In 30 years, I have yet to see a retention bonus retain, let alone motivate, anyone. – Kate D’ Camp, former VP of HR at Cisco
Let’s face it: only a few people voluntarily spend any time thinking about the use of employee retention bonuses (ERBs). I wouldn’t either, except for the fact that a majority of major firms use them instead of much more effective retention approaches. The use of retention bonuses is at an all-time high but I wonder why, because they’re expensive and only occasionally do work. In my over 20 years of work as a thought leader and practitioner in retention, I have been unable to find any credible corporate data that even comes close to demonstrating the effectiveness of retention bonuses.
The major flaws of employee retention bonuses fall into three categories, which include:
- ERBs are evil because they are a form of “paid servitude,” where you buy rather than earn employee loyalty.
- ERBs don’t actually work in a time when turnover rates have gone up 45 percent.
- ERBs have many negative unintended consequences that unintentionally create damage.
Maybe the lack of data proving the effectiveness of retention bonuses is not such a big surprise, because almost nothing in corporate retention is data-driven. There is also no data to prove the effectiveness of most other common “retention resource wasters” like improving benefits for all, engagement efforts to improve retention, or offering a coach/mentor or profit-sharing. Despite their lack of supporting evidence, the use of retention bonuses has doubled since 2010 (according to a recent WorldatWork survey). If you are a corporate manager or a talent management professional who is considering offering retention bonuses, review the following 25 ugly reasons thoroughly before you act. In my book, they rank at the very bottom as the least effective commonly used retention tool.
The Top 25 Reasons Why Retention Bonuses Don’t Work keep reading…
The Holy Grail in recruiting has always been the passive candidate: someone not actively searching for a job.
A LinkedIn survey of 18,000 full-time employees across all industries and 26 countries found what attracts these people. The results aren’t particularly shocking: passive candidates want more money. Either that, or they want a better work/life balance or a greater opportunity for advancement.
But the survey revealed more than just that. It also showed the surprising number of workers who consider themselves passive candidates, what active applicants want, and what motivates people to change jobs the least.
Some recruiting tactics are actually doing more harm than good, reducing the organization’s candidate pool and tarnishing its reputation in the process.
Check if your organization’s recruitment department follows any of these pervasive behaviors setting the wrong standards: keep reading…
Before you decide the grass is greener in agency recruiting, consult the Money Talks survey from Bullhorn. Released this morning, it shows agency recruiters on average earned $74,000 last year.
Some earned much more. Those who work primarily in contingent recruiting averaged $96,000. There’s no doubt that’s a goodly sum. Just keep in mind that a contingent recruiter earns zero unless the candidate they submit is hired, accepts the job, and keeps it usually for at least 90 days. keep reading…
A candidate from a well-known benchmark firm dropped out of our search for a General Manager position because the hiring manager took a week to respond to his interest. He said…
It’s not like I need their job. If it takes them a week to respond to a resume like mine for a job of this importance, they’re not the kind of company I want to work for. I move fast, and I can already see that my style wouldn’t fit their culture. –Wind River Associates
As a corporate recruiting leader, know that in a highly competitive college marketplace, there may be nothing that damages corporate recruiting results more than slow hiring.
Many firms now go the first step and track some variation of the “time-to-fill” metric. But despite that metric, not only are firms still almost universally guilty of painfully slow hiring, but to compound the problem, few recruiting leaders truly understand the many negative business and recruiting impacts that result from slow hiring. I estimate that the impact at most corporations exceeds tens of millions of dollars each year. And the dollar loss from this factor may be as much as 10 times higher than losses resulting from low recruiting efficiency related to the more popular “cost-per-hire” metric.
It’s not enough to be conscious and aware of slow hiring. Identify and then quantify in dollars each of the negative impacts of slow hiring, so that everyone from the CEO on down will support the streamlining of the process. After several decades of work on “speed hiring,” I have put together an extensive list of the negative consequences associated with taking too long to hire. The top 12 most damaging factors are listed below.
The Top 12 Reasons Why “Slow Hiring” Damages Recruiting and Your Business Results keep reading…
A case that has the potential to cost staffing companies — and, in turn, their clients — hundreds of millions of dollars is headed to the U.S. Supreme Court.
The justices agreed to hear a FLSA suit against Amazon’s temp worker provider Integrity Staffing Solutions over whether workers should be paid for the time they spend going through company security on their way home.
Two former employees provided by Integrity who worked at Amazon’s two Nevada warehouses sued the retailer’s staffing firm demanding to be paid for the 20-25 minutes it routinely takes them to clear the daily security check. Because the case was filed as a class action, it could affect many or most of the estimated 38,000 temps at Amazon’s three dozen U.S. warehouses and distribution centers. keep reading…
In professional sports, almost everyone readily agrees that a top-performing athlete is worth their weight in gold. That value is clearly reflected in their compensation, where for example a top-performing NFL quarterback can get paid 10 times more than the third-string quarterback on the same team. The value of adding a LeBron James, Peyton Manning, or Lionel Messi to your team can easily exceed hundreds of millions of dollars in revenue. The same is true in entertainment, where adding the right actor to a film or rock star to a concert can easily double the gross over an unknown performer.
