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retention RSS feed Tag: retention

What’s Wrong With Retention Bonuses? Pretty Much Everything

by Sep 22, 2014, 6:35 am ET

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…

Using Replacement Costs to Measure Turnover

by Aug 21, 2014, 12:23 am ET

On July 18, ERE.net featured “How to Really Calculate the Cost of Employee Turnover,” which highlighted a few key metrics that factor into the real cost of turnover. The opening statement stands out:

Employee turnover costs are often described with generic numbers such as “$X,000.00 per employee” or “X percent of annual salary.”

Turnover cost, specifically “X percent of annual salary” — which can also be translated to $$, is one of the most effective KPIs to use in achieving the real measure. They tell a much deeper story than the “generic” term implies, and they are much easier to use. In 2010, while doing research at Aberdeen Group, we found that most companies use replacement costs to measure the cost of turnover. After taking out some outliers in high-volume/low-skill environments and some very high-level C-suite and management consultants, the analysis showed on average that using 86 percent of starting salary is a very fair estimate of the cost of turnover. NOTE: One of the research notes where this finding was published can be found here (page 2).

Here are four reasons why this metric is effective and not as generic as one might think: keep reading…

Retention — The Top 10 Ways a Manager Can Identify Who Is About to Quit

by Jul 28, 2014, 12:49 am ET

There are few things that are more shocking to a manager then to have one of their top-performing employees suddenly quit on them. Some managers have described it as the equivalent to a “kick in the gut.” It is a shock not only because losing a key employee will damage your business results, but also because managers hate surprises, and as a result, they frequently wonder how they missed the signals that this person was going to leave.

Employee turnover is always an important issue, but most managers are unaware of the fact that overall, turnover rates went up 45 percent last year. And because I am predicting that they will go up at least 50 percent this year, individual managers should be aware of the precursors or warning signs that can indicate that an employee is considering looking for a job, so they can act before it’s too late.

After 20+ years of research on predicting turnover, I have found that if you approach the problem systematically, you can successfully identify which individual employees are likely to quit with an accuracy rate of over 80 percent. Firms like Google, Xerox, and Sprint, as well as several vendors, have developed processes for identifying who might quit. But for most managers, you must realize that you will simply have to develop your own identification process. So if you know of a manager who is worried about turnover, pass this list of turnover predictors to them so they won’t be surprised when their next employee announces that they are quitting.

The Top 10 Ways a Manager Can Determine if an Employee Is Considering a Search for a New Job keep reading…

How to Really Calculate the Cost of Employee Turnover

by Jul 18, 2014, 12:56 am ET

Employee turnover costs are often described with generic numbers such as “$X,000.00 per employee” or “X% of annual salary” (actual dollar amounts and percentages vary from source to source). It is tempting to go with simple sound bites like these, but keep in mind that they are based on averages. These overall tendencies probably don’t accurately describe your specific organization, department, or team.

The following is a simple but detailed method of computing the cost of employee turnover. The main factors in this calculation (aside from specific costs) are time and money involved with a departing employee, such as:

  • Time spent on filling the vacant position;
  • Hours/weeks in lost productivity before the employee leaves
  • Time that coworkers and the manager/supervisor combined will need to make up for the vacant employee (overtime, added shifts, etc.);
  • Number of hours in lost productivity resulting from orientation and training of a new employee; and
  • Time spent on admin and hiring tasks (advertising, resume screening, interviewing, onboarding).

We can directly translate between time and money (time = $) to provide specific costs by multiplying hours by hourly wage for different types of employees, tasks, and responsibilities. The numbers that you provide can either be averages for your organization, department, or team, or they can be specific to a single turnover event. The calculation will total all the time and costs spent with every employee turnover so you can determine what the final cost is for your business.

Here are the steps to calculate all of this: keep reading…

What LeBron James Can Teach Us About Hiring

by Jul 14, 2014, 12:16 am ET

Screen Shot 2014-07-13 at 9.17.23 PMI’m amused when sports analysts state their predictions with near certainty. Take for example ESPN’s David Thorpe saying on July 10 that the chances of NBA superstar LeBron James returning to the Miami Heat next season were 99 percent. The following day, James announced he would play for the Cleveland Cavaliers.

We hiring managers and recruiters know you can’t guarantee human performance. The best you can do is conduct pre-employment tests, ask candidates insightful interview questions, gather gobs of important data about them, and then play the percentages based on your analysis of the data.

