Competition for talent is on the increase, and many companies are going to great lengths to retain their best employees. Benjamin Chaminade looks at the factors behind retention and examines how companies can get started on an effective retention strategy
Competition for talent is on the increase, and many companies are going to great lengths to retain their best employees. Benjamin Chaminade looks at the factors behind retention and examines how companies can get started on an effective retention strategy
While employee retention is an important issue, important enough for 62 per cent of participants in a recent TMP survey to create a tailored retention program, it is still being confused with remuneration strategy. According to the last Australian Institute of Management’s national survey, large companies recorded higher annual salary increases this year than last, of between 4.3 per cent and 4.7 per cent.
But retention is not a money matter. It is a voluntary move by the company to create an environment which engages employees for the long term. This attachment relationship is durable and constant and links the employee to their company, by common values and by the way in which the company responds to the needs of the employee.
Creating a retention strategy means placing the employee’s needs and expectations at the centre of the company’s long-term agenda in order to ensure the professional satisfaction of the employee and create a trusted relationship. In this stable relationship, the employee stays in the company by personal choice based on free will and considered decision.
The time to implement the strategy, which should identify disengaged employees and motivate the engaged ones, is not when employees express the first signs of disengagement. The retention management system includes an element of seduction, drawing the employee to the company brand, so should actually be timed with recruitment, induction and day-to-day management.
What retention is not
A technique to force someone to stay. Retention does not mean keeping an employee by obliging them to stay so it should not be costly for the company. Retention means encouraging the employee’s free choice to maintain his relationship with the company.
All the nuance is here. The employee has to stay with the company because he or she voluntarily wishes to invest himself in the company and not because he couldn’t receive greater advantages somewhere else or because the job market is tight.
A blind and disproportionate action. Retention is not about keeping everyone all the time at any cost. This would require too much money and energy. Certain criteria must be introduced, such as measuring competency, performance and engagement in order to know which employees to keep. Your methods must depend on the level of the commitment of the employee. Several retention strategies exist requiring more or less time and action from management.
A remuneration policy. The most commonly used method of retaining employees is without doubt remuneration, with different systems of financial or non-financial bonuses that become part of a “global remuneration package”. The list is long but it includes bonuses, super and non-super benefits, and stock options.
But policies that are solely based on the accumulation of financial bonuses don’t differentiate between employees and can introduce an “auction” phenomenon that is difficult to control. Contrary to what many managers still think, putting in place a compensation and benefits package is not a retention strategy.
As surveys suggest, retention is not only based on a minimum material or financial advantage offered to an employee. The satisfaction created by receiving a bonus or any other financial advantage is quickly forgotten and has little impact on the retention capacity of a company. The danger of such practices is to make the employee more motivated by the reward than the quality of his work and therefore forget the real goal of what we want to achieve.
A means to keep your employees for life. An optimal period of retention exists, which varies according to the department in the company and the employee’s functions. Companies try to keep employees until they reach the desired high-level position, but often that leads to an increase in salary costs and to the promotion of employees based on the length of their tenure rather than on their competence, Occasionally, jobs are then created to sideline an employee or they are promoted to a level quite beyond them.
A way to keep all your employees. Retention does not mean holding onto “freeloaders”– employees who haven’t demonstrated strong performance for a long time. That is inertia or dependence, which is contrary to what a company should look for. It is not a question of retaining an employee who was poorly recruited and has also demonstrated his incompetence by the end of the trial period.
A method to automatically inspire loyalty. While companies hope their strong retention programs will build loyalty in an employee, loyalty is actually a trait that is – or isn’t – present in the employee’s personality. Honesty and integrity either exist or they don’t, so that by and large, a company can only, in a majority of employees, help to create a sense of an affiliation.
The retention questionnaire
Take some time to answer the following questionnaire in order to judge the capacity of a your company to keep its employees engaged. The following questions are a good indicator of your commitment to retention.
My company is well regarded by people looking for work and employees say flattering things about their job.
I have an employee-centric culture that values internal customers as much as external ones.
My employees have ample opportunity to understand how their work contributes to the bottom line of the company.
I provide my employees with opportunities for growth and development.
I provide a comfortable, safe work environment and I have a good reputation in the community.
My leadership is accessible and provides vision and direction.
I care for the wellbeing of my people by making employees’ lives easier and less stressed.
I know how much it costs me to replace every employee who resigns/needs to be replaced.
I know the reasons for these departures and the difference between an avoidable and an unavoidable departure.
I know why employees stay or leave my company and what keeps them engaged.
The rate of turnover in my company is lower than the average in the industry.
I spend more time and money on my retention program than on recruitment.
Salaries and bonuses are linked to performance or the development of competences.
Our managers are trained to select, identify, guide, coach, reward and retain their people.
I know my job forecast and professional development plan for the next two years.
My employees are aware that they are an ‘asset’ in which one needs to invest and not a ‘cost’ to reduce.
I use a job satisfaction or engagement survey in order to understand the requirements of my employees.
I know who the talented employees in my company are.
I think that my company does what is needed in order to retain its valuable employees.
I regularly measure the effect of my retention strategy.
How many did you tick?
Under 5/20: You are regularly in the job market and finding it increasingly difficult to attract staff. Either you are challenging established thinking that a salary and a job are enough to motivate your employees or perhaps you have turnover rate of zero, so retention is not a priority for your company?
But let’s take a moment to think about the following: For your birthday, which present from your partner or spouse would give you the most pleasure? A cheque or a gift appropriate to your hobbies? The cheque would be easy and practical, but is not what one would expect to receive from a close family member. In this case, why do you as a company systematically use this method? It is time to research the individual satisfaction and personalised retention?
Between 5 and 10: The retention practices of your company are largely inspired by the concept of ‘the carrot and the stick’ and are centred on financial reward and Friday drinks. But you recognise that this mass motivation, used to obtain better productivity has reached its limits. Retention is not about “one size fits all”.
Between 10 and 15: You are conscious that your employees are as important as your clients and that you need to concentrate on the former to assure satisfaction of the latter. You know what is at stake with retention and you are committed to answer your employees’ demands in a culture of engagement. Excellence is on its way!
Between 15 and 20: You are an employer of choice and everybody should know it.
Benjamin Chaminade is an expert in talent management and staff retention solutions, and has written several books on topics such as employer branding and employer of choice practices.
