GROWING PROFITS THROUGH EMPLOYEE RETENTION

1. GROWING PROFITS THROUGH EMPLOYEE RETENTION Lisa Elster Executive Search Consultant (508) 758-0191 lelster@morrisseygoodale.com

2. AGENDA • Turnover is a big profitability killer - Example •  Improve Retention and Watch Profits Rise. • How to Improve Retention: • Employee Engagement  • Management • Recruitment/Hiring • Conclusion • Q & A

3. ABOUT Morrissey Goodale is a specialized management consulting and research firm exclusively serving the architecture, engineering, and environmental consulting industries. Morrissey Goodale’s team has helped hundreds of clients transform and grow their design and environmental companies into high-level performers through strategic business planning, mergers and acquisition advisory, marketing and business development, executive search and human resources, leadership development, and business valuation and financial advisory services.

4. TURNOVER IS A PROFITABILITY KILLER!

5. EXAMPLE 1 A 200-person firm with 4% turnover will need to make 8 hires just to stay at the same level. *Total cost at an average cost of $4,554 per hire = $36,432 EXAMPLE 2 A 200-person firm with 16% turnover will need to make 32 hires to stay at the same level. * Total cost = $145,728

6. EXAMPLE 1 If a 20-person firm has just 2 people leave that is a turnover rate of 10%. *Total cost at an average cost of $4,554 per hire = $9,108 EXAMPLE 2 If a 20-person firm loses 4 people with a 20% turnover rate. In this example, you are likely losing a key part of your firm and smaller firms have a harder time absorbing these losses. * Total cost = $18,216

7. IMPROVE RETENTION AND WATCH PROFITS RISE

8. HOW TO IMPROVE RETENTION RATES

9. KEEP EMPLOYEES ENGAGED Definition: Employee engagement is the emotional commitment the employee has to the organization and its goals. This emotional commitment means engaged employees actually care about their work and their company.

10. PATRICK LENCIONI’S THREE SIGNS OF A MISERABLE JOB Anonymity – Are employees recognized or more like cogs in a wheel? Immeasurability – Do employees have a way to measure how well they’re doing i.e. do they have objective and quantifiable metrics? Irrelevancy – Do employees see how they add value to the organization?

11. TIPS TO KEEP EMPLOYEES ENGAGED Regularly communicate the following: MISSION VISION VALUES Why does the company exist? What the company wants to be? What’s important to the firm?

12. VISION Good firm leaders are capable of creating clearly defined visions for their firm and then communicating them to the rank and file. And show me a firm that can rally its people around that vision, and I’ll show you a firm with lower turnover than firms lacking people capable of steering their ships.

13. EMPLOYEE RELATIONSHIPS WITH MANAGERS As executive recruiters to the consulting engineering industry, supervisor dissatisfaction is the number one reason why employees will consider moving from one firm to another. Dissatisfaction is common when there are breakdowns in communications between manager and employee, and that can often be prevented through training.

14. IMPROVING INTERPERSONAL RELATIONSHIPS BETWEEN MANAGERS AND EMPLOYEES • Invest in management training that sets expectations including: • Leadership training i.e. empowering people with autonomy and respect. • Development of strong interpersonal communication skills and instilling the importance of communicating employee appreciation when warranted.

15. HELP MANAGERS ACQUIRE ACTIVE LISTENING AND INTERPERSONAL COMMUNICATION SKILLS • If there is one area that firms can and should emphasize when it comes to management training, it’s active listening and communication. • Employee dissatisfaction with supervisors is almost always the result of poor listening skills on the part of the supervisors. • Teach managers to treat employees like clients. It’s important for them to understand “what’s in it for the employee” if they want to understand how to motivate their staff.

16. SOFT SKILLS/EMOTIONAL INTELLIGENCE What Is Emotional Intelligence? Emotional intelligence is the ability to identify and manage your own emotions and the emotions of others. It is generally said to include three skills: emotional awareness; the ability to harness emotions and apply them to tasks like thinking and problem solving; and the ability to manage emotions, which includes regulating your own emotions and cheering up or calming down other people.

17. MEASURING AND HOLDING MANAGERS ACCOUNTABLE • Conduct employee surveys to get a pulse on the organization • Invest in executive coaching for managers who need it.

18. CONDUCT EXIT INTERVIEWS • Sample Questions to Ask: • What led to your decision to resign other than compensation? • If you could’ve changed anything about your position here, what would it have been? • If you were President of this firm, what changes would you make?

19. GROWTH • The second biggest reason we hear from employees as a reason why they would consider leaving one firm for another, is “lack of clearly defined career path.” They often feel stagnant as a result. • Growth can help solve this problem because it creates career advancement potential.

20. CAREER PATH • Discuss career paths with employees regularly • “Ideally, what would you like your career to look like 2-3 years from now?” • Listen to employee goals and work to align their goals with company goals, objectives, and expectations.

21. COMPANY OUTLOOK • Employees want to know how the company is doing. • Perception is often worse than reality. • Review goals and communicate any changes to get back on track.

