Author Archives: Ben

How Much Is Employee Turnover Costing You?

 

employee innovation retention

I will be presenting more on this topic at the HR Innovators Virtual Conference – 2 Days, 6 Education-packed sessions from top-rated speakers covering topics critical to success today, including, millennials and culture, creating meaningful workplaces, using social media to attract talent, and how talent loss affects innovation. Register Today! Space is limited.

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.

 

How to Scale Culture: Notes from #GDSummit

One of the scariest parts of having a great culture is the fear that it will shift and change in negative ways as the company grows. I can remember talking with Atlassian earlier this year, an organization that has an enviable culture and has leveraged it for incredible success. Every team at Atlassian has a person dedicated to defending the culture from poor fit hires, and these culture stewards can veto any hiring decision at any level. That’s an excellent way to help protect the culture as the organization scales up, but it’s not the only method for making it work. Today at the 2016 Glassdoor Summit, one presenter offered some amazing advice that is worth exploring.

Note: you can catch the livestream of the entire conference for free online. 

So far at the event we’ve heard from several speakers, including CEO of Glassdoor, Robert Hohman, about the value of transparency into culture. One quote this morning was particularly hard-hitting for me, and it came from Katie Burke, VP of Culture and Experience at Hubspot.

After talking about culture and the role of transparency, Katie threw out the quote above. I also believe the idea that acting on employee-generated ideas is one of the greatest ways to scale culture.

When we look at how culture is misrepresented in the media on a daily basis, it’s no surprise that HR leaders are craving a more concrete option for creating and scaling a culture that truly embodies the values and beliefs of the organization. Pick up any magazine or read any news article and you’ll quickly see that culture is purely about ping pong tables, free beer in the office fridge, and dog-friendly work spaces.

But as HR and talent leaders chase that elusive goal, they quickly become disillusioned and believe that this “culture” thing is just for the Googles and Ubers of the world.

As I pointed out in a recent Lighthouse blog around killing the traditional performance management approach, it’s critical for companies to point out culture in behavioral terms so that people have a concrete idea of what culture really means. But what about this concept of innovation, especially the type that is employee-driven?

Innovation, Engagement, and Culture

Innovation is not a new topic, but it’s one that is not often discussed in relation to the way we engage employees. The people throughout the organization are closest to the work, and they often have the best ideas for how to innovate and create new value. Therefore, innovation can be used as a valuable metric of engagement.

How many employee-generated ideas do you implement in a given year? One? One hundred? One thousand? Because it matters to your employees, and it's an opportunity to improve business performance.

Last year I read The Idea-Driven Organization and thoroughly enjoyed the book. The main concept was the power of listening to employee suggestions, giving them serious consideration, and implementing them when feasible.

It's fundamental, really. We all know that we should be listening to our employees. That goes without saying. However, the next step is actively soliciting input and then acting upon it. Instead of ignoring or fearing employee input, go the extra mile to encourage them to provide suggestions. The authors share a story that I think is a powerful reminder of this.

Employees at a bar had the opportunity to provide input on their jobs by submitting ideas. There were few, if any restrictions on the type of ideas, so one might expect them to pick some that made their work easier. But it turns out that was often associated with an improvement in the customer experience as well.

For instance, instead of having to carry a massive carton of empty bottles down to the cellar when it filled up, they installed a chute at the back of the bar for empty bottles to slide down to the cellar unassisted. This decreased the risk of workplace injuries from walking down stairs with heavy objects, improved customer service by not pulling away a service employee during a busy shift, and allowed bartenders to monitor and discard the empty bottles unassisted.

Even if nothing else came from these ideas other than the improved customer service results, it would be worthwhile. Yet it also improved the engagement levels of the employees by eliminating a non-value- added task from their daily work.

Another great example is from a former employer of mine. We used a “The Big Ideas Database,” which is a grandiose title for a spreadsheet. Any employee could share an idea through the web form and it would be considered by leadership for implementation.

