What’s a recruiter to do?

Focus on retention. It’s at times like these that organizations earn their employees’ loyalty. As the saying goes, this isn’t my first rodeo. I’ve seen the market soar and tank. The way companies treat their employees in stressful and frightening economic times goes a long way in determining who comes out of these difficult times better positioned to re-take greater market share.

Kevin Wheeler had a great piece earlier this month about framing the future you want and identifying four things you can do now to make that future more likely. But there’s more that we can do internally. I agree with Kevin that keeping in touch with our best candidates and keeping our pipeline active is critical. The importance of using this time to plan and educate ourselves for our own future success cannot be overstated. But one of the first things I learned as a recruiter is “If you’re not recruiting your best people, someone else is.”

Now is the time to make sure that you are reaching out to your own best people and involving them in conversation. You’ve seen economic downturns before and so have they. We know that we’ll come out of these things, and when we do, the phones will start ringing.

Think about it. When the market starts going up again and senior management is confident that the upswing is for real, you’re going to be asked to go out and get the people you need to sustain your company’s participation in the improving marketplace. But so is your competition — and don’t think they don’t know who the best people in your organization are. They’ve got a list of people in the industry that they covet. They may even have had conversations with your people at conferences or on their own.

You need to be reaching out to your best people now. Not necessarily to reassure them, because you can’t promise anyone anything, but to keep the internal lines of communication open. This is no time for HR to take on a bunker mentality behind closed doors. Hiding in your office is never a good idea. You don’t want to start rumors that could actually stoke people’s fears.

Jim: Where are all the HR people?
Joe: They’re in their offices with the doors closed.
Jim: The economy is real bad. They must be planning a downsizing.
Joe: Uh-oh, you’re right. I’ve heard that a lot of companies in this area are cutting jobs. As soon as things pick up I’m going start looking. Better to do it to them before they do it to me!
Jim: You got that right. Hey Bill, did you hear that there’s going to be a RIF soon?

And that’s how it starts. You don’t want to do is give people one more reason to listen to calls from your competition. The other question that comes to mind goes a little differently, but it’s another reason to be focusing on the positive things you can do when things look bad.

Joe: We’re really taking a hit from this economy. I hear a lot of companies are considering layoffs.
Jim: Yeah, HR is probably making a list right now.
Joe: How come you never see HR people on those lists?
Jim: Yeah! I mean we’re not hiring anyone right now. What are they doing? Why not lay off a few recruiters and save the jobs of the people who do the real work around here?

Doesn’t sound pretty, does it? That’s why you’ve got to get out there and be visible. I’ve heard that nobody wants to see HR walking around during a downturn, because people are afraid that we’re looking to see who’s working, who’s busy, and who’s not. Don’t let that deter you. Get out there. Be open and honest in talking with managers and their best staff to see what you can do to help alleviate people’s fears at a time like this. Encourage managers to have staff or town-hall style meetings with employees to give them a chance to speak openly about their concerns. HR needs to be side-by-side with managers at these meetings.

To be sure, there will be some companies letting people go, and yours may be one of them. But no matter what, no matter how deeply you cut, you’re not going to lay off your best people. These are the most valuable assets your organization has. Unless you’re turning out the lights and rolling up the carpets, as long as your firm is around, you want them working for you. These are the people who make your company successful, and will again in the future. That’s why you need to be re-engaging them now, when things look bleakest. You can’t give them double-digit raises or six-figure bonuses, but give them what you can, and possibly what they crave most: open communication.

Remind them of how valuable they are to the company. Stress that management is exploring options how best to weather this storm. Ask for their best ideas of what the company can or should do right now, six months down the road, or a year from now when things are different. Because things will be different. Maybe better, hopefully not worse, but certainly different. Ask them what they think is going to happen. They are closer to the front lines and therefore may be hearing different things than the people in the executive suite are hearing. Treat them with respect and get their input. After all, these are your best people. The same things that make them good at their jobs may also give them insights about where your industry is going.

I brought ideas like this to one company I was working with when they were considering layoffs. I asked senior management what they were planning to do for those employees who remained after the reductions. One manager said, in all seriousness, “We don’t have to do anything for them. They should be HTHJ. Happy to have jobs.” That organization did survive the setbacks it was going through, but has morphed and merged several times since. Many of the best people from that organization have left for the competition or to start businesses of their own. Sure the superstars made it through that round of downsizing, but as soon as it was over, they started looking.

Treating people with respect when things look worst is not just being nice to people, it’s good for business. These are the kind of people you’d have to pay a fortune to get if they were on the open market. Do everything you can now, while they are inside your doors, to keep them there. People are always less likely to look when the economy is bad, but the good people are just as likely to bolt if they see your company behaving badly in bad times. This is an opportunity for your organization to make its reputation. How many times have you heard companies boast about having been in business “X” number of years and never had a layoff? Companies point with pride at a record like that not because they’re nice but because it’s a recruiting and retention tool. They’re working to retain their best and most valuable employees.

Nucor Steel reduces executive perks and will even shorten the workweek from five days to four but doesn’t lay people off. It runs some of the most profitable and efficient steel mills in the world. Lincoln Electric guarantees jobs to employees with just three years of service and has not had a layoff since the 1950s. Its  turnover rate is infinitesimal.

Many of us are recruiters, and our job is to find the best people to fill the vacancies in our organizations. But we are also human resource professionals. When vacancies dry up, we need to focus on other things we can do to add value to our organizations.

Get out there. Be visible. Retention is the most cost-effective form of recruiting. And the time to do it is now.

The effect of long-term hiring freezes is particularly damaging to the recruiting function, because “no hiring” generally means that a majority of recruiters will be laid off. Historically, budgets for recruiting have been cut so low that the function is literally decimated, making it rather difficult for companies to resurrect a decent function when the economy swings up.

Many executives think that the decision to institute some sort of resource freeze is one that helps the organization because it contains costs; however, the opposite is more often the case.

Poorly thought-out freezes that impact talent acquisition and other talent-management activities may actually harm the organization by:

• Driving increases or vacancies in revenue producing/impacting roles that decrease revenues beyond any cost savings.
• Driving increases in employee burnout/turnover.
• Missing out on new talent opportunities (i.e., not be able to hire a superstar that becomes available).
• Decreasing an organization’s capability/capacity to innovate.
• Damaging the employer brand making hiring more difficult when the economy returns.

Rather than waiting for the inevitable announcement of a freeze, recruiters need to be proactive and preempt any such silliness long before it occurs by making the business case for leveraging this time to re-architect the talent acquisition function, upgrade its strategic programs, and trade up the talent population while salaries and vendor costs can be negotiated down significantly.

(Incidentally, you can tell when a hiring freeze is imminent because they are almost always preceded by the infamous “paper clip memo” from the CFO, which limits the purchase of office supplies, magazine subscriptions, and travel).

