people are going to create, it’s fairly easy to see that the future value of one of these individuals is clearly higher than the cost of their wages and benefits today. And that’s my position on this topic: the long-term impacts to innovation will harm the organization much more than the loss of the person performing the job function today.

Consider this example. In the past I served as the HR Director for a global government services firm. One of our employees, a software engineer, earned approximately $70,000 per year. If that person left, we would have lost that “position,” which would have required time, effort, and resources to backfill for the unique skill set. Let’s estimate that total cost to be $100,000. What’s interesting is the $100,000 figure is actually a relatively minor amount when compared to the overall value of the employee and her innovative ideas.  

One day on a whim that employee developed a new method for licensing hardware and software to the government. That bloomed into a multimillion dollar product line and became a steady source of organizational revenue. However, if we only looked at the “normal” cost of turnover, we would have seen only an impact of $100,000, not several million dollars.

Want to Know the Secrets to Employee Retention?

We have defined the problem, but what about the solution? In the upcoming session I’ll explore more than 20 ways to impact retention ranging from the simple steps to take today to the radical changes that separate good organizations from great ones. The ideas include:

  •         Gamifying retention
  •         Changing the ownership mentality
  •         Using an executive “save” strategy
  •         And more!

I hope you’ll join me for this session so we can make employee retention a positive differentiator for your business. Click this link to register and join me at the upcoming session: How Losing Your Best Employees is Killing Innovation.

 

Hello, friends!

This coming week I will be talking with some companies in my area on behalf of my local SHRM chapter (North Alabama SHRM). This topic will be focused on retention, and I wanted to see if you had any insights, tips, or other considerations. I will pull any suggestions together and put them into the presentation for the attendees to benefit from your point of view.

So, what do you say? Care to share some of your thoughts on employee retention? If you’re not sure where to start, here are a few possible discussion questions. Feel free to pick one to answer if you don’t already have specific suggestions…

  • Should organizations do regular “stay” interviews? Why or why not?
  • What can exit interviews tell us about retention/turnover?
  • What should our target be as far as retention goes? Is 100% reasonable? If yes, why? If no, why not?
  • How does recruiting play into retention efforts? What about training? Benefits? Other focus areas of HR?
  • What does the average employee tenure say about your company’s retention efforts?
  • What is the best way we can approach retention strategically? By focusing heavily on the relationship between manager and employee, by focusing on a culture that makes people want to stay, or something else?

Thanks! Looking forward to seeing what you guys have to share. I know the attendees of the event will really appreciate your insights. As always, if you have ideas or requests for other topics, feel free to reach out!

I’m at the SHRM Talent Management Conference in Nashville this week. This morning I attended a session on improving employee retention by Linda Ginac at TalentGuard. Here are some thoughts on that topic…

Turnover is real

With average employee turnover by generation standing at 2 years (Millenials), 5 years (Gen X), and 7 years (Boomers), turnover is a real issue for organizations everywhere. According to a recent study, the average turnover in the US is 15% with just over 10% of that being voluntary/preventable.

So, what are you going to do about it?

[Related: Check out this employee retention video]

Each employee is more than their job title

Continue reading

Recently I was talking with someone about employee retention techniques and how to get people to stay at your organization. At first I gave a rote answer based on my gut, but after thinking on the topic for a while I realized there were some pretty significant pieces to the puzzle. I would hazard to guess that the multitude of options explains why there isn’t a magic bullet for fixing retention problems overnight.

In the video below I talk through some of the key employee retention techniques and give a reminder that not all turnover is bad. In fact, we measure two separate items there: turnover (any staff leaving over time for any reason) and retention (voluntary turnover). Check it out:

Employee retention techniques video

Employee retention video notes

Here’s the short list of important items:

  • Respect-for the people and their work
  • Fit-culture fit, baby!
  • Basics-pay/benefits are a basic must
  • Challenge-offer a challenging, growth-oriented environment
  • Professional development, or mentoring for higher level-give people something more than a job
  • Connect with mission-have a mission worth buying into
  • When in doubt, ASK  your people what they want from you
  • Not all turnover is bad!
  • Retention vs. Turnover

Also, please don’t forget that I put together a free guide to employee retention that you can download, print, or share. Lots of great content in there from some excellent professionals in the industry.

What are your employee retention techniques? What has worked for you in the past?

