The Retention Institute

50% of Doctors…

2010-05-10T10:18:00.000-07:00

Several years ago I severely injured my knee playing basketball and required 2 surgeries to fix it. Several months into post-surgery rehab, the therapist advised me to never have such complex surgery performed by those who do it infrequently. His advice was clear: ski resort surgeons fix knees every day and I should have gone there rather than have local doctors perform the surgeries.

This brings to mind a sure-fire laugh line when speaking to groups, that “50% of all doctors graduated in the bottom half of their classes”. The point is that the worst graduate is still called “doctor”, and this leads to a discussion about how easy it is to assume that all who do the same profession do it equally well.

We know this is true about supervisors based on team performance, turnover rates, grapevine talk, and other criteria. Yet few companies put extra support plans in place for supervisors who are not as talented as their peers. Clearly there are a bottom 20% or so who need structured coaching, team sharing sessions with peers, additional support when hiring, and other interventions that will help them perform better in the short term and build their skills over time…or identify them as supervisors who shouldn’t be supervising.

The primary obstacle to such a plan is that managers are reluctant to tell supervisors they need help. It’s easy to say new supervisors get different treatment because being new doesn’t imply being ineffective. But some supervisors are ineffective and they need structured help to improve.

Where the Jobs Are

2010-05-03T08:00:00.000-07:00

Time Magazine’s recent cover story on finding jobs contained the results of a study from the University of Maryland on just which companies are creating jobs. The study ranged over the past 25 years and the following pattern has held true: young companies add jobs faster and a third of all new jobs come from start-ups. John Haltiwanger, the study’s author, concluded that “These are the rocket ships of the economy”.

One way to apply this data is to consider the potential landing spots for your top performers, the ones you cannot afford to lose. Typically we benchmark pay against established companies and think more about base than incentives or especially stock. Based on this study, it appears top performers have small companies to consider, too, and might look forward to less complexity and having a straight line to the top which small companies provide. As the number of jobs grows, post-recession economies invite employees to refresh themselves from the layoffs and pressure they faced when times were tough with their current employers. Small companies and start-ups offer alternative workstyles for fresh starts.

The Red-Headed Step-child Named Retention

2010-04-29T07:06:00.000-07:00

Employee Retention Strategy Can Save Companies Millions

In a recent post on the Risk Management for the 21st Century blog at AllBusiness.com Nancy Germond and I discuss a retention strategy that businesses can employ to minimize risk and help their bottom line by decreasing costs.

With unemployment at one of its highest rates many organizations have let their focus on employee retention slip - with the untapped pool that is consistently being flooded with talent old and new, this action puts your organization at risk and it’s costly. The majority of your current employees look for work elsewhere as economy improves - and even during the turmoil, and the attitude in many organizations is employees are easily replaced, but the costs (and hidden costs) associated with replacing talented employees lead to further problems down the road - risky thinking indeed.

Obviously this can be said with any organization, but the more experienced an employee is the less risky they are and the less risk there is for your organization which makes retention an important step in any organization.

The unique model, which I call The Rethinking Retention Model, bases the retention process on the belief that it should be managed like any other practice: sales, service, quality or safety.

These are some of my recommendations:

• Calculate the cost of turnover to determine how much it hurts your company's bottom line.

• Hold supervisors accountable for retention and teach them the importance of and how to build trust.

• "Narrow the front door to close the back door.”

• Carefully script the employee's first 90 days on the job.

• Develop a “Stay Plan”

• Build tools to connect with employees.

• Allow Candidates to Screen Themselves Out

• Hold employment vendors to retention standards.

• Hire Older Workers

• Use a referral system - current employees refer candidates for three reasons.

In today's economic climate, organizations can no longer ignore retention strategies if they want to retain their top talent, and retention is critical to any company's bottom line - and retaining talent is even harder. With the use of my strategy I was able to help one hospital cut nurse turnover by 34%, effectively them millions.

You can read the entire posting by clicking here.

For more information on my work, visit www.TheRetentionFirm.com or http://www.retentioninstitute.com/.