Because every organization is unique, there is no one magic way to structure the business case, but I have put together a list of arguments that you can select from:

A) Negative impacts on revenue and costs
Obviously, not expanding your staff or keeping open positions vacant can save payroll dollars in the short term. However, such savings may actually present a false reality because freezes have many other unintended consequences that CFOs often fail to account for:

1. Lost revenue. Across-the-board hiring freezes mean that critical revenue-generating and revenue-impact positions go unfilled. Obviously, when there is no one in a revenue-generating position, there is a lost opportunity to generate revenue every day that the position remains vacant.
2. Customer impacts. Frozen budgets and understaffing can stretch your employees. This means that other employees must now do double duty because replacements can’t be hired. This may also impact quality and send a message to your customers that your firm is slipping as constrained employees sidestep process elements and cut corners. Both can negatively impact your product brand and future sales.
3. A limit on growth. Within most large firms, even during tough times some businesses units are growing, while others are shrinking. By freezing hiring “across the board,” you negatively impact your rapid growth and top revenue generating divisions. This limits their ability to continue to grow. In global firms, some regions are likely to be growing despite the downturn and an overall freeze will threaten your competitive position.
4. Headcount replacements are expensive. In the end, few hiring freezes actually end up saving money because budgeted headcount employees are often just replaced with consultants, temps, interns, and other “off the book” spending. In some cases, these alternative consultants and workers are actually more expensive than regular employees, leading to a situation where overall “labor costs” don’t go down at all. Facing employee shortages, some managers increase the use of overtime in order to get the work done, but at time and a half, this solution is relatively expensive.

B) Retention impacts

1. Frustrated employee turnover. Freezing resources means stagnation, and when opportunities are limited, they are likely to seek employment elsewhere. Freezing pay, promotions, travel, and/or training can also limit employee growth and learning, which will also increase turnover, if not immediately, at the first sign of opportunity.
2. It encourages your competitors. Hiring freezes are visible to outsiders on your website and the news of their existence spreads rapidly. These freezes send a message to your competitors that you are “weak” and struggling. This may cause them to increase their efforts to recruit away your employees and more often than not, your customers.
3. Freezing deadwood. Unfortunately, not being able to fill vacant positions causes managers to slow down or even cease their efforts to get rid of their deadwood employees. “Carrying” these low performers leads to lower productivity overall, but also weakens your managers by not forcing them to confront low performers. It gives managers an excuse not to make tough people decisions, which may also eventually weaken their decision making in product areas also.
4. Freezes frustrate “idle” recruiters. The best recruiters you are able to keep on your staff will invariably get rusty during hiring freezes. Having idle recruiters is a waste of money but it can also foster turnover among your recruiters who love action.

C) Missing out on talent opportunities

1. Exceptional talent. Across-the-board hiring freezes mean that when a few exceptional individuals like “Tiger Woods” enter the talent market, you will not be able to consider them. As a result, you’ll miss out on exceptional talent who could really make an impact. If your firm doesn’t capture this exceptional talent, other firms will.
2. Off-cycle recruiting. During tough economic times, both the amount and the quality of available talent will greatly exceed the available talent during boom times. Because during lean times, few firms are hiring, there is minimal competition. Together this means that a firm can now successfully attract experienced and college hires that their weak employment brand, pay rates or location wouldn’t normally allow.
3. Weakened recruiting capability. Extended hiring freezes invariably weaken the recruiting function. This loss of recruiting capability can impact the business because the remaining recruiting staff won’t have the ability to successfully recruit and land “in demand” candidates for the few positions that do become open.

D) Reduced innovation and technological capability

1. Reduced innovation. Budget freezes in particular can rob your innovators of the resources that they need to innovate, just as hiring freezes prevent you from recruiting new innovators. As a result, the rate of process and product innovation may decrease significantly during hiring freeze. In addition, freezing promotions and pay increases may limit your innovators motivation and willingness to be creative.
2. Impacts on technology. Because technology is constantly evolving and improving, hiring and budget freezes will directly limit your ability to attract new technologists and the needed new technologies.

E) Additional negative impacts of freezes

1. Employment brand impact. It signals a stoppage in a firm’s growth, which can impact your firm’s employment brand as a great place to work. This can make future recruiting more difficult and expensive.
2. Stock price impact. A freeze sends a message to analysts, customers, suppliers, and employees that your firm is not in a growth mode. Long or frequent “pauses” in recruiting may also send a stronger message that the company is in trouble, which could further hurt the stock price, which is likely lower anyway as a result of the weak economy.
3. Recovery time. Hiring freezes often mean that the recruiting function will be decimated. The function cannot be rebuilt overnight after the freezes are lifted. Many managers wrongfully assume that recruiting is a pure production function, one which you can put money into today and get results out tomorrow. While recruiting truly is a production function, it often requires significant ramp-up time, which many organizations fail to plan for. Refilling the “talent pipeline” with candidates after a freeze might take months, which can end up making the freeze last even longer than intended. In addition, “exploding out of the box” when the economy improves will also be more difficult.
4. Excessive early spending. Anticipating freezes often encourages hiring managers to hire “a bunch” of people early (whether they are needed or not). They do this in order to avoid “losing” the positions later in the year when hiring and budget freezes are generally introduced. In the same light, rumors of possible freezes can make managers and HR paranoid and to do “immediate panic” hiring the moment they hear a rumor about an upcoming freeze. They might also make rush decisions during a current hiring process, in order to complete it prior to the institution of a forthcoming hiring freeze.
5. Lower referral rates. Freezes may cause employees to hesitate before making referrals. They are hesitant partly because budget, promotion and pay freezes make the organization a less desirable place to work but also because a freeze may make their efforts fruitless because it diminishes the chances that their referrals will soon be hired.
6. More time spent on administration. Most across-the-board freezes are really not true freezes. Top managers almost always leave “exceptions” open. As a result, they don’t really “stop” hiring, they just slow requisition approvals and make them more painful to get approved. A large amount of a managers (and HR’s) time is wasted “getting around” these freezes and justifying “exceptions.” It can also give managers a bad taste for hiring of any kind, which may result in managers not devoting much time to the hiring process once the regular hiring process returns.

Action Steps

Rather than instituting across-the-board freezes, educate managers about the different options they have for cutting costs and increasing revenues:

• Focus on budget dollars. When it is important to slow down expenditures, it is often better to do it through budget control (controlling dollars) rather than through a hiring freeze or headcount tracking. In addition, always look at the revenue impacts whenever costs are cut.
• Increase internal movement. Managers need to increase the impact of their current employees by developing plans to transfer people internally from low return areas to those with higher return.
• Use incentives. Managers should consider offering short-term incentives to employees for increasing productivity or for reducing costs. Employees are often better equipped to judge where costs can be cut with minimal impact on productivity.
• Prioritize positions. If a manager decides to use a hiring freeze, they should limit the freeze to pre-identified non-key positions. Otherwise, a vacancy in a critical job can cause a significant loss in revenue and negate the projected cost savings from the hiring freeze.
• Demand metrics. If freezes are used, track metrics to determine whether overall costs are actually reduced by the freeze.
• Performance management. Managers should be encouraged to periodically fire low performing employees first, before seeking replacements.
• Rapid growth divisions. These critical regions or business units should be exempt from across-the-board freezes.
• Continuous churn. The new realities of talent management and business are that the old pattern of resource freezes and then layoffs needs to be broken. In a global economy, where firms need to be fast and agile, the new model is for firms to simultaneously hire and release workers in different areas. Smart managers must learn to continually add workers in areas of growth and innovation, while continually redeploying or releasing workers in areas of low ROI.

