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Employee Retention : How to keep your best
Your resource for creating a retention-rich organization culture that attracts, engages and builds lasting loyalty among today’s most talented employees.
In the present scenario, world is turning into a global village and the whole globe is reachable from any destination. In this small world even companies are reachable to the people and vice versa. And so their jobs are also easily accessible for everyone. In this situation, the biggest challenge for a company is to retain its workforce intact especially the Knowledge Banks.
All the companies are planning to increase their turnover every moment of time. While in all this workout of increasing the turnover they forget about their loss incurred by the resignation of employees and the expenses of hiring new employees (Hiring Cost, Training Cost, Productivity Loss etc.). This hiring of a new employee normally costs around 35% or more of the average employee salary. For example- let us consider average salary of an employee per year as Rs.20, 000, and then the cost of hiring a new employee and other expenses come around Rs.7, 000. If you have 2 employees resigning per month the cost comes to Rs.14, 000 and taking the same for 12 months comes to around Rs.168, 000, which is a direct loss from the turnover of the company. And after all this there is always a risk of getting a right employee for the right position with a right attitude.
If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee (He might be better and might not be). You require time to judge his capabilities and work nature. The loss is even graver if he/she is Your Knowledge Bank, this can bring your process to a stand still even. And above all these things, one resignation many a times triggers a chain reaction among other employees, leading to a negative effect.
For all these and many other reasons you need to retain your employees. For retaining your employees, you need to understand the requirements of the employees and at the same time should make them clear about the expectations of the company from them. It’s a general human tendency that each human being thinks himself as important and expects the same from the other side, so the company management should make their employees accountable for their respective jobs and make them feel that they are very important for the smooth processing of that process(At the same time create a backup for him). Care and importance are two things of which every human being is mad of.
Below mentioned are few of the tools for Employee Retention:-
1. Employee Reward Program- You can make a provision of Monthly or Quarterly Award (depending upon the budget) for the best employee, Awarding 2 or 3 best workers each month. The award can be in terms of gifts or money. If it is money then it should be divided into two parts, first part to be given with the next month salary and the remaining after 6 months. In this way he/she can be retained for 6 more months. These rewards shall be considered at the time of appraisal.
2. Career Development Program- Every individual is worried about his/her career. You can provide them conditional assistance for certain courses which are beneficial from your business point of view. Conditional assistance means the company will bear the expenses only if he/she gets an aggregate of certain percentage of marks. And entrance to that course should be on the basis of a Test and the number of seats to be limited. For getting admitted to such program, You can propose them to sign a bond with the company, like they cannot leave the company for 2 years or something after the successful completion of the course.
3. Performance based Bonus- The employee always comes to know about the profit of the company which is of course based on the strategic planning of the top management and the productivity of the employee. To get more work out of the employee, You can make a provision of Bonus. By this employee will be able to relate himself with the company’s profit and hence will work hard. This bonus should be productivity based. You can make sure that this bonus is not adding extra-pressure on the budget of Your Company and you can arrange this by cutting a part of the salary hikes and presenting it to the employees in the form of bonus.
4. Employee Referral Plan- You can introduce Employee Referral Plan. This will reduce your cost (charges of external consultants and searching agencies) of hiring a new employee and up to an extent you can rely on this new resource. On every successful referral, employee can be given a referral bonus after 6 or 9 months of continuous working of the new employee as well as the existing employee. By this you can get a new employee at a reduced cost as well as are retaining the existing one for a longer period of time.
5. Loyalty Bonus- You can introduce a Loyalty Bonus Program in which you can reward your employee after a successful completion of a specified period of time. This can be in the form of Money or Position. This will encourage the fellow employees as well whether they are interested in money or position, they will feel fascinated.
6. Giving a voice to the Knowledge Banks- First of all you should try to retain your workforce intact, as they are the intellectual asset of the company. And above that you can’t afford losing your knowledge banks. These are the people who stabilize the process. You can involve them in some of the decisions.
7. Employee Recreation- You should also let your employees enjoy in a light mood. You can take your employees to a trip or for an outing every year or bi-yearly. You can make use of this trip as well. You can start this trip with an opening note about the management views and plans, strategies etc. At the same time you can involve your top management into some of the fun activities as this will make feel the employees that they are very close to the management and everybody is same.
8. Gifts at some Occasions- You can give some gifts at the time of one or two festivals to the employees making them feel good and understand that the management is concerned about them.
9. Accountability- You should make each employee accountable so that he can also feel that he is as important as his manager. If he/she will be filled with this sense, he/she will seldom think of leaving the company.