Many of the ideas were actually acted upon. Some were quite minor (larger garbage bags in the break room), but others were considerably more important (repurposing/licensing a piece of software led to an additional $2 million in sales annually). Employees were actually excited about sharing ideas via the platform as a way to drive innovation and continuously serve customers better.

And, as with the previous story, it drove their engagement as well.

Want to create a culture of innovation and high performance? Focus on seeking out employee feedback and acting upon it. It’s powerful fuel for organizational performance and can be a significant competitive advantage if implemented properly.

Does your organization encourage employees to share ideas? Have you ever considered the effect on engagement or culture when an employee’s idea is implemented? 

Two Employee Engagement Secrets Nobody Ever Mentions

It seems that we can't turn around today without having a conversation that touches on employee engagement. Yet despite all the attention, it hasn't really moved the needle. In one graphic (click through the link below to explore), pulled from Google Trends, you can see the level of interest in employee engagement for over ten years.

The interest level peaked in 2016, and if the trend continues, it will expand beyond its current levels by the end of the year. But to what end? Gallup's regular research into engagement points out a fairly dismal picture, and companies are trying to improve this measure to no avail.

I'm going to offer two answers to this problem that not only illuminate the issue, but give you some options to consider as you try to combat the pervasive issue of disengaged employees.

  1. Engagement is not a program. It’s a long-term, intentional set of practices.
  2. Engagement is not an outcome. It may lead to outcomes, but it shouldn’t be the end goal in itself.

Click here to read the rest of the article on the PeopleStrategy blog

Recruiting Analytics, Ownership, and Accountability (New Podcast)

Today the second episode of We’re Only Human aired on the HR Happy Hour Podcast Network. The show is focused on recruiting analytics, owners, and accountability. My guest for this show is Kristina Minyard, the Senior Talent Manager at Ignite. During the show we covered some of the interesting aspects that separate staffing and corporate recruiting as well as some of the common challenges and opportunities for recruiting leaders.

Show Notes

Episode 2: Recruiting as a Service

The We’re Only Human show was created in part to help showcase the personal aspects of the employment relationship, and recruiting pulls in a variety of opportunities to explore those interpersonal relations. Despite changes in technology and strategy, many organizations are struggling to find the right talent. Is it about picking the right tools, or is there a more fundamental issue at play with the hiring manager, recruiter, and candidate interplay?

In this episode of We’re Only Human, host Ben Eubanks interviews Kristina Minyard, Senior Talent manager at Ignite. The focus of the conversation encompasses the candidate experience, how to develop a partnership with hiring managers, and some radical thinking around ownership of recruiting metrics. Ben references the recent Lighthouse study around the Modern Measures of Success in Talent Acquisition which can be found at the link below.

Modern Measures Research:
http://lhra.io/get-report-barriers-talent-acquisition-measurement/

Kristina’s information:
Twitter: http://twitter.com/HRecruit
HR Pockets Blog: http://hrpockets.com

How to Get a Job in HR When You're Not Working in HR

Over the last week I've received more than half a dozen emails from people looking for their first foray back into the HR realm after making a move to a new city, taking time off for childcare/maternity leave, and other similar stories. It's a challenge, but this is easier than breaking into HR in the first place if you have some sort of track record to point to. Often, those early experiences (whether in HR or outside) can help us by illuminating the activities we don't want to do just as much as highlighting those thing we do want to do. Today I'm going to offer some practical tips and strategies to help those of you that are on the outside trying to get back into HR.

get a job in HR

The Local HR Group/Chapter

Let's talk about networking. What? You've heard of it? Well, good. It's a primary component of my advice for those people trying to break into HR. But I realized this week that I have a more radical view of networking than others. And no, not in the “annoy everyone around you all day every day” kind of radical view. I'm talking about the kinds of ideas and opportunities I create around me to find and connect with other smart people. Note: I hate talking about myself, but this is a good story that illustrates the point. If you have a good story, please leave a comment on this post so others can learn from your example as well!