Final Thoughts

Any review of history will reveal that the majority of wealth in modern civilizations is more often than not created during times of significant economic crisis.

Opportunities abound for those organizations that are truly strategic, but as we all know, lots of people talk about being strategic but few really are. Now is the time for talent management to step up and proactively re-engineer antiquated practices and programs, and to embed talent management activities throughout core business processes while the organization can accommodate change.

If you wait until things are moving fast once again, you won’t have time to be strategic; you’ll be too busy catching up!

(Watch out, though, for the fireworks expected at Friday’s shareholder meeting when almost anything may happen.)

For the past several months, senior managers and top-level executives have been leaving the company in numbers large enough to attract attention from bloggers and tech writers. In June TechCrunch published a list of 114 director and VP level personnel who left Yahoo!, many in 2008. Not long after the site published another story saying Yahoo! could see another 100 senior people leave in three weeks, after options vest worth tens or even hundreds of thousands of dollars.

The company’s official comment on its loss of senior leaders is: “Yahoo continues to be a leader in our industry and remains a unique, exciting, and important place to work even as we experience the attrition that’s to be expected in the Internet industry.” Bloggers scoffed at that comment.

We noticed, however, that the list contained only two HotJobs expatriates: Dan Finnigan, formerly general manager and now CEO of Jobvite (profile; site), and Mike DeLuca, who was VP of sales.

That’s either good news meaning HotJobs staff is happy and mostly unaffected by the morale issues swirling around the search part of the business. Or it means that HotJobs, historically a poor cousin to other parts of the Yahoo! empire, just isn’t getting much notice in the blogosphere either.

We suspect it’s more of the former, though “happy” may be too subjective an adjective. Certainly HotJobs has staged a stunning turnaround in the last two or three years. Traffic to the site has doubled and is growing, instead of declining. Revenues are up, thanks mostly to the hundreds of newspapers that have thrown in with the site as their job board partner.

Yahoo! doesn’t break out HotJobs revenue separately. So it’s not possible to say with precision how much it has grown since the launch of the consortium in late 2006. However, with around 800 newspapers participating to varying degrees, revenue can be expected to have tracked at least some fraction of the site’s 50 percent growth in traffic.

Business management often argues that recruiters are not presenting the right candidates, and in perfect “hiring hindsight” find fault on the basis of candidate education level, character attributes, work experience, technical skills, compensation, etc.

Recruiters are quick to remind management that they present, but do not select, candidates for hire, and that most employees who leave a position do so because of other issues such as training, compensation, work schedule, promotional opportunity, etc. Recruiting and line managers need to acknowledge a shared responsibility for employee retention, and a shared success when good employees elect to stay and grow with the company.

In the spirit of developing good metrics, here are a few specific questions to help assess how successful a recruiter has been in contributing to retention

Did the recruiter submit a diverse slate of candidates?

One of the best ways recruiters can influence retention early in the hiring process is by presenting a diverse slate of candidates, thereby offering management significant choice when it comes to who they would like to hire. Employee referral programs, while often highly successful, sometimes have the unintended consequence of creating homogenous employee populations with a tendency to leave or switch employers in groups. Diverse employee populations aid in retention by offering a richer employment experience to new hires, simultaneously encouraging a culture of inclusion and innovation through broader perspectives.

Did the candidates submitted fit the job description as it was posted? Did the job posting accurately portray the requirements and qualifications sought in successful candidates?

Both internal and third party recruiters are subject to EEOC regulations and should present the most qualified candidates for an open position, regardless of age, race, gender, etc. So even if a particular hiring manager only wants to see candidates who are Cowboys fans, recruiters must use criteria from job postings when assessing candidate qualifications. Further, most new hires framed their understanding of a particular position based on the job description — and if they start with a flawed premise, it’s often hard to recover. This is especially true if career path, training, or other promises fail to deliver.

Did the recruiter explain the job description, work schedule, general compensation structure, and benefits information to the candidates?

If a telephone screening or recruiter interview is a part of your hiring process, good recruiters will use this time not only to evaluate the candidate, but also to go over the most important details about the position and company. Other recruiters will ask a candidate to prepare before a screening by conducting some research about the company, and then more effectively use their time by filling in the gaps with all of the information about the position that isn’t available online.

For call center positions or those with unique work schedules, candidates sometimes fail to fully grasp requirements such as evening or weekend work, mandatory attendance for training, or lack of flexibility in scheduling (which is sometimes required due to childcare or class schedules for those continuing their education). The more clearly these things are explained on the front side of the hiring process, the better your retention will be because there will be no surprises for your new hires.

Did the recruiter set appropriate expectations with the candidate about the interview, hiring, and onboarding process?

This is a partnership, and recruiters can only give candidates information that they have. Management and recruiters need to communicate closely when there are process or procedural changes that will affect new hires. Interviewing and orientation are highly influential parts of the process as they set the tone for new hires who are still forming their first impressions of your company. Missteps here are often magnified, and gross errors can give the impression that a company doesn’t care, toils under bureaucracy, or is generally ineffectual.

Did the recruiter make himself/herself available to the candidate during the hiring process for any questions or concerns?

In large corporations, often there are teams of individuals who handle pieces of the process such as relocation, employee orientation, benefits, etc. Recruiters and line managers are equally responsible for redirecting candidates to the correct point of contact so that new hires receive necessary information. Entry-level candidates, in particular, often have difficulties navigating through the various departments responsible for ensuring a smooth onboarding experience. The best recruiters will always offer to help and provide resources, recognizing how a good start can contribute to better retention.

Did the recruiter check-in with the candidate after the start date? (This is not always feasible in volume hiring situations, but is a great best practice where possible.)

The biggest employee retention issues often surface within the first couple weeks of employment. Candidates sometimes have not taken down their resumes from job boards or formally ceased their job-seeking activities. Introductions to coworkers, management, and staff begin to uncover personality clashes or stylistic differences. Commutes that seemed like a great idea now become unbearable. While candidate check-ins can’t erase these issues, they can at least help recruiters proactively identify these things in case there is anything management needs to do to prepare for or address.

Human resources and line of business management share responsibility for the successful recruitment and retention of employees. Recruiting functions must educate management as to the role they can play in retention, and must also draw clear lines as to what they cannot impact in results. The better this responsibility can be delineated and shared, the stronger your retention results will be.

I believe a company’s organizational values, its core values, culture, and mutual expectations, are a company’s best recruiting and retention tool.

Mutual Expectations

In relationships of every nature, including partnerships, joint ventures, service contracts and yes, marriage, the incidence of association failure can be traced in large part to the failure of the two parties to clearly understand, appreciate, and agree to mutual expectations upfront.

