Becoming an Employer of Choice

1. Practical Insights into Building a Culture of Retention Becoming an Employer of Choice Sandra Hofmann SVP & COO Turknett Leadership Group Atlanta

2. What keeps you around? • Continuous employment • Feeling that my real skills and capabilities are being put to use • Real esprit de corps in the group • Strong program of employee benefits • Real rewards that are inherent in the work • Pay, better than average • Able to explore new areas and to grow as much as I can • Fairness in promotion, based on performance with promotion from within • Good working conditions, accommodations consistent with level of position • Knowing what is going on in the organization • Strong pressure to accomplish task, a challenge • Mistakes are permitted and there is little chance of being released • Feeling my job is important • Company policies that are known and fair • Knowing what is expected of me • Being told how well I am doing • Sufficient responsibility and authority • High standards of accomplishment that I must "reach " • Opportunity to use initiative, no direct or close supervision • Having a manager whom I respect

3. When you are an employer of choice, then everybody knows your name! • "Best lists" appearances. • Positive name recognition • Often cited in key publications • CEO has wide name recognition. • Your current CEO has a positive name recognition when professionals in your industry are asked in surveys or focus groups 75% of the time. • There is a published book written about your firm or CEO within the last five years. • Giveaway/takeaway ratio. • Talent competitors talk positively about you 25% of the time. • Recruiters list you in top employers. • In top three choices of top performers over 50% of the time.

4. When you are an employer of choice, then everyone wants to be with you! • Employee Referral rate >50%. • Former employees do/would return. • Over 10% of employees that voluntarily quit in the past three years have returned. Over 50% express an interest in returning when surveyed. • Employees send the "same" message. • When your employees are asked what they tell strangers about "why the firm is a great place to work" over 50% of their answers include your top selling point. • Turnover rate of top performers. • The turnover rate of your top 25% rated employees is below 5%. • CEO mentions people practices. • Your current CEO mentions specific HR or people practices by name in 25% of their external and 50% of their internal speeches.

5. Are you writing your story?

6. Make it real or you’ll be left hanging!

7. Why does retention matter? • Loss of key players affects corporate productivity • Replacement cost high • Cost of vacancy can impact shareholder value • Losing talent to competitors erodes competitive advantage • High attrition affects the morale • Inexperienced employees decrease customer satisfaction Retention is a strategic imperative for the enterprise! Source: Retaining talent: Retention & Succession in the Corporate workforce, Aberdeen Group, 2005

8. Headhunter.net: “where employees with good jobs go when they are having a bad day” Why is retention is a hot topic now? • 70% of HR managers believe retention is primary concern • 55% of HR managers expect retention to be significant challenge within next 5 years • 40% of HR managers have seen increase in turnover • Demographics are changing – generational diversity drivers Source: Atlanta Business Chronicle February 2006

9. How battle ready are you? • Do I understand the difference between voluntary & involuntary turnover in my company? • What level of voluntary turnover is acceptable? • How much does attrition cost my company? • What themes are at the root cause for turnover? • What is being done to solve the root cause?

10. 80% of employees hunting or open Global struggle to hire talent: 40% worldwide 44% US 78% Mexico 66% Canada 58% Japan 13% India Source: Manpower survey February 2006 Sales Rep Engineers Nurses Technicians production /operations engineering maintenance Accountants Accountants Administrative Assistants Drivers Call Center Operators Machinists Management /Executives Battle for talent heating up Top 10 jobs most difficult to fill

11. Why employee retention fails • Too much emphasis on pay, benefits, perks • 88% leave for reasons other than pay • but – work IS about the money! The best do typically offer better than competition • Blindly following other companies’ best practices • Match culture, benefits, practices to needs & desires of employees • Worthless if paper based & haphazard • Failure to train managers & hold them accountable • Monitor voluntary turnover, new-hire retention rates, employee-engagement survey scores & reward the best • No one can afford the luxury of another bad manager Retention is a process – not a program