10. Making the managers effective and easily accessible- You should make the management easily accessible so that the employee expectations can be clearly communicated to the top management, as it is impossible for the top management to reach each employee frequently.
11. Surveys- You should conduct regular surveys for feedbacks from employee about their superiors as well as other issues like food, development plans and other suggestions. This will make them feel of their importance and the caring nature of the company. Some of the suggestions might be of real good use for the company.
For a company, the workforce is like an intellectual property, both in terms of skills and money. A trained and content workforce can lead a company to new heights while a opposite one can hamper it badly. So, every resignation saved is every dollar earned.
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Comment by Saravana Kumar on June 12, 2010 at 3:15pm -
Nice One and thanks for sharing.
Regards,
Saravana
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Comment by Yashowardhan Chaturvedi on June 13, 2010 at 2:33am -
Would you care to explain what new did you tell us through this blog? In fact, I have quite a few doubts:
1. Employee Reward Program: you really believe that the employees would stay in the company to retrieve the rewards only? Is this not a way to entice the employees to stay 'for 6 more months' ONLY? And what are the chances that the employees would not leave immediately after receiving the remaining rewards?
2. Career Development Program: The bond will only make the employees run away from the 'Career Development Program' that you are intending to facilitate them with!
3. Performance based Bonus: The employee can never relate to the profits made by the company because the profits never reach the employees. Companies just dont want to spend a penny on their 'most valued resources' - the Human Resource. Further, cutting the salary hikes would only attract them towards the companies which give higher base pay!
4. Employee Referral Plan: you really think that by this scheme you can retain the old employees?! Care to explain how?!
5. Giving a voice to the Knowledge Banks: Good suggestion, however, isnt this the biggest challenge of the companies that the managers dont want to share their powers with anyone, howsoever important the person be or howsoever detrimental non-sharing becomes?
6. Gifts at some Occasions: giving gifts cant retain employees. I left my organization even when it gifted me with cashews on the new year and silver coin on Diwali!
7. Surveys?!?!?!?! How many people fill surveys?!
I would sincerely request you to please answer the above mentioned questions.
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Comment by Abhipsa Mishra on June 16, 2010 at 11:49am -
Thanks for your inputs.
Ya I would definitely help you to clear your doubts.
1. Employee Reward Program:
According to findings from a survey conducted by the Hay Group, a global management consulting firm, in conjunction with Fortune magazine's rankings of "The World's Most Admired Companies" and "America's Most Admired Companies:"
- 82% of these companies regularly reinforce their reward philosophy in communications with their employees, versus 64% of other companies
- 48% reported that their reward programs support efforts to retain their best talent, versus 28% of other companies
- 45% said that their reward programs allow them to attract the talent they need, compared with 25% of other companies
What these findings indicate is that employee reward programs may be a notable differentiation between the "Most Admired" companies, which embrace these programs, and other companies.
Not every employee reward program fits every company. It's important to develop rewards which will be valued by your particular employee group and which also do not interfere with the company's day-to-day operations. For instance, some companies offer incentive travel as part of their reward programs. This might be suitable for a large company with many employees, but not a great idea for a small business that can not afford to lose key employees for too many days beyond their already earned vacation time. On the other hand, shopping based rewards (e.g., "ABC Company" dollars provided on branded checks and redeemable at a various retailers or gift cards) are probably universally appealing to all size and categories of companies. Similarly, providing rewards of brand-name merchandise, which can be promoted in an "Employee Reward Program" catalog, is also suitable to a variety of businesses. Another option for some companies to consider is a pre-paid debit card operating on a major card platform such as VISA or MasterCard. This type of a reward offers businesses and their employees more flexibility.
For some businesses, customized employee reward and incentive programs are the best way to go. They enable a business to best reflect its corporate culture, nature of operations, employee demographics and any special selling or marketing campaigns that might be underway. These programs can have a company-specific name, logo, tagline, etc., giving full impact to the program and its role in demonstrating management's appreciation of employees.
Just as the type of reward offered is important so too are the different categories for recognizing employees. Depending upon the type of business (i.e., service, manufacturer, distributor, sales organization, etc.), companies can elect to reward employees for:
- Outstanding Attendance
- Achieving Professional Certifications
- Community-Service Involvement
- Mentoring/Training Other Employees
- Achieving High Levels of Quality Performance
- Sales Performance
- Customer Service/Satisfaction Performance
- Safety
We all have heard about "Employee of the Month or Year" awards, but what about "Peer-to-Peer Recognition," where other employees nominate a fellow employee for their contributions. Other award categories include:
- Advancing the Company Mission Award
- Championing the Company Culture Award [Like 'Value Champions' in HDFCSL]
- Customer Appreciation of Employee Award
- Length of Service Award
A pat on back may be also a reward at times.