For example, if Candidate A has a track record of switching jobs every six to nine months and Candidate B has reached 10 years of tenure for her two previous employers, who should you reasonably bet will remain with your company five years from now? There’s no guarantee if you select Candidate B they will stay with your organization a long time, but the odds are in your favor.

Which brings me back to LeBron and to an important hiring rule of thumb. keep reading…

Stop Your Firm’s Brain Drain – Convincing Innovators to Choose an Established Firm Over a Startup

by May 27, 2014, 12:01 am ET

                                                                                    John Sullivan and Trena Luong

There is an innovator brain drain going on. The drain is away from larger established firms, which desperately need more innovators, and toward startup firms, which are successfully recruiting a disproportionately high percentage of these prized innovators.

fs-tritium-image1It doesn’t matter whether your corporation is trying to hire experienced talent or recent grads; it seems like every innovator and entrepreneur these days is seriously considering working at a startup (or creating their own startup). What makes the “brain drain to startups” a problem so unique is that corporations are fully aware that they are currently outmatched in this recruiting battle and most are also painfully aware of the economic damage that they suffer whenever they lose an innovator.

Given this awareness, it would seem logical that, at least at large tech firms in the Silicon Valley, each would have a dedicated “counter-startup recruiting program” designed specifically to reverse this brain drain. But for some unexplained reason, it’s almost impossible to find a large corporation (tech or otherwise) that has a comprehensive formal recruiting program for landing innovators who have had a natural inclination to bypass them and go to startups. Yes, some large firms like Google, WL Gore, Yahoo, Facebook, and recently Zappos have a few features that are attractive to innovators but no one has a visible comprehensive “counter-startup recruiting program.”

What Is a “Counter-startup Recruiting Effort?” keep reading…

Why Boomerang Rehire Programs Rank #2 in Producing High-quality Hires

by May 19, 2014, 12:01 am ET

Screen Shot 2014-05-15 at 1.22.15 PMOther than referrals from your top-performing employees, it’s hard to find a corporate recruiting source with a higher quality of hire (i.e. on-the-job performance) and a higher ROI than boomerang rehire programs. If you’re not familiar with the term, a “boomerang rehire” is a former top-performing employee who you rehire after an absence of a few years. I rank them No. 2 in new hire quality and they also produce significant volume of hires (CareerXroads ranks them N0. 6 in volume, after college hires).

Although boomerang programs have been around for years. In the past they were a bit of a burden because if you wanted to find and keep in touch with your former top-performing employees, you had to put together and maintain your own corporate alumni group. Fortunately today with the tremendous growth of LinkedIn, you can now easily find out where any former employee works. That makes this source among the easiest to find candidates. Updating their LinkedIn profile can also signal to you that they are probably once again considering a move to their next firm, which provides you with an opportunity to reach out to them and ask them to consider returning.

Other firms now build a simple online talent community group and maintain relationships through text or e-mail. The benchmark firms in boomerang rehiring programs include Deloitte, Ernst & Young, Booz Allen, Bain, and DaVita, which has reached as high as 16 percent of its hires coming from its impressive “you are always welcome here” boomerang program.

Why Boomerang Rehires Are Such High-quality Hires keep reading…

Big Challenges for Recruiting Leaders — The Top 10 Upcoming Recruiting Problems

by Apr 7, 2014, 5:23 am ET

Those who follow my articles know that I frequently write on the positive trends and the big ideas that recruiting leaders need to be aware of. However, I have not often written about the biggest strategic challenges or problems that corporate recruiting leaders face. Of course no one wants to dwell on the negative. But since I am predicting that during the next few years we will all encounter a completely transformed world of recruiting, it only makes sense to at least be aware of our largest current and upcoming challenges. If you don’t act proactively to mitigate these major challenges, they unfortunately may grow out of control, causing exponential damage to your firm.

The Top 10 Highest-impact Strategic Recruiting Challenges keep reading…

Hire for Bench Strength or Brace for Failure

by Mar 25, 2014, 5:29 am ET

Screen Shot 2014-03-17 at 8.25.05 PMBaseball spring training is here, so it’s a perfect time for us to talk about the importance of an organization’s bench strength. When you think about all-time greatest baseball players, near the top of the list are legends Ted Williams, Ty Cobb, Ernie Banks, Rod Carew, Tony Gwynn, and Harmon Killebrew.

Guess how many World Series championships those Hall of Famers won combined? As many as you and me: Zero. Those players all set individual major league records, but their teams never won the ultimate prize.