12. Procter & Gamble General Electric Google UnitedHealth Group UPS Exelon Starbucks FedEx Anheuser-Busch Nordstrom FMC Technologies Walgreen PepsiCo Nestle BP Who has the edge?(when it comes to recruiting & developing talent) Source: Fortune February 2006: America’s Most Admired Companies

13. How do the best companies retain? • Provide open & frequent communication • Top management more accessible • Employees engaged at all levels • Expect excellence from everyone • Challenge employees often • Move employees to new jobs • Offer broad based & on-going development • Not focused just on high potentials • Promote from within Source: Fortune February 2006: America’s Most Admired Companies

14. A framework for retention

15. Organization Structure Leadership Capability Career Development Lack of Bureaucracy Innovation Employee Relations Recognition& Feedback Participation Training Equity/Fair Treatment Meaningful Work Orientation Department Manager Immediate Manager Strength of Culture Advance- ment Benefits Autonomy | Challenge Resources | Pay Satisfaction Job Satisfaction Role Ambiguity Customer Focus Team Cohesion Open Communication Lack of Stress Emphasis on Quality Inter-group Cooperation Work/Life Balance Organization Level Leadership Development Team Level Job Level Work Design

16. Organization Structure Leadership Capability Lack of Bureaucracy Innovation Employee Relations Participation Equity/Fair Treatment Meaningful Work Department Manager Immediate Manager Strength of Culture Customer Focus Organization Level Leadership Development Team Level Job Level Work Design

17. Retention & Leadership Job Level • Participation in Decision Making • Desire decision latitude to help influence direction of their team • Biggest Influence: employee’s immediate manager • Especially important for younger employees • Identified by Gallup to retain top talent: do my opinions seem to count? • Meaningful Work • Core dimension of job satisfaction • Want to feel that their work is making contribution toward the good of the company • Foster a sense of purpose: working for a cause as well as a company • Engaging company vision that shows clear connection to employee’s effort

18. Retention & Leadership: Team Level • Employee Relations: Defined as the process of maintaining a positive and cooperative workforce via fair & considerate treatment • Identified by Gallup to retain top talent: Does my supervisor seem to care about me as a person? • Direct relationship with boss more important than pay/perks • Important for both young & older employees • Positive supervisor/employee relations inspire commitment • One of the top 5 reasons employees stay in a firm

19. Retention & Leadership: Organization Level • Quality of Management • Direction of organization key driver of commitment • Trust in senior leadership key driver of commitment & 3 year return to shareholders • Bureaucracy • One of the hallmarks of “average” companies • Minimize the management burden by keeping hierarchies in check • Innovation • Companies viewed as innovative create energy & pride throughout organization

20. Retention & Leadership: Organization Level • Equity/Fair Treatment • Doesn’t mean overpay, just pay fairly according to internal & external market • Must embrace diversity & treat all employees fairly • Strength of Culture • Reputation or branding as an “exclusive” organization & market leader creates pride in organization • Helps people feel they are a part of something important • Customer Focus • One of the five most powerful drivers of workforce commitment • One of the key priorities of most admired companies

21. Benefits Autonomy | Challenge Resources | Pay Satisfaction Job Satisfaction Role Ambiguity Team Cohesion Open Communication Lack of Stress Emphasis on Quality Inter-group Cooperation Work/Life Balance Organization Level Leadership Development Team Level Job Level Work Design

22. Retention & Work Design: Job Level • Autonomy • Talented employees want independence & ability to make decisions without going through bureaucratic channels • Creates sense of control over environment & increased responsibility • Challenging work • Talented employees want a job that is challenging & has a large scope of responsibility • One of top 5 reasons employees stay • Create great jobs by letting people stretch their skills • Adequate Resources • Identified by Gallup to retain top talent: Do I have the materials & equipment I need to do my work right?