A New Twist on the Cost of Turnover

2010-04-26T08:00:00.000-07:00

We featured in a previous entry a very effective model for costing employee turnover, although every model will have holes and omit important considerations. Here’s one great example.
We recently began work with a hospital to cut their turnover and the CEO there was immediately open about why he hired us. He told us he had signed a contract to bring in a noted consulting company to increase efficiencies by shaving times off of waiting periods, surgeries, and the like…and he knew that improving efficiencies included improving individuals’ job performances. So logically he said “Why would I want to spend all of that money to make my people better and then not do everything I can to keep them?”

So let’s take this logic a step further and ask: Should you be concerned about turnover if your people don’t perform well? I guess the answer is no, and also that your problems are far bigger than employee retention. But the logical counter-question is about how important is it to retain employees if you’ve heavily invested in them, as this hospital has. The CEO’s position was that the more he improved efficiencies, the more he increased the cost of new-hire training to ensure new hires fully understood and followed the shiny new processes. Therefore, the cost of turnover had just gone up.

Can the Nursing Shortage Get Worse?

2010-04-19T08:00:00.000-07:00

In the March 22nd, 2010 issue of Time, Michael Lind penned a column called “The Boring Age” to illustrate how much of our society stays the same. The column was interesting yet irrelevant to our topics here until then end when he predicted that the largest single occupation in 2050 will be, to quote Mr. Lind: “drumroll, please – nursing!”
Much data is tossed around about the current nursing shortage, usually in the categories of the number of open nursing positions, the long-in-tooth average age of current nurses, and how healthcare jobs lead the list of those that will increase the most due to our citizens living longer. All of that is old news, just not good news to those who hire and try to retain nurses. But this is a new category – largest single occupation – and takes our current nurse-shortage problem to an entirely higher level.

We’ve worked with healthcare companies and have had great success with improving nurse turnover. Ultimately, though, the composition of the nurse job merits our scrutiny. It’s hard to do all this is asked, especially when nurses join the profession to provide the best possible care which is often times negatively reinforced by insurance companies. By 2050, those of you who are left to address what will be by then an even more extreme need might consider adding nurse positions and designing a true nurses’ aid job that evens out the work and the stress.

How Much Does Turnover Go Up?

2010-04-12T08:00:00.000-07:00

Many employers are concerned that turnover will go up as the economy improves, and PWC Saratoga has provided a benchmark for predicting this. According to their analyses, voluntary turnover increased significantly in the years that immediately followed the end of recessions in 1993 and in 2004. In each case they researched turnover for the two years that followed, and in ’93 the rate increased by 15% and in ’04 the rate increased by 11%.

What factors will drive how much the rate increases after this recession? Here are two considerations. On the one hand, we are told that jobs will be added more slowly, so it is logical to assume that fewer workers will quit if they have nowhere to go. On the other hand, this recession was longer and deeper than the other two and caused organizations to make more drastic changes. So employees might be more bitter and more driven to look and leave.

Most importantly, those with the best opportunities to leave will be the best workers, the ones you need the most. So meet with them and ask them why they stay…then make sure you accommodate their needs as best you can.

A Friend Changes Jobs

2010-04-08T10:02:00.000-07:00

I live in an Orlando, Florida suburb and know many of the local HR professionals because of various connections over the years. Orlando is a mid-level city, with far-fewer management jobs than Atlanta or Chicago, and those in HR here know that getting a top-level job is hard because there are few corporate headquarters nearby. If you are looking for an HR job that pays below six-figures, you might find one. Above six-figures, plan on a long search. And this is likely true in many other cities that lack a significant corporate headquarters base.

Of course, the economy has shrunk the number of most openings, too, so finding a top-level HR job in Orlando is harder than ever. But a close friend just climbed this mountain in less than a month and did so without a big-secret plan. She just got the word out, took calls from hiring companies and head-hunters, and selected a #2 level HR job to mentor with the soon-to-be-retiring top HR executive…for a healthy six-figure deal.