22. COMPENSATION • Based on our experience, compensation is rarely the first issue that comes up as motivation for leaving one firm for another. • Recruited candidates typically cite issues like their supervisor, career path, direction of the company, before addressing the issue of money. • Even though compensation is rarely the top issue, it doesn’t mean that employees will stay if they’re paid significantly below market rates. Review salary surveys regularly to make sure your firm is in line with the competition.

23. COMPENSATION INCENTIVES • Incentive compensation i.e. bonuses are a great way to keep employees engaged. • They should be aligned with company goals.

24. HIRING THE BEST PEOPLE • Turnover can often be attributed to bad hiring decisions in the first place. • Evaluating for culture and soft skills. • Past performance is the best indicator of future success/failure.

25. BUDGETING FOR RECRUITMENT Most firms don’t budget for recruiting. And that’s a problem. Consider a 200-person firm that has 10% turnover and wants to grow 20%. That would require 60 hires. *Assuming an average cost of $4,554 per hire, the total cost would be $273,240.

26. BUDGETING FOR RECRUITMENT If a 20-person firm that has 10% turnover and wants to grow 20%. That would require 6 hires. *Assuming an average cost of $4,554 per hire, the total cost would be $27,324.

27. DEVELOPING A RECRUITMENT STRATEGY • Align recruitment with the firm’s strategic plan. Where does the firm want to be next year, in three years, etc.? • Determine the number of positions that will need to be filled. Don’t forget about turnover. • Create a culture where recruiting is NOT HR’s responsibility. It’s everyone’s responsibility.

28. PRIORITIZE POSITIONS • Human Resources and Operations prioritize the positions that need to be filled. • Together, they develop a schedule, timeline, and budget for each key position. • Communicate, communicate, communicate

29. RECRUITMENT PROCESSES • Operations and Human Resources need to work as a team • Streamline systems for Recruitment • Advertising – LinkedIn, LinkedIn Recruiter • Recruitment database • Employee referrals • Agencies

30. COMPENSATION EVALUATION • Determine candidate’s salary requirements. Be careful about asking for current compensation. It’s illegal in some States now, and the trend is growing. • Have this conversation sooner rather than later. • Compare candidates requirements to see if they’re within fair market values. Use salary surveys to make this assessment. • Determine go/no go to the in-person meeting stage.

31. INTERVIEW/MEETING PROCESS • Be willing to make the first meeting away from the office • Keep the Process Simple – No more than two in-person visits • Avoid compensation discussion other than the initial verification of salary requirements in the compensation stage. • Sample questions – How would your boss describe you? What would you like your career to look like two years from now? • Sell the culture and the opportunity

32. HIRING PROCESS • Reference Checks – Do them • Verify Professional Registrations/Licensing • How to present the offer • Counter offer discussion – It’s a must in this market • Advising candidates on how to turn in their notice

33. ONBOARDING • How the new hire’s first day goes, can go a long way toward the decision on how long he/she will stay. • On day 1, make sure the new hire is set-up with the basics i.e. computer, phone, voice mail, email, etc. • Put together a checklist for day one to make sure he/she knows basics like where the rest room is located, office supplies, etc.

34. Keep turnover down, and see profits rise. And how do you do this? • Hire the right people in the first place • Set the right culture • Hold Manager’s accountable • Keep employees engaged CONCLUSIONS

35. QUESTIONS

36. THANK YOU www.morrisseygoodale.com @MorrGOOD_AEC morrisseygoodale

37. SPEAKER Lisa Elster| Executive Search Consultant | Morrissey Goodale LLC 275 Grove Street, Suite 2-400 | Newton, MA 02466 | 508.758.0191 (p) Lisa is an executive search and M&A professional serving the engineering, architecture, planning, and environmental consulting industries exclusively. She brings broad knowledge of sourcing, identifying, and recruiting top industry talent as well as connecting buyers and sellers in the market. Lisa advises firms on sourcing, recruitment, employment, negotiation, and compensation design. She is an expert at filling key positions and making strategic hires. Lisa excels at attracting top A/E executive level talent to her clients and is a skilled negotiator and closer. Positions she has filled have ranged from Engineers and Architects to Marketing and Business Development Executives. Lisa eats, sleeps, and breathes the Consulting Engineering, Architecture, Planning, and Environmental industries every day. In addition to recruitment, Lisa is a specialist on employee engagement and retention. She works with developing corporate missions, visions, value statements, and creating roadmaps to help A/E firms get their businesses from where they are today to where they want to be in the future when it comes to human capital planning. Lisa has a bachelor’s degree in business (with a marketing emphasis) and psychology from Milligan College in Johnson City, TN.

38. Recommended Reading On Fire at Work: How Great Companies Ignite Passion in Their People Without Burning Them Out by Eric Chester The Truth about Employee Engagement by Patrick Lencioni Emotional Intelligence by Daniel Goleman Drive: The Surprising Truth About What Motivates Us by Daniel H. Pink