Avoiding Six Dangerous Retention Mistakes Most Companies Make

1. Avoiding Six Dangerous Retention Mistakes Most Companies Make Steve Puckett, SPHR Director, Corporate Human Resources

2. Introduction • Employers facing “Talent Paradox” • Relatively high unemployment (peaked in 2010) • Increasing shortages in areas where attracting and retaining employees is most critical • Loss of high-potential talent • Spike in voluntary turnover after a downturn • Employees advancing careers • Poor morale due to cost cutting measures • Gen Y’s comparing notes

3. The Cost of Turnover • Can be significant and can result in… • Loss of productivity • Lost institutional knowledge and relationships • Added burdens on employees who must take on more work

4. The Cost of Turnover • Direct Placement Costs • Accrued paid time off and replacement costs • 50-60% of annual salary • Indirect Placement Costs • Disruptions to team-based work • Lost clients • Decreases in overall service or product quality • 90-200% of annual salary • 12-40% of Pre-tax Income No longer a problem for just “large” employers

5. Voluntary Turnover • During turbulent times best employees are the ones who leave • A’s first • B’s second • Left with C’s • Poor performers hold on to paychecks until unemployment eligible

6. 4 Paths to Turnover • Employee is dissatisfied with job • Employee has better alternatives • Employee is following a plan • Employee is leaving without a plan

7. Additional Factors • Organizational commitment and job satisfaction • Quality of the employee-supervisor relationship • Role clarity • Job design • Workgroup cohesion

8. Focus Shifted from Talent Retention to Cost Reduction • 2/08 Corporate leaders priority • Retention of top talent • 2/09 Cost reduction/survival • Top talent retention fell to #8 • Once again, retention on our radar screens • Retention of top talent is even more critical as economic conditions improve…

9. The Six Most Dangerous Retention Mistakes • Focusing on Retention Programs vs. Retention Processes • Supporting a Fear-Based Workplace • Confusing Employee Engagement with Employee Destruction • Not Supporting a Multi-Generational Friendly Workplace • Not Holding Supervisors Accountable for Retention • Not Narrowing the Front Door to Close the Back Door

10. Critical Retention Mistake #1 Focusing on Retention Programs vs. Retention Processes

11. Drive Retention from the Top, Because Executives Have Greatest Impact • Include turnover cost in annual report • Include in strategic plans and report monthly • Rewards for meeting goals • Consequences for missing goals • HR must encourage managers to lead with influence rather than authority • Leave authority to senior management - CFO’s must be on board

12. Think! Sales Service Quality Safety Retention = $Profits $

13. 10 Strategies of Rethinking Retention - Richard Finnegan • People quit jobs because they can • Companies make it too easy to quit • No effort to hold on to our best • Employees stay for things they get uniquely from you • Build a retention brand different from others • Supervisors build unique relationships that drive retention/turnover • Employees stay for bosses • Employees leave because of bosses • Hold supervisors accountable for achieving retention goals • Add to other measurable objectives

14. 10 Strategies of Rethinking Retention (con’t.)- Richard Finnegan 5. Develop supervisors to build trust • Relationships Trust Information Success 6. Narrow the front door to close the back door • Focus as much on hiring process as retention 7. Script employees’ first 90 days • Predict how long employees will stay • The most critical time during employment 8. Challenge policies to drive retention(support/hinder) 9. Calculate turnover cost to galvanize retention 10. Drive retention from the top • Executive buy-in is a must

15. Design Job for Engagement • Capture the minds and hearts of employees • Avoid the Sunday blues • Challenging assignments • The absent Millennial • Goals with feedback • Provide for personal growth and development • Full partnership career development process • Career interest forms

16. Hidden Obstacles to Retention • Young workers with fewer bills • Growing number of entrepreneurs

17. Calculate Turnover Cost to Galvanize Retention • Develop formula to calculate turnover cost • Those who have CFO endorsement have greater opportunity for upper management support • Call center identified turnover cost at $12K per employee • Destroyed a $12,000 obsolete piece of computer equipment to drive point • Drove home actual cost • Delivery company put cost of driver turnover at $60K, same value as company truck • Showed video of totaled truck from accident to emphasize cost

18. Best practice Retention is an on-going process driven by upper management NOT a Band-aid program

19. Critical Retention Mistake #2 Supporting a Fear-Based Workplace

20. Managing Through Fear vs. Trust* * Managing Through Trust vs. Fear, a Human Workplace E-Workbook by Liz Ryan

21. Managing Through Fear vs. Trust* * Managing Through Trust vs. Fear, a Human Workplace E-Workbook by Liz Ryan

22. During economic downturns most companies focus on keeping employees with good attendance even though their work is substandard. • This seems to be a better alternative to firing the employee and waiting days, weeks or months to replace. • Some bosses are encouraging young workers to buy a new car, boat or other expensive item knowing they would have to keep their job to make the payments.