Unfortunately in the corporate world, the HR function has failed to come up with a credible method for quantifying the “performance differential” between an average employee and a top performer in the same job. And as a result of not having this economic justification, executives have all too often been reluctant to fund the leading-edge recruiting, retention, and management processes that are required in order to successfully attract and retain these highly desirable top performers and innovators. In last week’s article, I demonstrated how to calculate the negative costs associated with hiring and keeping weak performers, and in this companion article, I highlight how to calculate the performance multiplier of top performers.
Calculating the Performance Multiplier of a Top Performer keep reading…
Every few years our business lexicon gets invaded by a new cliche. Management speak like “big data” and “social hiring” … vague terms that no one can really define but are liberally trotted out typically by vendors, consultants, and conference speakers trying to impress you. The king of the management cliches at present and one that makes my skin crawl is employer branding. There. I said it — well wrote it — but I was cringing when I did.
If you ever hear someone wittering on about employer branding I dare you to interrupt them and say, “define employer branding.”
I bet most won’t give you a very good definition and will be suitably aghast that you even questioned one of recruitment’s current sacred cows, but challenge it you must. Prick the pomposity bubble that we get sucked into. I read one article recently that urged all companies to create a “compelling employer value proposition.” There were few details on what that meant or how to implement it. In short it was just waffle. Companies spend fortunes and waste thousands of hours (I know, I was part of one) designing internal value propositions to allow company recruiters to become “front-line brand ambassadors.” This is nonsense. Stop wasting your time and money.
Let’s examine what exactly people are referring to when they talk about employer branding. Let’s cut through the waffle and look at some specifics that you can actually do to boost your organization’s perception among job seekers. keep reading…
According to the U.S. Bureau of Labor Statistics, unemployment in the United States has continually dropped over the past year. As of November the number dropped to 7 percent, down from 7.3 percent. We must ask ourselves how the improved economy affects employer recruiting initiatives.
While organizations should maintain the same overall headhunting strategies as in any other economy, some adjustments are necessary.
Take a look at the challenges hiring managers ought to expect when bringing on employees. Only when we define these hurdles is it possible to formulate and implement strategic solutions to over-leap them.
Demand for sales professionals continues to boom, even in our fluctuating job market. An Indeed.com search for sales positions in the U.S. yields over 770,000 results (versus marketing at 280,000 and human resources at 96,000). With so much competition for great sales hires, it’s no surprise that sales positions continue to rank among the hardest to fill.
Often, a mismatch between compensation and candidate expectations, as well as complex recruitment processes, means losing out on a top candidate, especially at the lower levels. And because candidates have so many opportunities to choose from, compensation and the hiring process become critical factors in recruiting a top salesperson.
In the typical sales environment, commission is the most popular way to compensate sales representatives: it’s essentially a pay-for-performance model that rewards results. What makes commission-oriented opportunities work, however, isn’t the commission check, but rather the perks and incentives that surround sales compensation. While some companies may believe that great sellers can make a living on commission, the real question is: why should they sell for your organization? What does your company offer that a competitor can’t? The answers to these questions are the keys to crafting a successful recruitment program. keep reading…
There you are — ready to pitch your rock star candidate to your hiring manager or client. You are excited about your ability to snag this great prospect in record time, and you are proud of the fact that your candidate is well-qualified for the position. You left a brief message, letting your client or hiring manager know you have found a great prospect. A call is scheduled. You pick up the phone to dial.
As the phone rings, you gather your notes and are feeling confident and prepared; your pitch is bulletproof. As you announce yourself and prepare to share your great news, you hear, “Sorry, but I only have a couple of minutes. All I need to know is if the person you referred to is experienced and will be negotiable on salary.”
You are speechless. Actually, your rock star does not have the exact experience and might not be open to a lot of salary negotiating. Nonetheless, you push forward — trying to recover quickly by reciting the list of the other great things you learned about your prospect, confident these factors will win over your hiring manager or client. But you can’t shake off feeling weak, frustrated, and doomed.
Not the way you envisioned the call going? How’s your confidence now? And what about that bullet-proof pitch? In 29 words — 143 characters — (about a Tweet), you became the victim of the will of your hiring manager or client.
What just happened? More importantly, can you recover? Let’s look at both of these questions and use some basic sales skills to provide some help. keep reading…
It’s natural to do everything you can to convert a potential candidate you’re interested in. However, mistakes made during recruiting process and in the onboarding stage can lead that person to leave early.
Recently, a friend of mine left his job after 18 months. He had spent four months looking for a job and deciding that one was the right fit. He even relocated to a new state to take it. He was as excited about it as can be. So what happened? keep reading…
Brilliant people and companies simplify; others complicate. The evidence of this principle is all around us. Ebay simplified the garage sale; Google distills the enormity of the Internet in seconds; and Apple has engineered the “smart” in phones so that all of its customers don’t have to be.