Tying that point to our organizations, we can’t be satisfied having just a couple superstars on our team and no bench strength to support them. Ultimately, we won’t win. Our organizations won’t achieve key goals in a timely manner, and we run the risk of sliding backwards if we lose one of our superstars.

Too often, we hire people whose full potential and ambition are invested in performing the jobs they’re hired for. Then, when we need more from them, they’re not able or willing to go the extra mile.

Your goal should be to have at all times (or be working toward) at least one employee with the skills, personality, character, ambition, and technical competence to take over each key position in your organization right away. Without this, your company will be unable to attain its growth goals quickly, reducing future profits and opportunities for your co-workers to achieve their career goals.

Also, if a key player is incapacitated for a couple months or longer, your organization could be damaged. I learned that lesson the hard way when I was diagnosed with cancer. But I was fortunate that we had hired several high-potential people who filled in for me when I was sidelined by my surgery and chemo treatments.

Here are four important actions I suggest you take to improve your bench strength:  keep reading…

Why Are You Losing Talent? Because They Don’t Know You Care (and You May Not)

by Mar 19, 2014, 12:02 am ET

Why quit linkedin surveyWith the rate of voluntary quits in the U.S. approaching pre-recession levels — 22.8 percent in 2013 — it’s no surprise that in a survey last year HR professionals and talent acquisition leaders identified retention and its twin “internal mobility” as one of the five top trends.

Nearly 40 percent of the 553 U.S. recruiting leaders who took part in LinkedIn’s global recruiting survey last year said they are increasing their internal hiring volume. Globally, the percentage was even higher.

“Internal candidates are typically higher quality; plus their skills, performance, and cultural fit are known,” LinkedIn’s Leela Srinivasan told SHRM in a report the society did on the survey. The report observed that 51 percent of the talent leaders acknowledged a “need to increase candidate awareness of relevant in-house opportunities.”

Now, just a few months shy of a year later, comes a new LinkedIn survey of workers who changed jobs. And what they told LinkedIn is that the No. 1 reason they left was the opportunity for career advancement.

Shockingly, 75 percent of the U.S. workers were unaware of their previous employer’s internal mobility program. We can’t tell if awareness would have made a difference, but the statistic does point up a very significant disconnect between what workers know and what HR thinks they know. keep reading…

Making Moneyball Work

by Mar 11, 2014, 5:47 am ET

Screen Shot 2014-02-20 at 10.45.35 PMBreaking News: (July 16, 2036) The national Comprehensive and Reliable Assessment of Performance (CRAP) database reached its goal of 100 percent coverage with the last employer — Roto Rooter of Northern Idaho — getting connected to share employee performance data. Employers nationwide now have a central resource to evaluate candidates for jobs, using the concept of Moneyball that was developed in the late 20th century. The database, established by the Dream On Act, is administered by the BUFFOONS (Bureau of Unreliable and Freely Flexible Or Objectionable Numbers and Statistics) at the Department of Labor.

Maybe this will come to pass, but don’t hold your breath and be careful what you wish for. Let’s think about what it’ll take to make Moneyball work. keep reading…

Here’s How to Tell That Your Talent Is About to Quit

by Feb 24, 2014, 6:00 am ET

Quit Job keyboardEmployees who are serious about changing jobs give off cues that, if you know what to look for, can give you time to act before it’s too late.

These are not the kinds of tell-tale signals every manager recognizes.

“You might think that someone who starts showing up to work late, failing to return phone calls and emails, and taking lots of sick days might be about to leave, but those weren’t unique behaviors that applied only to the quitters,” says Tim Gardner, a Utah State University associate professor at the Jon M. Huntsman School of Business. Unlike a worker who starts taking days off in the middle of the week, or who prowls job boards, or inadvertently leaves a resume in the copier, the signs of a serious job seeker are more subtle. keep reading…

This Tool Will Help You Rethink Talent Acquisition

by Jan 15, 2014, 12:49 am ET

Screen Shot 2014-01-06 at 1.43.52 PMRegardless of mission or vision statements, the ultimate goal of any high-performing HR function — and or its “talent fulfillment” group — is to provide the support, resources, and expertise to help their organization acquire, develop, and retain top talent — a responsibility that starts with strategy, focuses on acquisition, and never ends.

Talent fulfillment — the act of identifying, acquiring, and retaining top talent – can mean different things to different organizations and HR professionals. It could be hiring external recruitment agencies, temporary employees, contractors, or some combination thereof. That said, those organizations operating with that mindset, unless in the midst of a significant growth phase, aren’t likely to meet anyone’s definition of high performing. High performance means finding talent, growing talent, securing talent, and keeping talent — your organization’s own talent.