When I was getting into HR back in 2009, I was much more shy than I am today. I didn't have anything of value to offer the HR community. I was just one of many recent grads with a degree and a job that didn't fit my long-term goals. So I went to my local SHRM chapter (CIPD for those of you across the pond).

Yes, this is a common step for many people. But what happened next is not.

Instead of going to events and trying to meet people, I decided to make people want to try to talk to me (remember, super shy here). I emailed the webmaster for the local chapter and asked if there was a way to help with the website and other duties. He readily agreed, and I started attending board meetings with a small group of smart, connected individuals in the local community.

Because I was a board member, the others quickly got to know me and my credibility grew. And I started connecting with others in the chapter over time.

About a year after I started volunteering one of the board members had a job opening. It was a stretch opportunity for me, but because she got to know me through my volunteer work, she knew I would be a good fit.

And then I stopped, gave up the whole networking thing, and forgot about it forever.

Heh, not really.

The next year, I decided to do something that nobody had done before in the local chapter. I started an HR book club as a way to connect to like minded individuals, learn some lessons, share some expertise, and read plenty of books.

Through the book club, I forged stronger relationships with some of the people I already knew, and I also extended my reach to others in the chapter that were interested in developing themselves through books. That year-long experience was a lot of fun, and I still talk regularly with one of my friends that I made in the group.

There have been other initiatives within the chapter I have participated in, but those are some of the ones that stick out as particularly innovative.

Find an HR Technology Vendor

This is another option that is completely different from pretty much anything you've ever been told, but it's worth a shot (especially if you're in or near a large city). HR vendors sell technology to companies, but their primary audience is HR leaders. I think approaching a vendor with an HR degree, certification, or background would make you more valuable than someone just coming off the street with no knowledge of HR, recruiting, and those aspects of the business.

The caveat here is that you're probably going to have some level of technology savvy to pull it off. I'm not saying you need to be a code jockey, just that you can use technology and find your way around without a lot of fumbling and help.

There are providers across the world that offer these solutions, but if you're in areas like Boston, Chicago, San Francisco, Atlanta, etc. there are probably quite a few companies to pick from. If you want a list of company names to give you a head start, check out my How to Learn HR for Free post.

The Bottom Line

The one thing I want you to take away from this conversation is this: applying online, submitting resumes, etc. should only be 10-20% of your job search efforts, not 80-90% as is the norm. It will require you to get quite uncomfortable in many cases, but it's also the key to creating the career path that serves you best.

What other questions do you have around the topic? Anyone else have a great story of how you’ve made it happen? 

The Many Faceted Roles of HR within an Organization

There is a perception of HR that is so outdated that in many cases it is almost laughable. Most people see HR as simply that department that does the hiring, firing and training. After all, there is the accounting department to see to payroll so what is it that is so important about HR and is it really that important? Actually, if the average person knew all the tasks that HR does on a daily basis they would wonder why anyone would ever want to work in that department. Could it be that the advantages outweigh the disadvantages? Here is a look at the many faceted roles of HR within an organization.

Key Areas Where HR Interacts with Any Business

Continue reading →

Measuring the ROI of HR Programs is Critical: Here’s How Patagonia Does It

When I am teaching a class to prepare students for the PHR/SPHR exams, one of the things I repeatedly highlight is the need to tie HR practices back to business objectives. If we only see ourselves and our actions within the “bubble” of HR, then we severely limit the impact and value we can deliver to the business.

One method for bringing the value to the business is by evaluating the financial cost and determining the return or value of a specific program. I know, I know, this involves people, which makes it notoriously difficult to measure. But you don’t have to get crazy about it. There are ways to pull it off.

Measuring Value

I have a friend that works for a company that does satellite mapping. One of the company’s ongoing projects involves supporting large retailers. The satellites take periodic photos of the retailers’ parking lots, and the extent to which the lots are filled with vehicles is used to predict sales for the quarter.

I don’t expect any of us to go to that level to measure the impact of HR programs. :-)

However, the ability to determine a full ROI requires thinking outside the box a bit. We need to be able to take a big picture view so that we can truly evaluate the impacts on the business. In talking with HR leaders at organizations both large and small, the best way to explain this is through a good use case. I read about the example below from Patagonia and knew I needed to share it here.