23. Retention & Work Design: Job Level • Role Clarity • Identified by Gallup to retain top talent: Do I know what is expected of me at work? • Unclear expectations & ambiguous demands from boss lead to turnover • Compensation & Benefits • Offer a variety of creative benefits • Is not a source of satisfaction, but is a driver of dissatisfaction • Choice of benefits increasingly important • Stock, profit sharing & pension plans top 3 benefits correlated with commitment • One of the key priorities of most admired companies • Communication of benefits one of the five most powerful drivers of workforce commitment • Many employees don’t have a good understanding of their entire benefit package • Job Satisfaction • Though not always related to productivity, has always been linked to turnover & intention to quit

24. Retention & Work Design: Team Level • Team Cohesion • Coworker relations top reason to stay • Best large companies mimic small companies with smaller autonomous units • Predominant characteristic of “100 best companies to work for in America” • Role Harmony • Decreasing conflicting demands increases job satisfaction • Open Communication • Information sharing between manager and team important • Clear communication systems used by effective leaders • Openness in team facilitates overall cohesion & satisfaction

25. Retention & Work Design: Organization Level • Stress • Free up time for employees to relax & reduce stress with variety of programs (Work-free weekends, thinking/meeting-free days, limitations on business trips, flexible vacation time) • Conflict & overload common work-related factors to stress • Emphasis on Quality • Quality products/services create pride in organization, fostering commitment • Work/Life Balance • Flexible hours one of top reasons cited • EAPs, medical/dental care, family time-off programs, allowance for personal time • Job sharing & telecommuting • Recognition of personal/family life-powerful factor • Especially important for women who do not value promotion opportunities

26. Career Development Recognition& Feedback Training Orientation Advance- ment Organization Level Leadership Development Team Level Job Level Work Design

27. Retention & Development: Job Level • Orientation • Realistic job preview helps set expectations • Orientation critical in the first 3 days • Training • Interpersonal & technical training popular incentive programs • “Train like crazy” one of recommendations to retain staff

28. Retention & Development: Team Level • Recognition • Must provide special recognition for top performers • Recognition for good work one of most common reasons for staying • Recognition doesn’t have to be financial! • Feedback • Regular dialogue on performance issues • Identified by Gallup as important for positive climate: In the last six months, has someone at work talked to me about my progress? • Ongoing feedback by immediate supervisor critical. • Use of 360’s very effective tool for giving insight and focusing development

29. Retention & Development: Organization Level • Career Development • Put people in jobs that challenge them • One of top 3 reasons for staying • Educational incentives more effective than dollar compensation • One of five most powerful drivers of workforce commitment • Identified by Gallup as important for positive climate: This last year, have I had opportunities at work to learn and grow? Do I have the opportunity to do what I do best everyday? • Opportunities for Advancement • Must be communicated throughout entire organization • One of the factors that inspires commitment

30. Retention through professional excellence • Children’s Healthcare of Atlanta • Great Expectations • HomeBanc Mortgage Corporation • Associate Emergency Fund • Randstad North America • On-boarding process • The Home Depot • Veterans Recruiting • Doctors Hospital of Columbus • Combined community & workforce programs • CARE • Global Gender Equity & Diversity initiative • City of Atlanta • Growing service during right sizing

31. Other Important Determinants of Retention • Before you hire - Selection • Hiring the right person both in skills & fit will save money in long run & increase retention • After they leave - Exit Interviews • Wait 2 weeks to let emotions subside & find out why people are leaving • Don’t just file the information. Do something with it. • Create an “Alumni” Network • Stay in touch • Remember your reputation as an “employer of choice”

32. Organization Structure Leadership Capability Career Development Lack of Bureaucracy Innovation Employee Relations Recognition& Feedback Participation Training Equity/Fair Treatment Meaningful Work Orientation Department Manager Immediate Manager Strength of Culture Advance- ment Benefits Autonomy | Challenge Resources | Pay Satisfaction Job Satisfaction Role Ambiguity Customer Focus Team Cohesion Open Communication Lack of Stress Emphasis on Quality Inter-group Cooperation Work/Life Balance Organization Level Leadership Development Team Level Job Level Work Design

33. Questions?

34. Thank you shofmann@turknett.com 2310 Parklake Drive, Suite 500, Atlanta, GA 30345 www.turknett.com