This is sort of like a short-order cook and a baker.  keep reading…

Calculating the Tremendous Dollar Value of a Top-performing or Innovative Employee

by Jan 13, 2014, 12:53 am ET

Lionel MessiIn 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…

Top 10 New Year’s Resolutions for Strategic Talent Leaders

by Dec 30, 2013, 1:22 am ET

The New Year is the perfect time to reexamine and refocus your talent efforts. The coming year will see a surge in economic growth, but it will occur in a business environment with continued volatility. Succeeding in this environment will require a new approach. So before all of the activity that accompanies any new year begins, take at least an afternoon off for some “strategic thinking and planning time.” In order to guide your thinking, I propose 10 talent resolutions or focus areas which are likely to have high strategic and business impacts.

10 Strategic Action Areas in Talent Management keep reading…

Stay Interviews: an Essential Tool for Winning ‘the War to Keep Your Employees’

by Dec 2, 2013, 6:09 am ET

The complete guide on how to use stay interviews to improve retention

Many firms use exit interviews to find out why employees are leaving their jobs. Unfortunately, asking an employee on their last day “why are you leaving?” doesn’t provide useful information in time to prevent the turnover. A superior approach that I’ve been recommending for over 20 years is a “stay interview.” I alternatively call it a “pre-exit interview,” because it occurs before there is any hint that an employee is about to exit the firm. A stay interview helps you understand why employees stay, so that those important factors can be reinforced.

Definition: A “stay interview” is a periodic one-on-one structured retention interview between a manager and a highly valued “at-risk-of-leaving employee” that identifies and then reinforces the factors that drive an employee to stay. It also identifies and minimizes any “triggers” that might cause them to consider quitting.

The Many Benefits of Why-do-You-Stay? Interviews keep reading…

NFL Highlighting How ‘Problem Generators’ Affect These 5 Components of Your Business

by Nov 14, 2013, 9:45 am ET

Screen Shot 2013-11-13 at 11.20.45 AMFootball, and in particular the NFL, is a big part of my life. Not only do I enjoy the game and all it has personally done for me, I enjoy all the lessons about business management it has to offer. In the latest rounds of NFL scandals the Miami Dolphins offensive lineman Richie Incognito was accused and tried in the media for work place harassment. It has caused another valuable member of its offense of line, Jonathan Martin, to quit the team and create a storm of controversy about the culture of the NFL locker rooms. Is this commonplace? Is it generally accepted behavior for professional football players? Probably not. As this controversy continues, we may find out differently. From what many of the experts are saying this is simply a case of mismanagement, and a player or players out of control.

In the business world, degrees of “problem generators” like Incognito exist; these are the people with the bad attitudes masked by talent. In some companies they are more prevalent than others. Many organizations actually seek to eliminate these problem generators and prevent them from ever being hired using some of the techniques and tools suggested in this Simple Guide to Interviewing for Attitude. One bad apple can cause a lot of damage, and the evidence is obvious when the promising Miami Dolphins lose to the winless Tampa Bay on Monday night mostly due to the loss of two key players.

Problem generators create host of subtle but extremely damaging side effects. Here are my top five areas that are affected the most by a problem generator. keep reading…

Winning ‘the War to Keep Your Employees’ Requires Re-Recruiting Your Top Talent

by Oct 21, 2013, 6:28 am ET

If you expect to win “The War to Keep Your Employees,” you must continually assure that the best offer that a top performing employee receives comes from inside your own firm.

In order to assure that, management must periodically approach top talent and recruit them again (re-recruit) just as if they were a new external prospect. Although I coined the term “re-recruit” more than 20 years ago, it is still an effective retention tool today. keep reading…

8 Questions You Need to Ask to Turn Around Employee Turnover

by Oct 15, 2013, 6:45 am ET

Some of you like turnover, I realize: after all, you’re recruiters. But others on this site are in-house recruiters who’d like to keep who they’ve recruited. It doesn’t seem to matter if you are a small company or multi-national, selling food, clothes, or technology, or servicing patients or homeowners. Employee turnover is affecting every organization in every industry from New York to California, from Canada to Japan. Even India and China are beginning to experience high rates of turnover.

That begs the question: Why do employees leave? keep reading…

We’ve Got to Stop Over-promising and Under-delivering, or Retention Will Suffer

by Oct 8, 2013, 6:15 am ET

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…