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Comment by Abhipsa Mishra on June 16, 2010 at 12:12pm
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2. Career Development Program: Many people join certain companies because of these programs for your information. It helps them get into good universities aswell as motivate them to work for the company that led them to get such a kind of education. Employees run away from bonds is a fact but a bond that shapes up their career and pays them well plus they get recognized is no way a bad deal.
3. Performance based bonus: Bookham, the San Jose optical component firm that few days back announced an agreement to merge with its Fremont riva, Avanex, reported to the SEC today that the compensation committee of its board of directors last week approved the payment of performance-based bonuses to five of its top executives despite the fact that the performance goals on which they were based were not met.
The performance period in question was the six month period ended Dec. 27. For the executives to receive a bonus under the plan, the company was to achieve two “threshold metrics” for the period. First, the company had to achieve a minimum pro-forma operating income, excluding a host of charges for stock-based compensation, restructuring and severance charges along with costs related to the settlement of certain “legal actions”, along with certain non-cash accounting charges, such as amortization and goodwill impairment.
The second performance condition was that Bookham record a minimum in total revenue over the period.
It turns out that the compensation committee decided to take into account, after the fact, a number of other facters, including “the significant investment of time and efforts made by the management team to the achievement of (Bookham’s) strategic goals”, the execution of the merger agreement with Avanex, the “overall compensation levels of management”, along with the “overall” corporate performance.
Based on those criteria, the committee decided to give some bonus to all the officers, including $190,219 to Bookham’s chief executive, Alain Couder (pictured), who was paid $1.4 million in cash, bonus and stock in fiscal 2008, according to the company’s proxy statement, the same year it spent $2.3 million in severance charges to layed off employees.
There are may ways to skin the cat. Your employees would receive a competitive base salary, let’s say $60,000. In addition, you would put in place a performance based bonus plan which would accomplish several things:
1. Reduce your fixed salary expense from the $70,000 (or higher) level that they are requesting if you offered them the standard compensation package.
2. Align your employees’ interest with the company’s to grow their specific department’s revenue and increase their productivity.
3. Increase responsiveness and client satisfaction levels as your employees would now have a vested interest in attracting referrals to the company.
4. Foster a cooperative working environment with other departments as your employees will look to cross sell their services (i.e. organic and paid optimization or paid optimization and analytics).
As you said 'companies dont spend a penny on their most valued resources - the HR" this is high time alarm point for those companies.
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Comment by Abhipsa Mishra on June 16, 2010 at 12:25pm
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4. Employee Referral Programs: I have made it very clear in the write up. Go through it again if you could not understand. But still if you dont understand let me introduce you to some facts.
Practical ways to pump up employees so they introduce you to highly-quality job candidates who may potentially fill specific organizational slots.
Research suggests that people hired through employee referrals tend to have longer tenure and higher job satisfaction. Yet, national surveys indicate that only 10 to 15 percent of positions are filled this way. The three common obstacles that hamper employees from making referrals are
1. Employees don't see recruitment as a high priority. Their own daily business priorities capture their attention. Thus, human resource departments need to create devices to encourage participation.
2. Employees have difficulty matching job requirements against the talents of their friends and associates. For instance, an employee may know her friend works in data processing, but she doesn't know if he qualifies for the posted position "MIS Network Specialist IV." This difficulty in matching talents to vacancies prevents referrals. To overcome this obstacle, employees need to know who can give them information about a position's requirements.
3. Employees make faulty assumptions about the interest level of friends and associates. Referrals normally don't come unless a friend explicitly states interest in seeking a new job. However, many will explore a "better opportunity," even if not actively looking for one. Therefore, employees need to get the message: "Refer good people; it is not necessary to judge if they are keenly interested right now."
In the past seven years, Vanguard Resource Group Inc. has examined the practices of organizations that report
30 percent or more of their vacancies filled through employee referrals. These organizations credit the following six best practices:
1. Public recognition of successful referrals.
2. Prompt bonus rewards.
3. Regular promotional incentives.
4. Converting the program from a passive to a proactive tool.
5. Creative devices to enhance employee participation.
6. Good communications feedback about referrals.
These six techniques alleviate the primary employee obstacles described above and help nurture a high-involvement environment.
It helps retaining old employees by the following ways:
1. ER bonus
2. Healthy peer relationship
3. Recognition by the management for introducing a talent
Hope its clear now.
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Comment by Abhipsa Mishra on June 16, 2010 at 12:45pm
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5. Giving voice to the Knowledge workers: I guess you couldn't properly understand these lines. Learn between the lines. I have no where suggested the managers to 'share their powers'. It strictly means to enable and empower our employees. To be more specific - to utilize their knowledge and experience in the decision making, strategy formulation and so on.