My friend’s name is Donna, and she got a great job in a hurry because she’s good. She doesn’t network much because she works long hours, and she is better at coaching managers than preparing her own resume. But she shines in interviews and answers questions based on what is best for the business rather than what is best for HR. She sees legal advice as just that rather as mandates that must be obeyed to avoid jail. Her best skill is that she listens, realizes what is in the company’s best interests, and then finds ways to say “yes”.

Most importantly for us, Donna has proven what most of us intuitively know…that good workers can find jobs in any economy. Her now-former employer expressed angst at her leaving and has probably by now identified ways they could have kept her. More money, of course, wouldn’t have fixed her problem.

Good News about Grey Hairs

2010-03-15T05:00:00.000-07:00

Data from the U.S. Bureau of Labor Statistics tells us that older workers plan to stay in the workforce, perhaps because they lost retirement dollars in the recession. Specifically, workers ages 65+ will grow by 78% during the period of 2008-2018 while the number of workers in age groups 35-44 and 45-54 will shrink. In fact, the number of workers ages 65+ will grow about 10 times faster than the total labor force…10 times faster.

Why is this good news? On balance, older workers are more likely to show up, do their best, and stay in their jobs. They bring old-school values, know what they like to do, have bills to pay, and a lifetime of experience regarding how to treat customers and solve problems. Smart companies tailor recruiting and benefits programs to hire and retain older workers with hopes they will delay retirement rather than be forced to replace them.

Here’s just one study that demonstrates the value of older workers. A BusinessWeek analysis found that by increasing productivity and labor-force participation of older Americans, the U.S. could add 9% to its gross domestic product by 2045, which would add more than $3 trillion a year to overall economic output.
Use data like this to make your company a haven for older workers, especially if you work in a service industry that typically hires young workers in their first or second jobs.. Good things will happen as a result.

Nonprofits and Pay

2010-03-08T09:00:00.000-08:00

Most non-profit workers attach themselves to their agency’s mission, leading management to think pay is far down on the priority list. I’ve participated on several non-profit boards and usually cringe when executives report how much money is dedicated to client services and how little to pay, benefits, and other “overhead” expenses. For sure, donors want to know that the majority of their donations go to the agency’s cause but the risk is that non-profit employees are willing to take substantially less pay that they can make on the for-profit side. A study published in the Review of Public Personnel Administration tells us employees are aware of the pay issue and have loyalty limits, that sometimes mission is not enough. The solution includes benchmarking pay against similar jobs in the private sector. If your best employees can make more elsewhere and are critical to your service delivery, why not pay them to keep them?

Retention Tip #19

2010-03-01T08:00:00.000-08:00

Occasionally we’ll include a specific retention tip in our blog. Here’s Retention Tip #19: Match the length of your onboarding program with your tipping point: Many companies lose a high percentage of new hires early such as the first 90 or 180 days. This happens especially in service industries such as call centers, retail, and fast food. If your company faces this challenge, measure the number of days at which point early turnover ends...the point at which you can say "If they stay this long, they tend to stay much longer", and develop onboarding processes that continue throughout this period. Include supervisors by asking them to meet with employees over time with specific questions to ensure new hires are connected to their peers and their supervisors, too, as well as learning and performing their jobs well.

CERP Program Approved for up to 26 SHRM Re-certification Credits

2010-02-24T10:40:00.001-08:00

The Human Resources Certification Institute (HRCI) recently approved that candidates in our employee retention certification program can earn up to 26 re-certification credits. This is nearly half of the total credits required for re-certification. The programs official title is the Certified Employee Retention Professional program (CERP) and it provides candidates with online tools to apply to their organizations in real time to cut employee turnover and retain the best workers. Whereas other certification programs are typically based on knowledge in order to pass tests, the CERP requires information and action.

The CERP is a great way to build your skills and contribute to your company. More information is available at http://www.retentioninstitute.com/

Employee Retention Tip of the Month

2010-02-17T09:59:00.001-08:00

Retention Tip #19: Match the length of your onboarding program with your tipping point

Many companies lose a high percentage of new hires early, specifically the first 90 or 180 days. This happens especially in service industries, such as call centers, retail and fast food. If your company faces this challenge, measure the number of days at the point where early turnover ends...the point at which you can say, "If they stay this long, they tend to stay much longer,” and develop onboarding processes that continue throughout this period. Include supervisors by asking them to meet with employees over time with specific questions to ensure new hires are connected to their peers and their supervisors, too, as well as learning and performing their jobs well.

