“Employee Retention” – Prof.M.S.Rao

“Profits are related to customer retention. Customer retention is related to employee retention. Employee retention may or may not be related to benefits, but benefits could be part of the package that causes people to stay and -- by the way -- engage in discretionary effort. ... If you go into any organization that's customer-facing, you can tell in five minutes when the employees are feeling abused. They retaliate on the customers.” - Jeffrey Pfeffer

One fine day your key employee tells you that s/he is leaving for better opportunities elsewhere then what will be your position. What will be the status of your projects and how can you respond to clients whom you have committed deadlines. It sounds strange right! Therefore, do you think that it is essential to empower your employees and motivate them to retain by all means so that your projects sail smoothly and you can ensure organizational excellence and effectiveness.

Employee Retention:

Employee retention is all about retaining the employees for longer time within the organization through both financial and non-financial means by finding out their aspirations and expectations. It is essential for both the employers and employees as the former don’t get the work disturbed and the latter build credibility and credentials in their CVs. In fact, it is win-win for both the employers and employees.

Employee retention has become a thorny issue for employers. There is no fixed formula for employee retention as people are different and their emotions, egos, needs and expectations are different. It is certainly a challenging task to retain the employees. The days of ‘carrot and stick’ policy don’t work anymore. People want to have freedom in every aspect and even about their work-life balance as well.
Employee retention involves hiring the talent, positioning them in the right slots, valuing their contributions, motivating them both through financial and non-financial means, keeping them in the career pipeline through training and development and offering them challenging roles and responsibilities and finally making them accountable and productive.

Organizational Challenges:

Let at look at few statistical findings related to employee retention.
The average cost to recruit and train one employee is estimated at 2.5 times an employee’s salary.
It costs $678,000 in recruiting, training and missed sales opportunities every time a SAP sales person quits!
U.S. businesses spend over $200 billion annually recruiting and replacing their employees.
Lot of time is lost when trained employees leave organizations. As the saying goes, “Known devil is always better than an unknown angel”, the known, proven, tried, tested and trusted employee is far better than the potential employee. Who knows the potential employee might prove worse than the existing employee.
Employee retention is a Herculean task where employees are getting sensitive and leaving the organizations for silly reasons. The employees, in general, are more demanding and it has become a big challenge to meet their expectations and aspirations.
When the employees leave, the company loses not only the skilled and knowledgeable employees but also the precious information about the projects and the company’s sensitive information.

Why Do Employees Leave?

1. Employees don’t leave organizations but they leave bad bosses.
2. They leave when there are no career opportunities in the present organization.
3. When their services are not recognized and rewarded.
4. Organizational politics take a toll where few people who are close to top management find themselves insecure and they carry forward information and create problems for talented employees.
5. When there is no adequate compensation.
6. When they find it difficult to maintain work-life balance.

What Do Employees Want?

Employees look for attractive compensation and right work ambience. They look for challenging roles and responsibilities. There must be more scope for learning and development. They like to work in professionally run organizations that are free from organizational politics having flat structure. They look for respect, recognition and reward with a boss who can encourage risk taking and who can handhold them through thick and thin. They expect clarity in their career growth and advancement with a proper career lay-out. And above all, they want to work with fun and there should be joy at the workplace. Precisely, workplace should not become pressure but must become pleasure to work with.

Myths and truths of Employee Retention:

We shall look at few myths and truths about employee retention.

Myth: Employees look for money.
Truth. Employees basically look for challenging roles and responsibilities.

Myth: Employees leave organizations.
Truth: Employees don’t leave organizations but leave bad bosses.

Myth: Employees leave for better opportunities elsewhere.
Truth: Employees leave when is no scope for learning and development. When there is no career growth within the organization and due to personal reasons.

Retention Strategies:

“Compensation is only one of many factors in the recruitment/retention equation.” - Paul Schwartz

• Hire the right talent. Take proper precautions so that right talent comes in and stays within the organization for longer duration. It avoids agony for the employees and saves precious time, money and energy involved in recruiting and training the precious manpower.
• Provide them regular feedback for their improvement.
• Inform them about their career status and where do they stand in the career pipeline within the organization.
• Keep the morale of employees always high.
• Conduct regular get-togethers and picnics where employees break their traditional hierarchical positions and gel well with others and develop fraternity and loyalty towards the organization.
• Employees can be retained through both financial and non-financial motivation. Employee Stock Options (ESOPs) falls in the category of financial motivation where the employees are offered with shares to encourage and make them feel that they are the part of the company. However, it must have a lock-in period to realize and encash the shares. Non-financial motivation like job rotation, job enlargement and job enrichment motivate the employees. Job rotation is all about rotating from one job to another to widen the job skills and to have cross-functional skills and it takes the employees to higher positions quickly apart from breaking the monotony when they do the same job regularly. Job enlargement is another non-financial motivational aspect where the role of the employees are widened with challenging work so that they feel that their work is highly challenging. Finally job enrichment is another non-financial initiative where the employees are given higher designations for time being due to the absence of their superiors either due to sudden resignation or long leave.
• Companies should provide regular training and develop their precious resources as that motivate them to be loyal to their organizations. There should be emphasis on employee development and career growth.
• Employees don’t leave companies but leave because of bad bosses. Therefore, it is essential to train the senior executives and those who act as bosses to develop interpersonal skills and learn respecting precious human resources.
• Provide right organizational culture and climate.
• It is rightly said in HR circles that to keep employees retained in companies adopt ‘3Rs’ approach. 3Rs stand for respect, recognition and reward. It is essential to treat employees as assets and respect them. Recognize the hardworking people and reward them through both financial and non-financial means.
• Finally, provide inspiring leadership.

Conclusion:

Employee retention is no longer a tension as long as you know their pulse and attend and address them sympathetically and empathetically.

Recruitment and retention are two sides of the same coin for effective organizational excellence. People often think that with recruitment the major task of HR is finished. In fact, the real task involves retention where the hired manpower is motivated and kept ready in the pipeline.

Recession compelled employees to stay in organizations currently. Once the recession ends many employees will leave their current employers. It seems that there is lot of dissatisfaction among the workforce and they are compelled to stick to their jobs. Therefore, the employers must take precautions to retain their precious skilled manpower and prepare accordingly to avert any kind of organizational eventuality.

Treat your employees as assets. Don’t treat them as robots that are paid for delivering their goods. There are costs involved in hiring the talent and it is essential to retain the existing employees failing which leads to financial drain for organizations as well as intricacies involved in hiring fresh talent.

Employees don’t leave organizations for money. But they leave for other reasons beyond. It is essential to know what their needs as needs differ from person to person.

If you don’t love your employees you lose them. Therefore, decide yourself whether you intend to love them or lose them. To conclude, respect employees. Value them. If the employers handle their employees effectively then ‘employee retention’ is not at all a tension.