Conversations with employees, colleagues, and friends have often centered on ways to simplify. Want to lose weight? Burn more calories than you consume. Interested in accumulating wealth? Save more than you spend. Want to have meaningful work? Know your strengths and passions and find a job that personifies them. When approached with a challenge, train your brain to think “what is the simplest way to solve this?” This question will predominately lead to an attainable strategy. We love simple and tend to avoid people, processes, and technology that complicate.
The winning teams always execute the fundamentals better. Are you and your company doing the fundamentals better than the competition? keep reading…
Recruitment is simple. Organizations should have one defined objective — to locate, attract, and hire top talent. However, we have made talent acquisition one of the most complex areas of human resources. As a result, strategies are skewed and talent acquisition professionals are bogged down chasing the latest trends and fads instead of focusing on core fundamentals and practices.
Recently I participated in an HR case study with a leading organization that specializes in deriving fact-based analysis and findings. The topic of this particular case study was “What are companies doing to be successful and to overcome recruiting obstacles.” As I sat there and contemplated my answer … a series of conferences, conversations, articles, meetings, and case studies flashed through my mind. I went blank.
I politely apologized to the interviewer and asked her not to take offense to my answer, but here it is: “What is anybody doing that’s truly new and generating overwhelming results? Are we as an industry spending too much time on alternative sourcing methods rather than sticking to the tried-and-true tools that have always achieved results? keep reading…
The theory that recruiting great employees is highly difficult is true, but what if your firm was making the recruitment process more complex than it had to be?
Almost one out of every four decisions that a small to mid-size company will make during a recruitment process will hinder their chances at staffing competitive talent. The consequences of these actions can result in a myriad of ill-fated outcomes, ranging from higher salary costs and wasted time to losing competitive applicants altogether.
Firms that are unable to streamline the staffing process on a regular basis are probably prone to committing one or more of the following seven deadly sins of recruiting: keep reading…
In case some of you are wondering who the best is, they are up here on this plaque.
That line from the 1986 film Top Gun — a film about Navy aviators — sums up the surprising problem besetting the Air Force. It can’t retain its fighter pilots. Increasingly, its pilots are remembered with retirement plaques.
It wasn’t that long ago that 80 percent of the service’s fighter pilots would re-up after their initial 11 year commitment. Today, the percentage is 65. And unless that improves, the Air Force estimates that its current 200 pilot shortage will grow to 700 in the years ahead.
To combat the problem and get more experienced aviators to stay the Air Force announced a lucrative retention program upping the pay for pilots and offering a bonus worth $225,000 for experienced pilots who sign-on for nine more years. keep reading…
There have been ongoing debates for a decade or more over whether or not there is a talent shortage. If there were a real talent shortage we would have seen much different corporate behavior than we actually do see. If firms genuinely could not find the people they needed, they would have either raised wages to the point that the jobs became highly attractive or they would have invested significantly in training. Neither has happened. keep reading…
With only days left before this year’s college seniors become alums, those who don’t already have jobs are going to find it as hard to find work as last year’s grads did. And for those in the liberal arts, in the last few weeks, three different surveys of hiring managers and recruiting leaders found employers are only planning slight — if any – increases in the number of entry-level grads they bring on board.
Most striking about the surveys is that while they measured different aspects of hiring plans, and talked to different types of companies and employers, the bottom line was the same: entry-level jobs in a grad’s field are few.
Here’s what the three surveys found: keep reading…
Top performers have an incredibly high ROI
Articles from academics don’t always provide practical lessons, but there have been two recent ones that everyone in talent management should pay attention to.
The results of the first one focus on the output differential produced by top performers. This study published in February in Personnel Psychology which cut across several industries, revealed that the top 5 percent of the workforce at the researched firms produced 26 percent of the firm’s total output. The top-performing 5 percent produced 400 percent more than you would expect (26 percent rather than 5 percent).
That means that top performers have an incredibly high ROI because they produce more than four times more; however, they are generally paid less than 20 percent over an average worker in the same job.
Just like on the business side of the enterprise where the 80/20 rule prevails (80 percent of your profit comes from 20 percent of your products) there should be a similar 80/20 rule covering employee performance. This disproportional impact means that despite the fact that many in HR are enamored with the practice of “treating everyone equally,” it turns out that that approach may be well-intentioned but misguided because in business, just like sports and entertainment, top performers have a significantly higher business impact than the average. Top performers need to be prioritized.
Prioritization Is Also an Essential Element of Referral Programs keep reading…
Remember the Yugo? Yugos were cars built in the old Yugoslavia, in the 1980s. They were sold solely based on their low price. More than 100,000 cars were sold in an eight-year span, but their poor quality and service resulted in zero buyer retention.
When it comes to hiring talent, most companies place too much emphasis on compensation competitiveness and not enough on their cultural brand. They may have flashy careers websites and other candidate attraction materials, but these are generic and not reflective of the company’s unique culture.
In this article I will give you tips on how to make your company more competitive by taking the vital first step of identifying your culture. Only after this step will you be able to successfully attract candidates who will fit your values and be successful in their roles. Without it, you will be stuck in the Yugo Trap, continuing to hire mismatched candidates leading to poor retention. keep reading…