Which Management Skill Matters Most for Retention?

2010-02-15T20:17:00.000-08:00

The answer, hands down, is trust. An abundance of studies by research institutes, universities, and real-life management experiences all point to this 5-letter word as the critical fulcrum as to whether employees stay with a manager or leave him. Yet a typical management curriculum includes communication, feedback, recognition, career coaching…with the assumption that doing these things leads to building trust. But some managers can be pretty good at these skills but still have flaws in their behavior that lead to their team’s not trusting them. The good news is that trust is usually about behaviors versus character. We are good people who do some insensitive things. And since none of us are immune from doing things at work we later regret, an essential skill for building trust is apologizing.

Where is the fine line between “good” apologies and “bad” apologies? It’s about taking full responsibility in a credible way. One example is Toyota executives who have apologized with no excuses for their recalls and did so with passion I could feel. Another is former Time Warner CEO Jerry Levin who apologized publicly for the decision to merge with AOL. These apologies felt sincere and are far more effective than those who apologize with words like “I’m sorry you misunderstood what I said”, or worse, those who apologize after getting caught doing something they really don’t regret.

The message for managers…and us…is clear. Learn to look someone in the eye and say “I’m sorry I did this because I know how it impacted you and I’ll never do it again”. That’s simple, highly effective, and very difficult for some of us.

Employees on the Move

2010-02-08T11:16:00.000-08:00

USA Today published results of several “intent to leave” surveys in their edition on December 23rd, 2009. Here’s what they said:

Right Management surveyed 900 workers and found that 60 percent intend to leave their jobs in 2010
The 2009 Employment Dynamics and Growth Expectations Report said 55% of employees plan to change jobs, careers or industries “when the economy recovers”
CareerBuilder.com surveyed 4,285 full-time, private-sector employees and found 40% had difficulty staying motivated in their current jobs and 24% didn’t feel loyal to their current employers

Historically, turnover has gone up as economies improve and more jobs appear. This recession went deeper and lasted longer so the ultimate job-changing outcome might reflect employees’ frustrations with layoffs, lower pay, and more stress that came their way.

A CEO’s New Year’s Message

2010-02-01T10:58:00.001-08:00

David Ottati is CEO of Florida Hospital Flagler as well as a client and friend. He recently addressed his top 40 managers and provided a list of 5 people-management guidelines for them to follow to continue the great success of his hospital. Here’s David’s list:

1. Appreciate your people and recognize everyone has weaknesses, even you and me

2. There are times to make difficult decisions and make them…think long-term

3. Separate personal relationships from performance…and know how important it is to build trust by connecting with each member of your teams

4. Allow room for mistakes to help them grow and contribute more

5. Reward those who make process suggestions for the good of all…is their goal to make us a better hospital or just a better hospital for them?

Getting the Right Metric

2010-02-01T10:57:00.001-08:00

We find it interesting that companies report turnover by year or month when many of them have a high turnover rate in employees’ first 90 days. So our solution is to measure early turnover…first 90, 180, and 365 days…to learn each company’s early turnover “tipping point”. If we know many leave in their first 90 days but those who make it past 90 days tend to stay for long periods, then it makes sense to measure, report, and set goals for this metric rather than the usual ones.
This metric is especially helpful for high-turnover jobs such as call center reps, waiters and waitresses, fast food workers, and even nurses. Nurses have so many choices that some hospitals lose them early and need to build in early fixes in the ways they hire and onboard.

Comparing Turnover Percents

2010-01-19T12:17:00.000-08:00

In his terrific book, “Good to Great," Jim Collins warns against comparing one company’s metrics against another’s because it is easy to justify one’s own mediocre performance if it is the same or better than an average competitor. This great advice really hits home when comparing turnover numbers for several reasons. One is that companies tend to report turnover in different ways, but more importantly it can be soothing to know that your turnover is the same or a little better than a competitor’s when the raw data tells you that your are losing half or more of your staff each year. That’s bad news no matter how much worse your competitors are. These benchmark comparisons also lead to the obvious excuses that stop improvement actions like “We’re doing better than ___ so we must be doing OK”. The implication is that there are no solutions available…and there are.

