The Retention Riddle, or Who Owns Retention and Why?

Keeping a company’s workforce has somehow become a job for recruiters in many organizations. I happen to think that’s scapegoating – putting the blame for poor hiring decisions on the recruiter. If there is anyone to blame it has to be the hiring manager. And if there is anything we do understand about people, it is why they tend to leave their employers. The reasons are always complex and involve several variables, none of which have much to do with the staffing organization. People are driven to leave companies less by market forces (i.e. salaries and benefits) than by intangible forces. Survey after survey has pointed out that the reasons people leave are focused around their manager. The simple truism is that good managers retain good people. Yet some staffing organizations I work with have – amazingly in my opinion -taken on that responsibility and will suffer from it in the end. Let’s take a look at the issue of keeping people. The U.S. government has done the best job of this over the past few decades – much too good of a job as it turns out! It is at the cusp of losing large percentages of workers over the next decade. The IRS, Foreign Service, CIA and other organizations that have “enjoyed” turnover rates approaching zero are soon to be faced with replacing more than half their workers. The government has kept too many people by offering them excellent pension programs and lifetime benefits. This approach to retention – the golden handcuffs – works well and has also been used by many Fortune 500 companies. The problem with this approach is not in the tools but in the way they are applied. Neither the government nor most of the Fortune 500 had robust performance management systems to weed out poor performers. Any employee so inclined could stay as long as they wished. If you takes a look at General Electric over the past two decades, you’ll see a picture of vigorous performance management coupled with a constant and predictable replacement rate – about 10% of the workforce every year. This is surely the way it should be: a few out and a few in all the time. The trick is to meter this to a level that makes sense for the organization and its strategic objectives. For organizations that have resisted the golden handcuff approach, turnover has been an increasing problem. There is little understanding of the need to meter turnover and control, not prevent it. Making certain that organizations have some basics in place for managing this flow of people is where HR, and by association, the staffing function, can play a role. Here are five ways you can endeavor to control turnover – not prevent it altogether, which, as we have seen, is not a noble goal. Retention, well-defined, is simply keeping those whom you wish to keep and letting go those whom you do not wish to keep. Endeavor #1: Place Responsibility Where It Belongs. Managers own retention. There have to be measures that report and hold them accountable for the people they lose. Managers that develop relationships with their staff, who act fairly and consistently and demand performance, have the right kind of turnover. Managers who keep everyone are very bad managers. Managers who lose large numbers consistently are also bad managers. Endeavor #2: Establish Performance Management Systems. Whether you ascribe to Jack Welch’s style of removing the bottom 10% or so of poor performers or prefer simply moving, removing, or developing poor performers, it has to be a corporate norm. Letting people “slack off” quickly becomes a way of life and fewer and fewer people strive to do their best. This kind of environment is disheartening to those whom you hire who are diligent and motivated, and they move on. I could cite many examples but won’t for obvious reasons. Endeavor #3: Provide Development Opportunities To The Best. When you have good performers who contribute to the organizations’ goals and profits, you are beholden to help them grow. Focusing development on the poor performers (something I see all the time) deprives the best. These best see that the worst get the most, realize that they have nowhere to go inside the firm, and so go outside. This is the kind of turnover than is insidious and can destroy an organization as surely as a fungus can destroy a plant. Endeavor #4: Promote Ruthlessly And With Accountability. Take the best performers, develop them and let them go to wherever they are stretched. Giving people challenges and encouraging them to try for something that seems unattainable motivates and retains. Managers who, for selfish reasons, keep the best toiling on critical projects and let poor performers attend classes and take advantage of development opportunities build resentment. Managers who promote the hard working to levels just outside their comfort zone and who at the same time make development and coaching available, are going to have high levels of performance and keep their people. These people also need to be held accountable and have metrics that are meaningful and lead to more pay or other rewards. Carrots always work better than sticks. Endeavor #5: Understand The Market And Be With It. People know what they should be paid and have an innate sense of what they are worth. Organizations with good retention also have excellent salaries and benefits that publicly point to those others should emulate. Everyone likewise quickly recognizes people rewarded beyond their efforts, and become disillusioned. The base of any retention pyramid has to be market-level pay, fairly given. Recruiters may have a slight role in the retention process by ensuring that candidates they present to management are the best they can find. But, the decision on whether or not a person is hired rests entirely with management. So too does retention. If you are being seduced to take on the retention “problem” in your company, resist. You will in the end be blamed and have no one to complain to but yourself. <*SPONSORMESSAGE*>