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People and Risk - Retention


In my third offering on people and risk I have taken a look at retention. The case for an organisation to focus on retention is compelling:

  • the cost of recruiting someone is very high - both in terms of direct costs (advertising, head hunter, relocation, hiring bonus etc) but also in terms of time (shortlisting, interviewing, inducting, training) and also in terms of lost productivity and impact (time taken to get up to speed, impact on rest of team etc)
  • there is a real cost to the organisation in terms of loss of corporate memory and loss of knowledge
  • programmes and change initiatives can slow down due to the need to divert resources to cover the job and need to remobilise the team, enjoin new members etc
  • the exporting of skills to other organistions, which are often your competitors

When I consider retention I think that there are two main mechanisms - negative retention and positive retention. They are additive so the more you do of one the less you need to do of the other. I recognise that the labels I have given them look a bit biased so I would welcome better lables if anyone can suggest some!

Negative retention is around making it unattractive to leave the organisation. This includes building retention into your incentive structures; paying more than the competition; locking people in via benefits such as very attractive pension terms. As it happens, I think that some of this is 'good HR/Management practice' particularly if the approach is flexible and geared towards specific business drivers rather than just a 'blanket solution'. Clearly if an organisation can afford it, employees can be locked in through high pay and high bonus (and rolling long terms stock and cash bonuses). As an HR professional I tend to think that this is a bit 'lazy' and somewhat wasteful. Whilst money has a place in an overall retention strategy, attention and innovation should also be applied. The problem with locking someone in is that they may resent it, or even worse, you may regret it (and end up paying way over the odds to 'encourage' someone to leave). Ideally you want your people to want to work for you, not continue to 'hang on' at all costs.

Positive retention is around making it attractive to stay. Overall, a much healthier approach and one that will survive the odd business downturn. Positive retention requires a few things - organisation focus, management skill and capability, good infrastructure, policies, tools. Simply put, companies that cannot buy loyalty need to earn it. Some of the key ingredients can be quite intangible and it is essential that an organisation remains sufficiently in touch with its people to be able to identify needs and tweak responses.

For me a key element of retention is making people feel valued. I think that some managers are better than this than others; and I also think that some 'organisations' are better at this than others. It is, of course, an inherently personal thing. What makes one person feel valued may have the exact opposite impact on another person. Take the payment of a spot bonus - I have heard people talking about this in very different ways - ranging from 'this really made me feel valued and that they noticed my hard work' to 'they just think they can buy my loyalty' - strange but true.

Continuing to focus on the topic of making people feel valued there are a number of things that one can do. First is to give it some attention. Part of your leadership training should be around skilling your leaders in the identification of individual motivations and ensuring they feel valued. Identifying individual employee motivations is not a particularly complex thing - you can, of course, just ask them. And if team leaders routinely ask and check up, and use this information as part of their management and motivation of that individual you are a long way down the track. At the organisation level it is a bit more complex. Organisation culture operates at many levels from intentional to unintentional, from conscious to unconscious, from formal to informal. Thus gathering information means that you need to ask people (which you can do through the management line, and in focus groups as well as annual questionnaires) but also analysing your formal and informal protocols and practices.


To finish off I wanted to mention one other retention strategy that organisations can usefully adopt. This is to think about retention in a systematic and strategic way. As part of your succession planning you should also consider individuals and roles that are critical - most people do this. But in addition you should consider the 'flight risk' of the key individuals and also their mid term career and compensation trajectory. Is it going up?, and if so at what rate? or slowing down? or stalled? This has a direct impact on your retention challenge and taking a formal stock check every year means that you will trip up less often when a long term, good performer suddenly hands in their resignation (and on reflection you realise that they have indeed been slightly neglected, that their pay has lagged a bit, that you sort of took them for granted ...).

And the final comment, is that you should, of course, measure your effectiveness at both retaining the people you wish to keep (and also losing the people who you wish to lose - retention is about retaining the people you wish to retain, and not necessarily everybody).



Published by: Lisette on 25/07/2009 - Add a comment

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