Patagonia Case Study: On-Site Child Care

on site childcare new mothers

Check out the data below, emphasis mine on the key data point.

Because child care benefits are an important recruitment and retention driver for working parents, one-quarter of organizations (26%) allowed employees to bring their children to work in a child care emergency. Although this benefit has remained consistent since 2013, it decreased significantly from 32% in 2012. On the other hand, there has been an increase over the past year in the percentage of organizations offering a child care referral service, from 9% to 16%, and 2% allowed parents to bring their babies under the age of 1 to work on a regular basis.

The above-mentioned benefits, which help the employee at a minimal cost to the organization, were more commonly offered than costlier benefits such as access to backup child care services (3%), subsidized child care program (4%) and nonsubsidized child care center (3%). The least common child care benefits are becoming even scarcer. The prevalence of subsidized child care centers (2%) decreased from 4% in 2012 and 9% in 1996, and consortium child care centers went from 1% in 2012 to just a fraction of a percent.

Source: 2016 SHRM Benefits Study

The use of company child care centers is dropping. I believe this is due in part to the difficulty of showing an ROI on these programs. In many cases, HR leaders are not trained or equipped to prove the value of certain benefits, like these, and they go on the chopping block any time there are budgetary constraints that affect the offerings companies can deliver.

Bucking the trend, Patagonia is not only providing on-site child care, but it plans to expand the coverage to even more employees in the coming year.

To support our families, Patagonia provides company-paid health care and sick time for all employees; paid maternity and paternity leave; access to on-site child care for employees at our headquarters in Ventura, California, and at our Reno, Nevada, distribution center; and financial support to those who need it, among other benefits. In particular, offering on-site child care, we believe, is the right thing to do for employees, working parents, and the life of the workplace.

However, a reasonable businessperson might ask, “What does it cost?” It's expensive if you offer high-quality care and subsidize your employees' tuition—but not as expensive as you'd think.

Source: Fast Company

This is where the conversation gets interesting. In the article, the CEO of Patagonia explains the wide variety of ways the program’s costs are recouped for providing child care support:

  • Tax benefits: 50%
  • Employee retention: 30%
  • Employee engagement: 11%
  • Total recouped cost: 91%

But that just takes hard costs into consideration, not even bothering with any other elements that might be possible to tie in. And it might be undershooting the mark in terms of overall returns.

We're not alone. JPMorgan Chase Bank, N.A., has estimated returns of 115% for its child-care program; global business consultant KPMG found that its clients earned a return on investment (ROI) of 125%.

There were two statistics from the conversation that I particularly liked, because they help to illustrate the true value of this kind of program.

1. For the past five years, Patagonia has seen 100% of moms return to work after maternity leave.

This is incredibly rare. I don’t have any stats to back it up, but I’d say a sizable portion of the “new mom” segment is still choosing to stay home with the baby instead of going back to work. Companies lose a lot of great talent by not having policies and philosophies that support this critical segment of the population.

2. For the past five years, turnover among Patagonia employees who use its child care program is 25% lower than in its overall workforce.

This was wrapped into the “retention” calculations above, but it’s still a great reminder. When HR pros look at turnover data, it’s often cut by tenure, job, manager, and other similar factors. What about looking at it by benefits, as Patagonia has done? By seeing the impact of this kind of program on the bottom line in terms of employee retention, it becomes an even more valuable asset to the company for recruiting and ongoing engagement.

Statistically only two of you reading this out of every hundred people are actually going to be working at a company with on-site childcare, so that’s a narrow conversation. But I want you to think about how Patagonia is able to tie the value of its program back to various pieces of the business–you can do this with your own leave programs, benefits, perks, etc.

Break out the spreadsheet. Dig into the data. Prove the value.

Does your company have a benefit that is special to the employees? Do you know what impact, if any, it has on the employee population or the bottom line?Â