The employer/employee relationship unquestionably falls into this category. In fact, outside of a family, work relationships represent the greatest number of people involved. Yet few businesses formally establish clearly stated employer/employee mutual expectations!

The key to a company’s success is a reciprocal, balanced level of expectations between the organization and each of its employees.

Time was when the primary social and work contract in this country could be characterized as “show up, be reliable, do your job, and it’s yours until you retire. When that happens, we’ll continue to take care of you.”

But the erosion of this long-standing, unspoken social contract came about in the mid 1980s, when the burgeoning global economy created competitive pressures in the industrialized world, particularly in the United States. As a result, things began to move to a performance- and quality- orientation regarding the way in which a company viewed its fundamental relationship with employees.

Having built three successful businesses from scratch (the first local, the second national, the third global), I have established organizational values that have held up in both good and bad economic times. In fact, for 10 years before I sold my global company, it was considered the industry’s “employer of choice” for top professionals.

During the earlier days, however, we definitely spent our share of recruitment dollars and often settled for employees who exhibited less than 100% of our ideals. It was only after we established our organizational values (our core values, culture, and mutual expectations) that we hit our hiring stride.

That philosophy, or set of core organizational values, included a number of logical elements to employee/employer success. It wasn’t until we put those points down on paper and had prospective employees review them that we began to experience consistent recruiting success.

A few salient points of what employees could expect from the company: a competitive compensation and comprehensive benefits package; a clean, professional, safe and pleasant working environment; training that will help job performance and broaden career growth opportunities; a working environment that encourages individual initiative; commitment to diversity among staff and the fair treatment of all employees; opportunity to become stockholders within the company; and employee performance that will always be evaluated fairly.

On the other side of this mutual coin, here are a few company expectations of employees: open-minded, flexible and adaptive employees who are aware that change is a constant in the company’s competitive marketplace; self-directed, professional, reliable, career-oriented team players; a willingness to continually broaden knowledge and skills; and being a true company representative in speech and action.

Career development is another “best practice” recruitment tool. A successful company sees career development as an investment, not a chore. It should start on day one, with a comprehensive orientation program that includes a series of courses about technology, customer service programs, industry fundamentals, and evolution.

Since a full-time training staff is not part of the budget for most companies, “visiting faculty” and/or approved employee volunteers specified to address specific subjects could provide overview and training.

At my global company, a new employee would spend the first two weeks with various “faculty members” addressing the courses and various functions of the company.

Retention

Having invested considerable resources in recruiting, selecting, and developing high-quality talent, it’s logical that measures must be taken to keep these desired employees.

The primary retention motivator within the most successful companies is the company’s core values and culture, or its “organizational personality.” Looking forward to going to work every day with people you like and admire, taking pride in the organization, and performing work in a positive environment are fundamental and powerful retention tools.

If a company maintains an effective, appealing culture, its pay scale/benefits can be competitive, as opposed to very competitive. Put another way, if your organization is having trouble hiring or keeping desired employees, chances are your pay scale and benefits are not competitive, reflecting less than attractive organizational values.

Benefits should always be a reflection of a company’s core values. An organization needs to have a genuine awareness of the contemporary pressures of dual-income families, single heads of households, eldercare, and childcare. Believing this, we developed a PTO (paid time off) policy which stated that time could be used for any purpose, including vacation, illness, or personal needs.

The bottom line on pay and benefits is that if you have an ethical, practical set of core values and a culture that reflects them, you can and should be able to offer competitive pay and benefits. If you don’t, and want to upgrade the quality of staff, you must be very competitive. Benefits must reflect your integrated core values, culture, and mutual expectations.

Getting Benefit for Benefits

Over a certain period of time, however, employees may forget how good they have it. So keep your attractive pay and benefits package in the forefront of employees’ minds. Once a year, share with your entire employee family the facts about your company’s salary structure and benefits compared to the local labor market. If your pay and benefits package is good, make sure employees know and appreciate it.

The development and integration of comprehensive core values and culture, the cornerstone of organizational values, takes time. But once instilled, they become an organization’s heart and soul…and its key to successful recruiting and retention.

“It isn’t unusual to find employees driving 50, 75, even 100 miles each way to work and that can cost them $5,000 a year just in gas,” says Chuck Wilsker, president and CEO of the Telework Coalition, a Washington DC-based organization that supports telework options.

“When telecommuting is an option, it eliminates the geographic recruiting boundaries and increases the pool of prospective candidates. I have heard of specific situations where employers have been able to offer 15% less salary, simply because the employee will no longer need to absorb the daily commute cost.”

Employees who commute 30 miles or more to work are likely to turn-over at higher rates now that gas prices have sky-rocketed, according to Wilsker, and it will only get worse when the job market and the economy rebound. If more firms begin offering telecommuting options to appease employees, the competition for top talent will literally have no boundaries, since proximity to the office will no longer be a major recruiting criterion.

In addition, with no ceiling on gas prices projected anytime soon, Wilsker says that commute costs are starting to concern highly skilled employees, not just hourly workers. In the past, employees making $150,000 to $250,000 might not have considered long commutes when weighing an offer, now they are now thinking about it long and hard before accepting.

Fuel and commuting expenses are also making it harder to close offers made to relocating candidates says Mickey Matteson, account executive for Recruiter Relocation, a third-party relocation company. She says candidates are scrutinizing the cost of living in prospective urban areas, and in the past, most candidates would have accepted the offer, opting to live in less-expensive suburbs or outlying areas. Now, given the commute costs, more are either turning down offers or negotiating for higher salaries.

Matteson says relocation costs are also escalating and those increases are impacting recruiting. The average moving company fee is now $10,342, and many of the quoted prices have jumped so dramatically by the move date that some candidate deals are unraveling at the last minute. The total cost of relocating an employee or candidate is now $55,165, and given the steep price tag, Matteson says that 81% of companies are requiring relocating candidates sign repayment agreements, forcing them to repay the relocation costs, if they quit before completing one year of employment.

“Candidates are being more cautious and many are opting to rent out their existing homes rather than selling them,” says Matteson. “That’s making employers nervous because they don’t feel the candidate is committed, but at the same time, candidates want to try out their new employers and new surroundings. Some employers are allowing new workers to fly back and forth, but given what’s happened with the airline industry recently, I’m not sure that decision will make sense for very long.”

The Winners

Some employers are organizing car pools and offering employees the opportunity to purchase discounted mass transit passes, and the most progressive companies, are offering full or part-time telecommuting programs, which helps to attract and retain talent.

REI, the outdoor clothing retailer based in the Pacific Northwest and a perennial winner of Fortune magazine’s Best Places to Work Award, installed a customized work environment program (CWE) in some departments at its headquarters several months ago.

Initially, the program’s main goal was to help employees achieve greater work-life balance; now, the employees are saving money on gas. CWE allows employees to select alternate commute times to avoid traffic or the opportunity to work from home a few days a week, based upon each department’s need. CWE along with REI’s other subsidized transportation programs, such as van pools and paying 50% toward the cost of mass-transit passes, is a strong selling point with applicants, according to Bruce Bobzien, senior recruiter for REI.