Employee Retention Tip of the Month

2010-01-11T10:37:00.000-08:00

Retention Tip #17: Hire Older Workers

The U.S. Bureau of Labor Statistics has determined that the older a worker is when starting a job, the longer the employee will stay. So whereas this might bring grey hairs to mind, it also means that 30-somethings stay longer than 20-somethings. Consider age when hiring workers, especially if you work in the service industry and hire call center agents, waiters or waitresses, hosts or receptionists. And, ask yourself this. Can you increase your employee retention by hiring workers who know what they like to do, have bills to pay and are more stable in their lives?

The Power of Stay Interviews

2010-01-11T10:13:00.000-08:00

We believe Stay Interviews are far more important than exit interviews. With our clients, Stay Interviews are conducted by firstline supervisors rather than HR so these supervisors hear in-person and with no filters why each individual team member stays. Once these supervisors are trained to ask pre-formed questions and then probe, they learn actionable things they can do that are important to employees…and therefore help them to stay.

The training sessions include role plays where we ask supervisors to “play themselves” rather than play pre-assigned roles. In a recent session, a food service supervisor said she was interested in learning more about computers and about international foods. The entire group then brainstormed ways that supervisor’s manager could fulfill this wish and came up with the following ideas: teach her to save international food websites in her “favorites”; send her international food articles online; suggest international dishes for company functions; buy her an international foods magazine subscription; give her an international foods book on her next service anniversary.

This example makes the power of Stay Interviews clear, both for retention and engagement. Solving many employees’ needs is easy if we ask and learn what they are.

On Your Mark…Get Ready…Change Jobs!

2009-12-15T04:50:00.001-08:00

History tells us that employee turnover goes up when recessions turn to recoveries, and early data says that trend will continue in 2010. Finnegan Mackenzie, our sister company, conducted a study with ExecuNet on executive retention and found a clear and alarming pattern…that executives who are highly engaged are also eager to leave. The study found that while more than 90% of executives are engaged in their jobs, more than 70% would take a recruiter’s call. In fact, more than half are already looking and nearly 90% said they would accept or strongly consider an opportunity that was better for them in the next 30 days.

“Myopia” best describes these executives’ perceptions of their teams. The numbers for the next level down are similar to those reported above, yet CEOs believe the percent below them who are looking now is far below the actual count.

This data challenges the long-held belief that engaged employees will stay. Consider how your executives view their ability to retain key players as more jobs become available? Might you need to provide retention solutions now before you incur a 6- or 7-figure loss to get top management’s attention?

Why “Lucky to Have a Job” Didn’t Work

2009-12-09T09:10:00.000-08:00

The recession leaves in its dust 3 data points that underscore how high-performing employees can always find jobs:

Per the U.S. Bureau of Labor Statistics (BLS), the number of workers who voluntarily quit their jobs in 2008 fell just 11% compared to the number who voluntarily quit in 2007; this means that your chance of losing a good worker in the depths of the recession were a full 89% as strong as they were when the economy was at full strength
A University of Wisconsin study confirmed that voluntary quits went up after layoffs, citing that a layoff of just 1% of the workforce caused voluntary turnover to increase a full 31%
MSNBC reported that job applicants nearly tripled in 2008, ensuring that selection criteria was high and only the best applicants were hired

This data confirms that if any employees felt lucky to have a job, it was probably those who performed less than stellar and held on while the job market shrunk. Think back to your turnover during 2008 and 2009…Did you lose good performers or average ones?

Caught on the HR Side of Retention

2009-11-30T12:52:00.001-08:00

Here’s a rambling from just this afternoon. An HR director told me she had done all she could to reduce turnover among licensed social workers but continued to lose 25% of them each year. She estimated their cost per exit to be $10,000, and losing 50 each year culminated in an annual expense of about half a million dollars. My first thought was “Does the CEO of your company know this? Does your CEO, or CFO, know that reducing turnover by 20% is worth $100,000 to your company each year? Not just once, but each year?”