23. Beware “Jerk Bosses” • Since 2003, 24 states have introduced legislation on “workplace bullying”, however no laws have been enacted* • 9 states with 12 bills active as of 3/25/13* • 37% of U.S. workers report they were a bully victim – 12% have witnessed workplace bullying* • Verbal attacks from supervisors are generating six figure settlements • Four times more complaints than all forms of harassment combined *According to the Workplace Bullying Institute

24. Transitioning From a Fear-Based Workplace10 Early Signs of a Fear-Based Workplace • Appearances are everything • Staying longer than boss • Worrying less about quality of work than how they’re perceived • Fear-based discussions rule over work discussions • Who’s stock is falling/rising • Preoccupied with who is invited to meeting vs. meeting agenda • Predicting employee failures

25. Transitioning From a Fear-Based Workplace (con’t.)10 Early Signs of a Fear-Based Workplace 3. Distrust rules • Off the record conversations • Coded messages • Back alley meetings • Backstabbers thrive…”Would this be your knife in my back?” • Your failure is my success 4. Numbers rule • Total obsession w/ metrics • Employee is sum of numeric goals • Record profits and now cutting back on perks…coffee, etc. • Stock price vs. People price 5. Too many workplace policies • Overdependence of rules vs. common sense • Lengthy, tedious policies • Ordering supplies, scheduling a business trip or vacation day

26. Transitioning From a Fear-Based Workplace (con’t.)10 Early Signs of a Fear-Based Workplace 6. Management discourages lateral conversations • Fear of employees comparing notes • No one has authority to authorize meetings • Loss of sharing ideas…No Brainstorming Allowed! 7. Information is restricted • Information leads to success • Lack of transparency • Knowledge = Power • Destroys trust

27. Transitioning From a Fear-Based Workplace (con’t.)10 Early Signs of a Fear-Based Workplace 8. Brown-nosers rule • Kissing up at all levels • “Who said it” rules over “what was said” • Fear-based leaders surround themselves with “yes men” and “yes women” • Right answer vs. truth 9. The boss is so out of touch it’s almost comical…The Office • Focuses on keeping one’s head down, taking no risks and sucking up to anyone in management

28. Transitioning From a Fear-Based Workplace (con’t.)10 Early Signs of a Fear-Based Workplace 10. Management leads by fear • Most decisions made in secret • Information is given in drips • Company culture “Be glad you have a job, stop whining and get back to work” • Leadership is based on keeping employees in the dark • Major gap between management and employees

29. Treating Employees Fairly Requires: • Distributing rewards • Respect through interpersonal relationships • Involving employees in difficult decision-making • Offering opportunities to question decisions

30. Critical Retention Mistake #3 Confusing Employee Engagement with Employee Destruction

31. Employee Engagement • Employees who are so committed to their jobs that they want to give… Discretionary Effort

32. 3 Buckets of Employee Engagement- N. Davis, Editor, HR Magazine - G. Sherrill, VP HR, Wal-Mart • 17% actively disengaged • Unhappy • Undermining co-workers • 54% not engaged • Sleepwalking thru workday • Putting in time w/o passion • Fence sitters • 29% work with passion “Do you want the 17% hanging around your 29%? Disengagement costs U.S. economy $300B in lost productivity annually.

33. 6 Essentials for World Class Employee Engagement • People Senior leaders who excel at • Listening • Knowing and cherishing relationship with employees • Outstanding communication • Work Providing resources for employees to over-achieve • Full Service Recognition Competitive pay Recognition for each generation One size does not fit all • Opportunities Succession planning Training Career development

34. 6 Essentials for World Class Employee Engagement (con’t.) 5. Quality of Life Issues Targeted benefits Flex schedules 6. Company Culture Live your practices • Diversity • Company reputation • Performance management *Every employee must understand How their job impacts organization’s success

35. Employees First and Customers Second- Vineet Nayar HCL Technologies • Key is holding management equally accountable to employees • Live in a world of democratic form of government BUT • Autocratic nature of business

36. Customer Service Focus Must Include Internal Customers • Employee first, Customers second • Satisfied employees display better customer service

37. How Not To Engage Your Employees • Company President • Not listening to employees • Hires a $100K consultant • Consultant listens to employees • Makes same recommendations • Not embracing 50-50 meetings • 50% informing • 50% listening

38. Employees Stay Because of Things They Get Uniquely From You • Write down 2-3 employees in your company who are critical to your success • Write answers to these questions for each employee • Could this employee leave you for a better job? • Has the employee ever considered looking elsewhere? • Now write down reasons you feel they have stayed Tangible…shift, schedules Intangible…new skills, good supervisor

39. Critical Retention Mistake #4 Not Supporting a Multi-Generational Friendly Workforce

40. Traditionalists (Veterans) • Born before 1945 • Long term careers • Loyal • Tech-challenged • Like structure • Respect authority • Law & order • Hard work…max effort • Duty before pleasure • Honor

41. Baby Boomers • Born 1945-1964 • Motivated by position, perks and prestige • Competitive • Goal-oriented; equate work & position with self-worth • Independent • Prefer to meet face-to-face • Believe you have to “pay your dues” to get ahead in the workplace

42. Generation X • Born 1965-1980 • Technologically savvy • Like informality • Learn quickly • Work/life balance • Embrace diversity • Like to work independently • Like casual work environment • Short attention spans

43. Generation Y (Millennials) • Born after 1980 • Communicate through texting, social networking, email • Family-centric • Embrace diversity • Expect to advance quickly • Attention craving • Participation vs. accomplishments • Good at multitasking

44. Major Increase in Employment Replacing Exiting Boomers Top Job Opportunities for Next 10 Years* The best paying, fastest growing jobs will grow up around one of the richest and fastest growing segments of the population: the retiring Baby Boomers. *24/7 Wall St.

45. Generational Expectations of Succession Planning

46. How Generations View Change

47. Using Social Media to Engage Workers • Gen Y will make up 36% of U.S. workforce by 2014; 46% by 2020 • Opportunities for career progression • Opportunities for personal development • Collaborative work environment • Flatter them; motivate them • Employers must embrace social media to enhance learning opportunities

48. Washington Post Survey3400 SurveyedEmployee Retention Desires

49. Critical Retention Mistake #5 Not Holding Supervisors Accountable for Retention

50. Hold Supervisors Accountable for Achieving Retention Goals • All levels of supervisors should have retention goals • Should be weighted same as productivity, safety, other goals • Talent Keepers recent survey • Only 14% supervisors have retention goals