So if telecommuting attracts applicants, lowers costs and increases employee satisfaction, what’s holding companies back from offering the option to everyone? Command and control. Employers are often reluctant to allow people to work remotely, beyond the constant watch of managers.

Jay Horowitz, CEO of Strategic Legal Solutions, a New York-based provider of outsourced legal services and staffing, recommends easing into telecommuting to get started, offering the arrangements on a case-by-case basis, perhaps a few days each week, to trusted workers. He also suggests employers make certain the telecommuting employee has a properly outfitted home office to assure effective communications.

Strategic Legal built a practice around experienced telecommuting attorneys who provide remote support for large cases and projects, such as class-action law suit discovery. Horowitz says that law firms are cognizant of all the indirect costs of employment including space, furniture, computers, and parking, so increasingly, the firms requested offsite attorneys for project work. Now, given the current gas prices, the concept makes even more sense.

“I wouldn’t hesitate to allow an employee to telecommute now that I’ve done it before,” says Horowitz, who allows the firm’s account executives to telecommute. “But I think you should have them come into the office for the first few weeks, train them, expose them to the culture and be very clear about the expectations. Maybe have them come into the office one morning each week after training, so you can stay connected. I think the more flexibility you show as an employer, the more likely it is you’ll be able to secure top talent.”

New Tools for Remote Supervision

Information technology has traditionally offered remote work opportunities, yet even the tech industry hasn’t had all the tools it needs to supervise telecommuting workers. oDesk, an online tool businesses use to build and manage remote teams, received $15 million in funding last week. The oDesk Web-based collaboration tools enable project managers to visually track and verify all work performed, both historically and in real-time.

Over the past few years, the term “recruiting” has increasingly become almost automatically appended with “and retention.”

The titles of VP, Director, or Manager of Recruiting & Retention have become pretty common, and many industry commentators clump the two together, almost perfunctorily.

I don’t get the connection.

Most organizations carelessly use these terms, so it may help to gain some clarity by agreeing on our definitions.

First, “recruiting” refers to those activities that are undertaken to convince employees of other companies to leave their current job in favor of a new one. By definition, the end result of this process should be the addition of new workers to our payroll who were not on that payroll the day before we recruited them. In other words, recruiting results in the influx of new talent into a company.

An important point here: this definition renders the phrase “internal recruitment” oxymoronic, and properly so. There is no such thing as internal recruitment, since you cannot, by definition, recruit someone to join the company who is already an employee. You can internally move, redeploy, reassign, or transfer them, but you cannot recruit them. Having recruiters spend time on internal movement activities and calling it “internal recruiting” represents a misuse of a recruiter’s time that will decrease the effectiveness of a function’s ability to actually recruit new talent into the company.

On the other hand, “retention” refers to those activities that a company undertakes to keep its highly valued current employees engaged and committed to the company. In other words, after workers are recruited, hired, trained, and productive, we initiate certain actions and engage in certain behaviors to encourage their ongoing loyalty to our firm.

Many companies do a nice job of making new employees feel welcome and provide excellent onboarding programs to assist with boosting retention from the employee’s first day. But these also occur after a new employee has been recruited, and after recruiting has moved on to finding candidates to fill the next requisition.

Separate and Distinct

If “recruiting” focuses on external talent who does not yet work here, and “retention” focuses on keeping the employees who are already here, aren’t these two activities separate and distinct at their core? Don’t they require vastly different activities and different skill sets to accomplish? Why do we automatically lump these activities together?

The most common thinking, of course, ties the quality of recruiting to retention performance using the argument that if the recruiting function hires the right people in the first place, our workers will have higher engagement, will be more career-oriented, and will stick around longer. But there are a few big problems with this argument.

First, in all but a few rare cases, recruiting doesn’t make the hire; the hiring manager does. Almost universally, the most the recruiting function can do is create the slate of finalist candidates (if they even do that), and the manager takes it from there.

Recruiting may have a vote, but it is rarely a veto. And on those rare occasions when it is a veto, it is not an override veto: recruiting may be able to stop a hire, but it can never force one on a hiring manager who doesn’t want the candidate, no matter how poor the manager’s reasoning.

Turnover’s Fuzzy Logic

The other problem with the argument is that it reflects fuzzy logic about the prime causes of turnover. While a good recruiter should be able to increase the quality of the candidate slate, and therefore increase the quality of the final hire, a bad line manager, poor management practices, and unkind co-workers can frustrate the greatest hire in the world, causing them to leave in record time.

Does a recruiter have control over any of these factors? I have never read a study that links attrition to recruiting practices. I have read hundreds of studies, though, that clearly link attrition with bad management practices, poor selection practices (remember, the manager makes that decision), bad bosses, boring work, lack of career-enhancing opportunities, and unsatisfactory compensation opportunities. Notice that none of these qualities have anything to do with recruiting.

Another challenge in merging these functions is that the capabilities required to be a great recruiter have little overlap with the skills required to build impactful, measurable retention programs.

Great recruiters have an external focus on the market of people who do not work here and may not have ever thought about working here. Retention initiatives are internally focused on people who have already decided to work here. Why would we think that one human being would be good at or be able to split their time between the two worlds? In fact, both roles are large enough to ensure that if you are doing one well you are almost certainly under-delivering in the other.

Interestingly, when we ask recruiting leaders who have this title to enumerate the scope of their retention activities, it is typically limited to ensuring the quality of candidates in the pipeline, sometimes providing marketplace feedback on competitive talent practices (usually compensation and talent management schemes at direct competitors), and marketplace feedback on the company’s market reputation.

Recruiting can certainly increase attrition through poor recruiting practices. Recruiters could, for example, misrepresent actual job duties, fail to eliminate habitual job-changers, or fail to stand firm with hiring managers about best hiring practices. But these are recruiting failures, not retention failures.

Look at it this way: assuming that recruiting does its job right, retention of that employee is no longer up to the recruiting function once that hire becomes an employee. It is up to HR and to line management to ensure their long-term success and loyalty.

After all, consider that line managers:

• Make the final hiring decision.
• Are primarily responsible, along with HR, for onboarding/new hire integration.
• Direct employees’ day-to-day work.
• Set the tone of the work unit.
• Lead the career development, along with HR, of direct reports.
• With assistance from HR, provide performance feedback/direction.
• Using HR programs, are responsible for promotions, both within their work groups and throughout the organization.

Let’s stop pretending that recruiting and retention are natural soul mates. Even more importantly, let’s put the retention focus where it properly belongs: in the hands of HR for overarching programs and in the hands of line managers for day-to-day delivery.

Let’s make first-year retention performance and top talent retention performance part of line managers’ key performance objectives. Let’s measure HR business value in terms of their demonstrated effectiveness at impacting workforce engagement and key employee retention.

Let recruiting focus on bringing us the best new talent on the market.

Then recruiting and retention will have the space they need to improve.