The master slave model had been used in different countries including families where subjects are under royal highness. This is the reason why some businesses function with only this model available. However, this is no longer applicable to our modern world today because employees need to be a part of the decision-making since they are practically at the front line in the day-to-day activities of the company.
As part of company management you need to tap your employees' strength by involving them in the team building effort. Managers who oversee productivity need to be extra sensitive about their employees' strength and weaknesses so that they know whom they can rely on in times of crisis.
The concept of employee involvement originates from a leader kind of philosophy where people contribute to the effectivity of the company and improvement is continuous. Companies that employ this strategy are most successful in areas of their business. Add to that, there is a healthy work environment that occurs when employee and employer are always in constant communication with each other. Employee involvement means setting an atmosphere in the office where the impact of decision and actions necessarily affect their job.
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Comment by Abhipsa Mishra on June 16, 2010 at 1:33pm
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6. Gifts for employees:
The purpose of gifts for employees:
To thank your employees for their loyalty and their hard work, to inspire them to keep at it and to make them feel appreciated.
It must be of such quality that they would want to keep it and use it and even show it their friends.
It must not be overly expensive otherwise employees could think that they could have used the money far better.
It should preferably be something practical otherwise it is packed away and soon forgotten.
If possible it must be of value to their families too, since the family must often give up certain privileges such as an evening together when an emergency happens at work and your employees must work late.
Gifts for employees should add value to your relationship with your employees.
Surveys: An employee survey is like a performance review for your organization. Knowing where you stand with employees enables you to identify areas for improvement. Surveys pinpoint staff priorities, showing you where you should focus your efforts.
If you've already got ideas for change, it’s important to test the waters prior to implementation by asking for feedback. You may be surprised by how your employees respond! You may learn there is a better approach, or a more pressing issue that needs your attention.
Employees will definitely fill up the survey questionnaire if it is designed well, looks purposefull and its reults are chalked out.
For instance one of the corp[orat cultures of Walmart is all employees of Walmart before leaving for the day write down one good and one bad experience of the day. The day after in the morning after prayer they discuss both and then chalk out ways to minimiseand then overcome the problems that led to a bad experience!
You can also take some insights from the movie 'Rocket Singh'. How he used the customer feedbacks and utilized it to make his organization stand.
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Comment by Yashowardhan Chaturvedi on June 18, 2010 at 12:02am
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:) never expected such detailed reply!
Thanks a lot.
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Comment by Abhipsa Mishra on June 18, 2010 at 11:56am
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Whatever! Hope your doubts are cleared.
There are many other retention tools like
Employee engagement
Hand holding
and some think tanks on boss - subordinate relationship which also is a vital factor in employee retention process.
Looking forward to get valueable inputs from you.
Regards
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Comment by Akanksha Yadav on June 18, 2010 at 9:43pm -
I for one like your blog, however I have a question...your profile says you're a Finance Expert and despite that you have an unconventional good idea of HR and its functionality. :)
As for this blog post - I disagree with the idea of signing a bond, people who wish to leave - no matter what one does they do! Instead the idea could be to identify high performers and average performers. Develop the latter by innumerable programmes like giving them an option for higher studies, bearing partial costs or some percentage or the university gives them some privilege for coming through the Co. Development and personal growth is something every employees views. Initial years the kick of getting a high package does wonders, but gradually it's more about how much are you contributing, how does the Orgn view you (as in being important and indispensable like you pointed out), learning as much as they can, and keeping families happy. Even today if you ask the majority of those guys who put down their papers, all would reciprocate with the thought - We tried to work things out first with the co., but when they got rigid we thought it's high time to move out! People fear relocation as they'd have to build their image from the scratch (unless one's the totally outgoing guy dying to work with diverse teams).
For a man the deepest desire is to be recognized and understood. If organizations have brilliant recognition schemes perhaps employees would stay on. Also employee engagement isn't a one time effort. One needs to keep on reinventing with things as boredom sets in pretty easily. So if something is doing great like family day or team parties, mind you 4 months down the line, people would stop having fun with it. They are looking for new adventures in life. So if the organization is able to understand the cycle of every activity it indulges with the employee, a large section of the resignation givers may eventually back out and settle with the happy environment.
Mentoring is something that should be with utmost priority introduced within organizations and the mandatory need for Management, authorities to be responsive and sensitive to employee needs. Many a times one turns autocratic and yes they have to bear the costs of 1 resignation = 2 hires to fill the gap.
Indeed employee engagement and retention is a very controversial topic :) Discussions can go endless!
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