And if the economy hadn’t helped cut turnover, wasn’t it likely that quits would rise even higher in the new year?

Her real problem became clear. She had interviewed employees on why they stay or why they left, she had asked managers to attend training programs, she had re-thought onboarding and other HR programs…and she was tagged as the sole provider of solutions.

Our discussion led to the Rethinking Retention Model(sm) and ultimately the Certified Employee Retention Professional program (CERP). Candidates in the CERP program are required to implement a shared model whereby the responsibilities of HR and executives are clear. Whereas HR provides new, retention-driven processes for hiring, training, onboarding, and other traditional roles, executives must place a dollar cost on turnover and drive retention goals and consequences from top to bottom.

So a new type of retention discussion is happening in that organization now, and it’s likely the HR director will participate in the CERP program in order to share retention responsibility with her management team rather than struggle with retention on her own.

A Quote to Remember

2009-11-25T07:33:00.000-08:00

Years ago I was an HR director of a large company, and our CEO was a gifted thinker and master of rhetoric. One day he said the following:
“HR’s role is to never make a decision for a manager and never let a manager make a bad decision”

I wrote this down as I sat at the foot of the ultimate tribal chief. But sometime later I privately questioned his logic. We all know that our role is to manage by influence versus authority, so how then can we be certain to change a manager’s direction if he is committed to it? And what if his manager is equally committed? And what if we’re completely out of the loop and don’t even know the circumstance?

The solution became clear, especially as it related to retention. By installing retention goals and accountabilities, “bad decisions” became apparent and were ultimately addressed. So sometimes the next best thing to having authority is to ensure that those with authority have the right metrics and apply the right accountabilities, so we can achieve the outcomes we need, and our company needs, without being squeezed in the HR middle.

Strategy for the Day

2009-11-25T07:31:00.001-08:00

Controlling absenteeism is a pesky job. We recently brainstormed this idea for a client company: Implement 4-day workweeks for employees who meet certain job-related criteria including minimal absences. Then those who take all the days the policy permits will still be in good standing but won’t be eligible for a shiny new benefit that others will enjoy.

A Turnover Cost Model That Works

2009-11-25T07:29:00.000-08:00

Costing employee turnover is a job for finance professionals only, as they count the dollars in your company and speak with credibility. Besides, you’d rather they bought into the cost amounts than not, so let them determine the actual numbers.

For a model that works, go to www.TheRetentionFirm.com and click on “turnover cost calculator”. There you will find a model that separates costs into “direct” and “indirect”. The “indirect” costs are most important because this reports lost productivity which is usually the greater cost and the harder to measure.

The “direct” costs are those that easily come to mind…exit survey time, new hire interview time, drug tests, assessments, uniforms, maybe relocations…all of those good-by and hello activities that turnover produces.

The “indirect” model takes a simple approach to a complex issue. It asks that you divide your company’s annual revenues by your total number of FTEs and then divide that resulting amount by 240 which is the average number of workdays in a year. This tells you how much revenue an average employee contributes in a day and this number is indisputable. Then comes the one judgment part, where you are asked to determine whether the job for which you are calculating a cost is average or above or below average relative to producing revenue. Weight an average job a 1 meaning the daily contribution amount for that job doesn’t change. You might weight a sales job a 1.5 though, or a custodial job 7.

Once you’ve established the weight for the job you are measuring, the remaining steps are easy. Multiply your amount times the number of workdays the job is usually open as a result of turnover and you have the lost productivity while you search for a replacement. Then multiply your amount times the average of workdays the new hire is learning the job so you know the cost of “ramp up”, but cut that amount in half since the new hire is partially productive for each of those days.

Then add “direct” to “indirect” and you have a real turnover cost for each position. No model is perfect, of course, as we can never include the cost of lost team productivity, lost manager’s time, or turnover than leads to turnover. But the mathematical model presented is hard to question, and often produces an amount that causes top executives to take more action on retention.