My friend was released after just 20 days on the job.

She was given work assignments to complete that had never been discussed in the interview. At her exit interview, her manager admitted he had overestimated her technical skills in the interview. She had not professed extensive technical skills in the interview. She was given no notice that she was to be terminated, just asked to come to the conference room at 3 pm on what turned out to be her last day.

Reflecting back, she realized that there had been virtually no communication with her manager over her last three days leading up to her termination. What’s ironic is that she was actually getting a lot of work done then. She felt that she was finally just starting to get the hang of things.

This was during the time when her manager was probably meeting with HR to work out and finalize her termination. At the exit interview, she was told that she “didn’t pick things up quickly enough.”

My friend had asked lots of questions of her manager while employed there, particularly when given work that was beyond what had been discussed in the interview. But whenever she asked her boss about her assignments, he talked about other things and never really answered her questions.

When a manager says something like “you didn’t pick things up quickly enough,” this can also be seen to mean, “I didn’t take the time to manage you well.”

Especially with new hires, managers have to invest a lot of time in integrating the new employee. When a new piece of equipment is obtained for the office, there is often instruction in how to use that piece of equipment, at least for the person who is responsible for using it. We may even send the person to training in how to use the machine.

Sink or Swim?

We don’t seem to do that consistently with people. We throw them into situations and expect them to “sink or swim.” We cannot afford to have too many new hires sink. It just costs too much money.

It costs a manager something more than money to admit that he may not have managed the person in the way that they needed to be managed. He didn’t take the time to figure out how to motivate the person. He didn’t figure out how the new person learns best, through careful instruction or trial and error.

The cost is that the manager has to admit that he made a mistake. That he was wrong. It’s much easier to blame the now-terminated new hire:

• “You didn’t pick things up fast enough.”
• “You weren’t communicating enough.”
• “You didn’t understand the culture here.”
• “You were a bad fit.”

In all these cases, the common denominator may have been that the manager didn’t do a good enough job in interviewing the person or integrating the new hire into the workforce in the first weeks or months. In every case, the manager blamed the employee for what may have been the manager’s shortcoming.

Managing is hard work. It’s not intuitive. No one is born a manager. Some people are born leaders, but managing requires training and it takes time.

Good managers can be developed, but only if they are given the time to learn, also the same way new hires need time to develop.

Managers need to master a broad skill set to be effective in all phases of the role:

• Understanding how the department operates so that the right mix of jobs is created.
• Interviewing (which is so much more than just talking to people) to effectively determine whether candidates have the correct skill-match for the position.
• Orienting the new hire to the workplace and to the job and his or her colleagues. Integrating a new hire takes weeks, not hours. Too frequently, managers leave orientation up to HR. No offense to HR, but new hires are too valuable to be trusted only to HR. The HR team has a critical role to play in integrating new employees, but the new hire is going to listen far more to what their new manager tells them than anything HR has to say.
• Setting performance objectives so that the new hire clearly understands what is expected of him or her.
• Giving feedback on an ongoing basis, not just at the end of the year in an anxiety-ridden performance evaluation.
• Recognizing and rewarding people for their effort as well as for their accomplishments.

When you look at all the expectations that we have of managers, it’s easy to understand why we invest so much in management development and training. It takes time to become an effective manager. Anyone promoted to management generally figures this out in the first few days on the job.

The piece that too often gets overlooked is training our managers in people management. How to interview candidates, how to select the right ones who can be most productive in their environment, and how to continue to get the most out of them on the job. Managers need to learn how to engage their staff so they give their best effort on the job as opposed to just doing enough not to get fired.

The good news is we usually give new managers the time to figure out how to do their new job, in part because of all the time and money invested in developing this person to the point of promotion.

No doubt, this new manager would certainly be annoyed if after a few weeks in the new position, their manager called them into a conference room and started in with, “You’re not picking things up quickly enough.”

“Water carriers play an important role at Herman Miller,” says Deb Exo, director of talent management. “They carry forward the context of the past that supports the future of the company and they provide insight about the company and mentoring to new employees.”

While having a stable of tenured employees might be newsworthy enough in 2008 employment lore, it’s the furniture pioneer’s ability to sustain those employee retention levels that might be its most notable accomplishment. The company averages 3 percent voluntary turnover per year and reported 9,600 applicants for 738 new positions, according to Fortune’s “Best Places to Work” list for 2008.

The company’s candidate selection process doesn’t currently include assessments or psychological profiles, but it does include a multi-day stay at the company’s Marigold Lodge, where candidates participate in an interviewing marathon.

Exo laughs as she says that the company’s interviewing process is legendary for being long and involved, and admits that she went through 12 interviews before receiving an offer.

“Following an initial screening for technical skills, the candidates stay at the lodge for several days, where they may go through as many as 8 to 12 interviews, but certainly no less than five,” says Exo. “The candidate gets the full experience of the company culture 24/7 while they stay there, because there’s a lot of storytelling that’s included in the process. They also bump up against water carriers and we get a chance to really engage the candidate, so we can see how they learn and think.”

Exo says that the length of the interviewing process isn’t pre-scripted, and while candidates are often exhausted after interviewing in the evenings and during meals, the complete disclosure methodology seems to give everyone involved enough information to make informed choices. Water carriers also carry forward the culture by presenting to new hires during orientation. New staff members are informally assigned to a mentor, who is usually a water carrier. They provide new employees with tips about how to get things done and navigate the company culture. Mentoring is designed to breed future water carriers.

Of course, not everything at Herman Miller has tribal roots. There are 2008-style incentives that encourage employees to stick around and become future water carriers. Exo received a pair of diamond earrings for her 25th anniversary, so now she not only carries water, she carries rocks.

For more about Herman Miller and the company’s migration to talent management, read the June issue of the Journal of Corporate Recruiting Leadership.

In most organizations the recruiting function is entirely separate from the retention effort, yet the design of the hiring process has a dramatic and direct impact on future turnover. I estimate more than one-third of the factors that drive future turnover have their roots in the recruiting, hiring, and on-boarding process.

Unfortunately, most managers and many recruiters are unaware of this direct relationship and as a result, organizations suffer from unnecessary turnover. If you are a hiring manager, a recruiter, or a retention specialist, it’s important that you understand how the hiring process impacts the likelihood that someone will depart early.