Recently I received a copy of 7 Hidden Reasons Employees Leave by Leigh Branham to review. It was great timing, because I’ve had the “big picture” retention ideas floating through my head in preparation for the HR portion of a leadership retreat at work. This truly was a fantastic book with many great insights, and I can’t list them all here. I’ll hit on some of the high points that really got my blood pumping as an “in the trenches” HR pro:

  • There is a major disconnect with regard to how managers understand retention. According to the research, 89% of managers believe employees leave/stay for money; however, surveys show 80-90% of employees leave for reasons not related to pay (job fit, manager, culture, work environment, etc.)
  • In many companies exit interviews are handled by HR. Surely we’re using that opportunity to learn where our weaknesses are and how to manage them, right? Wrong! 42% of HR departments admit their exit interview program isn’t effective. Continue reading

Retention Management

Retention management is a responsibility that is pushed from HR to managers to executives and back again. As the ones closest to the action, supervisors can have a positive impact on employee turnover if they take the right steps.

“People leave managers, not companies.”
Marcus Buckingham in First, Break All the Rules

Whatever your turnover rate is, it could always be better. Especially when the estimated cost of turnover is 30-50% of the position\’s salary, and that can jump to 400% for highly specialized or senior level positions! There are many ways that you as a manager can influence this statistic. Don\’t believe me? Here are 11 ways to improve your retention rate.

  1. Feedback-providing regular, honest assessments of someone\’s work lets them know you care
  2. Regular meetings-take the time to be transparent about what you know
  3. Explanations of work-remind people of the end purpose/goal for the work they are performing
  4. Goals for the future-help your team members develop positive, challenging goals
  5. Work/life balance-when work and life come into conflict, don\’t make them choose between work performance and family
  6. Professional development-give opportunities to learn and grow; people appreciate the managers who challenge them to be better
  7. Ask for (and seriously consider) input/opinions-when they know you are honestly asking for input, they\’ll be honest with you
  8. Focus on strengths-give tasks based on strengths when possible; it gives people something to look forward to and ensures the work is being done well
  9. Serve them-servant leadership beats fear-based leadership every single time; if you\’d rather be feared than respected, it\’s time to hang up your manager hat
  10. Clear expectations-if you want something from them, make it obvious; hinting and beating around the bush just frustrates everyone involved
  11. Internal equity-treat your high workers well and challenge your low performers to get better; treating both parties the same is a recipe for disaster

If I had to boil that down to two short and sweet actions, it would be walk and talk. Get out of your office/cube and go see your people. Take opportunities to not only talk with them about what you know, but to ask them for feedback on your performance.

One question I often receive is “but what about my low performers, isn\’t that good turnover?” If we\’ve taken the time to put an employee through the disciplinary process and they still aren\’t turning around, then yes, there are sometimes no other options. But that is to be exercised only after you\’ve attempted activities like those listed above. It\’s a last resort, not a quick fix to a performance problem.

While we have a well-established process for performance appraisals, that annual/semi-annual conversation should be a restatement of the facts you both already know and understand. Neither party should be surprised during review time, so make sure you are regularly building in opportunities to provide two-way feedback. Your people will appreciate you for it!

Internal promotion is a valuable, yet underutilized, tool to engage employees and managers in the recruiting process, provide career growth, and save on costs associated with bringing in external talent.

As I alluded yesterday, the content covered at Hire Minds was astonishing. The first session was an interview/case study of Chipotle restaurants and how they use internal promotions and development bonuses as incentives to bring in great people and move them up through the organization as they grow. The examples below are pulled directly from that session content.

Reduce employee turnover by 64%

When they started promoting from within instead of looking for talent outside the organization, turnover for salaried managers dropped from 52% to 35%, and turnover for hourly managers dropped a whopping 64% (111% down to 47%).

HR pros often wonder if we should share succession plans with employees in case something doesn’t work out and it demoralizes them. However, in this case, all of the employees know that they are eligible for leadership positions if they are willing and able to put forth the effort.

Pay managers to mentor new leaders

As an incentive for managers within the organization to train the next generation of leaders, Chipotle offers people development bonuses of $10,000 for managers who bring someone up into a managerial position from within the ranks of the staff. Because they are rapidly growing and expanding into new markets, Chipotle is able to use these bonuses to lure seasoned veterans out to the “front.” Because the areas grow quickly, it offers the leaders multiple opportunities to earn the bonuses.

When asked by the audience how often the bonuses were paid out, he replied that Chipotle paid out over $1 million in people development bonuses in 2010. That’s significant! The bonuses are structured where the referring leader receives half up front, and half after 6 months of solid performance from the new manager candidate.

How to keep recruiters busy if you start promoting internally

Everyone in the audience laughed when a recruiter stood up and asked where his job was going if the company achieves its goal of 100% internal promotions into leadership positions. The speaker told us that since the recruiters are no longer spending their time sourcing candidates for management/leadership roles, they are working directly with store owners to develop better hiring practices for their hourly workers.

I’ve said it before–I’m a fan of internal recruiting (video) if it’s possible. Anyone else?