Recruiting Factors That Impact Future Retention

If you’re interested in reducing turnover, here are some of the hiring-related factors that impact future retention:

1. Hiring candidates who are focused on money. Every candidate has his or her own set of motivators for taking and remaining in a job, and a significant percentage of people are motivated primarily by money. Money is the offer component that is the easiest to compare between firms, but it is also a factor that can change fast. Individuals whose primary motivator is money tend to be at the top of the turnover pyramid because they frequently “jump” to a new job as soon as a higher monetary offer comes in. No matter how good your initial starting salary, if your organization is slow to give raises, bonuses, stock rewards, or to counter outside offers, you will inevitably lose these individuals when more money comes along. Leading firms like Ernst & Young and Southwest Airlines understand this relationship and as a result, they specifically target hiring individuals who don’t have the “give me the money” mentality. Incidentally, individuals hired from executive search firms can fall into this “money first” category. If they left the last job because an executive search professional presented a “better money” offer, don’t be surprised when they leave again when the next executive search professional calls with slightly more money to offer. Solutions include targeting individuals from not-for-profits, government, education, and medicine. Also, share information on the maximum and minimum salary, stock options, and bonus amounts (based on actual new-hire experience over the last two years). By providing only trend information from actual experience and carefully avoiding any direct promises to individual candidates, you can minimize legal issues and any misperceptions about the actual amounts that they “will” actually make. To determine a candidate’s top motivators, give them a simple, one-page survey that requires them to force-rank the top and bottom factors that motivate them to change jobs. By forcing them to rank the top and bottom three “job change” motivators, you can get a good (though not perfect) idea of whether exceptional money is a critical factor. Options could include high base pay, bonus percentage, exceptional benefits, challenging work, learning and growth, working in a team, working independently, the opportunity to innovate, job security, a directive manager, a hands-off manager, a product they believe in, the desire to help others, recognition, and two-way communications.
2. The source where you found the candidate. Employees who make referrals have a personal interest in the individuals they refer succeeding on the job. As a result, the employee making the referral has a tendency to mentor or guide that individual and will intervene to help the candidate if he or she gets frustrated. Sources of recruits who don’t have that mentoring connection, like large job boards, almost always produce hires who quit at a much higher rate. Look at each of your early turnover cases and see which of your sources have above-normal turnover rates.
3. Their average tenure in other jobs. Calculate how long, on average, any “serial quitters” stayed in their last several jobs as an indicator of how long they are likely to stay in this job. I am not saying you shouldn’t hire people who change jobs frequently. They might be top performers who are simply in high demand or who work on projects with relatively short lifecycles. However, you should estimate their likely tenure, then mark it on your calendar, and then later, actively “re-recruit” them around the time they are “overdue” for change and are likely to begin looking for a new job.
4. On-boarding and orientation. The first few days on the job have a dramatic impact on future retention (one firm found that weak orientation could increase future turnover by as much as 20%). Research shows that individuals make a “mental decision” during their first month as to how long they expect to stay with the organization (Note: this phenomenon is highlighted in the popular book, Blink). New hires subconsciously judge whether the organization meets, exceeds, or fails to meet the expectations they have based on how they were treated during the first week and month. If they are under the belief that your organization promised exciting work but are told during their first week on the job to sit in their cubical and “read the manual,” they are likely to conclude (and also to tell their colleagues) that while the organization may talk a good game, it is not reflected in the actual job. To avoid mixed messages, make sure that your “local” on-boarding is stimulating and gets them up to the expected level of productivity quickly. Such a program might focus on coordinating meetings with the top people right away, providing new hires with a mentor, and periodically asking them what can be done to bring them up to productivity faster. During orientation, ask candidates specifically “what is the best way to manage you?” By identifying what management approaches they personally have found to be effective with them in the past, you can avoid the need for a lot of trial and error on the part of their manager. Some of the “factors” you want to identify relating to “how to best manage them” include what motivates them, what frustrates them, what is the best way to communicate with them, how often they like to see their manager, what challenges them, and what would they like to learn during orientation. With this information, you can provide their new manager with insights into the management approaches that make them the most productive (note: managers can also provide new hires with a profile outlining how they manage their employees). Ask new hires during on-boarding why they accepted the job and what led them to quit their last two jobs. Passing those reasons on to their current manager can help ensure that they know which factors might cause the new hire to leave again.
5. Recruiter involvement after the hire. If you want to reduce future turnover, maintain a relationship with new hires during their first six months in order to ensure that they don’t become frustrated (this approach was championed by Michael Homula at FirstMerit Bank with great success). Recruiters can add value because good recruiters routinely know what motivates and frustrates their candidates. It only makes sense that they maintain a relationship with new hires for a few months after they come on board to gauge whether the candidates’ expectations are being met. I call this process “closing the sale.” In this case, recruiters don’t take over a manager’s role in retention; instead, they only supplement it. Recruiters can be a source of advice and information, help reduce new hire frustration, and provide insight on how to navigate inside the company. Recruiters can also help new hires understand the “what” and “why’s” within the firm. As many as 60% of new hires fail, not because they’re bad hires, but instead because of a bad initial job placement. Recruiters who keep in touch can help to speed up internal redeployment of initially “mis-placed” individuals.
6. The lack of diversity orientation and retention. Many organizations have a diversity recruiting function that endeavors to hire diverse individuals. Unfortunately, once they are hired, diverse individuals frequently receive no further special attention. This is unfortunate, because by definition, diverse individuals have different expectations and needs than the average hire. If you treat all new hires exactly the same, you should not be surprised when you find that diversity turnover rates are higher than your average turnover rates. The solution is simple: offer variations in on-boarding to ensure that the unique needs of diverse people are met. Next, add a diversity retention function or process to ensure that your organization gets direct feedback from diverse new hires about factors that might cause them to be frustrated or to begin looking for another job.
7. Manager rewards for great retention. Less than one in three organizations reward managers for having low turnover rates among new hires. If you want managers to pay attention to retention both during and after a new hire’s induction period, show them the impact that turnover has on their business results. Then, tie every manager’s bonus to “performance turnover.” Performance turnover differs from traditional turnover in that the loss of a top performer, a diverse individual, or an individual in a mission-critical job is weighted significantly higher than the turnover of an average performer. There is no punishment for losing a bottom performer.
8. Being aware of the most common causes of turnover. If your organization conducts delayed or “post-exit” interviews, you probably already know that most top performers leave because they had a bad manager, were not challenged, were not growing, or were mistreated. Don’t place a top candidate with a mediocre or bad manager. If your organization doesn’t have a bad manager identification program, look at the processes pioneered by FedEx and Dell.

Shifting to other turnover causes, if you want to ensure that new hires are challenged, learning, and growing, ensure that all new hires have an individualized plan for learning, growth, and challenge (Qualcomm, for example, requires every employee to have a learning plan). Next, focus on the lack of differentiation.

In my experience, it’s hard to get compensation professionals to realize the important role they play in great recruiting and retention, but every effort must be made to convince them that you can satisfy most top performers’ need for differentiation by ensuring that a significant portion of pay and bonuses are based on performance.

Few things frustrate top performers more than being paid, recognized, and treated exactly the same as poor performers like Homer Simpson.

Final Thoughts

HR has justifiably been accused of creating numerous functional “silos” that hinder cooperation between the different HR departments. New hires must be “maintained” just like any other new asset. There needs to be a planned maintenance schedule that is personalized to the needs of each new hire. That maintenance process must be coordinated and systematic and must “force” integration of the actions of the various silos. Almost without exception, one of the thickest walls between HR functions is the one that separates the recruiting function from the retention effort.

In my experience, the interaction between these two functions is, all too often, minimal to nonexistent even though bad recruiting directly “causes” future turnover and conversely, poor retention efforts unnecessarily increase the future workload of all recruiters.

To avoid this common problem, identify the direct connections between how you recruit and orient and future turnover. Then take the necessary steps to stop this wasteful, preventable turnover.

Decreasing turnover and increasing productivity can be a natty problem. Solutions usually come in one strength: weak. That is, incentive programs, public awards, and social get-togethers generally fail to make a long-term financial impression.

I won’t claim that employee appreciation programs aren’t a nice touch; after all, everyone wants to feel appreciated. But such recognition does not solve the real problem.

Care and Maintenance of Cube Farms

Jobs are considerably more complicated than they appear. The recruiting and hiring process is easy to understand. The hard part begins after hiring. That’s when employees endure a manager’s personality and level of competency; receive varied compensation and benefits for doing similar jobs (generosity and equality are not a widely shared corporate objective); encounter daily job frustrations (lack of resources, conflicts with other people and departments, conflicting policies); and worry about surviving the next reorganization.

That is what we forget about organizations. Companies, government agencies, and non-profits are not buildings or equipment. Organizations are people. That’s why we call them “organizations.”

Organizational research confirms that excessive turnover is most often a function of the wrong people in the wrong job. Specifically, managers who do a poor job choosing the right seed and forget to nurture their Cubies.

The Deciders

Excessive turnover and low productivity are symptoms of management treatment and decisions.

We’ll start with executives and middle managers?the folks who make the big decisions. Although these candidates need it the most, they avoid assessment like a televangelist avoids a sunshine audit.

Executive decisions require considerably more than the average level of skill. They need an almost superhuman mental ability to anticipate opportunities and avoid unexpected problems, combined with a personal charisma to make it happen.

In B-school terms, this is called “expert knowledge” and “leadership.” B-school case books are filled with hundreds of examples of company executives who lacked expert knowledge and zigged when they should have zagged. Just check out the business section of your local newspaper for the massive mistake of the month.

Once you get past an executive’s glowing resume, dig for details. Most important, try to understand the skills and motivations he or she will bring to the job. Often these will not be evident in the resume, nor will they be evident in the interview. Both usually address results, but “results” are often not the same as skills. Think of results as the score at the end of the game and skills as how the game was played. You need to know skills.

Key skills that should be assessed before turning over the family jewels to an executive include his or her ability to make reasoned decisions when information is totally lacking; his or her ability to persuade (not cajole) subordinates to take action; and most important, his or her hidden attitudes, interests, and motivations.

When people get promoted (or elected) to positions of power and authority, the first casualty is usually humility. Dr. Bob Hogan has written extensively on how a large number of executive failures can be attributed to narcissism that blooms after a promotion. That is, the executive or manager thinks he or she is above reproach. Just think of Leona Helmsley, Ken Lay, Bernie Ebbers, and (more than few) high-profile politicians who thought they deserved special treatment.

Pat, Howie, and Roger

Assuming your executives are not the poster kids for bad behavior, and assuming working conditions in your organization are better than the average troll mine, what other factors do you think have a substantial effect on turnover? Did you guess incompetent front-line managers?

Employee surveys generally say front-line managers are the greatest source of dissatisfaction about their job. I don’t know about you, but I have worked for some real sociopaths. Some were paranoid about losing their job; some felt subordinates should be human-shields whose purpose was to make the manager look good; and some were totally clueless about what their subordinates did.

Some of my ex-managers’ priceless comments still ring in my ears. For example, after 15 months of no departmental meetings, Wrong-Way Roger exploded with, “Meetings? You know what to do! If I held meetings, I would be doing your job!”

Another manager, Oblivious Pat, claimed he could learn his PhD’s job within a few months. And Horrible Howie insisted his PC be programmed so all he had to do was press one button to get anything he wanted.

While some might claim these people were dipsticks in the motor of life (I would never say that) others would see them as shining examples of a management selection system that put the wrong people in the wrong job. Wrong-headed Roger should have been kept apart from human beings. Oblivious Pat should have been an auditor. And Horrible Howie should have stayed in school.

Management, especially front-line management, can have more effect on turnover than any other system. If your organization suffers from high turnover, the first place to look is front-line management.

Key Management Skills

Front-line management jobs come in all shapes and sizes. On one hand, there are people with a management title, but their job involves “doing,” not coaching. Their title could be a reward for good performance, an ego boost, or strategic positioning. No matter. This kind of manager does not manage. He or she is an individual contributor and should be evaluated for contributor skills, not management skills.

True front-line managers are usually coaches. That is, they have the responsibility for managing, developing, or correcting the activities of the people they supervise. Front-line managers get things done through people, not by doing the job themselves. None of the managers in my examples were able to manage, and their interactions with intelligent human beings were caustic. Their behavior drove turnover.

Front-line managers do not have to be expert in the jobs they supervise. They just have to know it well enough to give direction and guidance. This is not an easy skill to acquire; while some argue it can be learned, my experience evaluating managers of all types show few people have the skills to coach effectively. In practice, they tend to dance around the issue or make veiled threats. None of which helps their direct reports get better.

Manager/Coaches = 1 in 7

When I evaluate managers, only about one out of every seven can intelligently question, discover problems, make appropriate suggestions, and get subordinate commitment. Six out of seven flounder?mostly in the coaching arena.

Use better standards to select and promote new ones by evaluating candidates’ abilities to do the following:

• Plan and organize complex activity.
• Coach and develop others.
• Be able to think analytically and see both the forest and the trees.
• Be able to perform the job, but not necessarily be an expert.
• Have the attitudes, interest, and motivation of a manager.

Always remember first-line managers are cited as employees’ greatest source of stress. And stress can be a significant reason for turnover. Incoming and first-line management promotion decisions are the easiest to tackle. Simply forget about “promotions as a reward” and focus on “promotions based on job skills.”

Evaluate prospective front-line manager job skills by interviewing about past behaviors, administering tests and exercises, and watching the person perform in coaching simulations.

If you want to start reducing turnover, make sure every incoming executive and manager has the right skills for the job.

Turnover at one mature organization I have spoken with recently has reached close to 100% for its key engineering talent. This is not because the company is a poor performer or because it doesn’t pay well. In fact, it is doing very well and pays above the average.

The reason they are losing people is because they are well-paid, have made significant income, and have built up large 401(k) accounts. They are leaving because they are successful and able to pursue other interests.

The causes of turnover are changing and wise organizations are looking deeply at those causes and learning new ways to respond.

I often hear managers, CEOs, and supervisors promising this and that and making speeches about how committed they are to their workers.

When it comes time to allow workers some say in their work, or the opportunity to transfer to another department, or the chance to try something new, they just as often hesitate. Words can take on many meanings and can be twisted to fit any occasion. Deeds speak for themselves.

Back in the “good old days,” turnover levels were very low in most organizations, often approaching less than 2% in firms such as Hewlett-Packard and IBM. Employees expected to be retained until retirement and to receive a living retirement income after 25 or 30 years of service. There was loyalty and commitment to the firm and frequently in the best of these companies, strong cultures