What Makes Employees Happy?  The Latest Research on Attracting and Retaining Employees of Choice

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Regardless of your organization’s economic state, your organization’s survival will hinge upon your ability to retain the “make a difference” employees and to attract future stars. According to the U.S. Job Recovery and Retention Survey sponsored by SHRM and The Career Journal:

·         Seventy-five percent of all employees are looking for new jobs.

·         Thirty-eight percent of the human resource (HR) professionals surveyed said they have noticed an increase in turnover. Employee turnover creates the need for aggressive employee retention programs.  You don't want your best employees seeking new jobs.

·         Thirty-five percent of employees are actively job searching.  Forty percent are passively job searching.

·         Nearly half of the employed survey respondents said they would step up their job search efforts as the job market improves.

·         HR professionals believe that as employees leave their organization for new opportunities, most of the resignations will come from non-management (69 percent) and middle-management (19 percent) positions.

·         A quarter of the HR professionals surveyed said they are very concerned about voluntary resignations. HR professionals participating in the survey believe the top three threats to employee retention are the following:

o        Better compensation elsewhere — 25 percent,

o        Job burnout — 24 percent, and

o        Dissatisfaction with the potential for career development at the current organization — 19 percent.

In a global work force study conducted by Towers Perrin the following employee “drivers” were identified:

• Top 5 drivers to attract employees of choice:

1. Having a pay for performance program
2. Formal career advancement process
3. Commitment to work-life balance
4. Flexible healthcare benefit program
5. Competitive pay
   
    
• Top 5 drivers to retain employees of choice:

1. Managers that encourage and motivate their staff
2. Belief that pay is fairly determined internally
3. The reputation of the employer as an employer of choice
4. The opportunity to learn and enhance one’s skills
5. The perception that the employer is making efforts to retain quality staff


 
• Top 5 drivers to engage employees of choice:
  1. Perception of consistency in pay and rewards
  2. Managers delegate decision making to staff
  3. The reputation of the employer as an employer of choice
  4. Commitment of the organization to improve employees’ skills
  5. Management shows an honest interest in the careers of their employees

So who are these “employees of choice”?  According to an article in About.com’s Human Resource research engine, these most desired people posses the following competencies:

• Customer Dedication: Is committed to meeting / exceeding customer expectations and establishes.  Maintains strong customer relationships.
   
• Results Oriented: Isn't happy until the job is done.  Goals are met and usually exceeded.  Motivates self and others to get needed results.  Pursues results relentlessly.
   
• Technically Competent: Has technical know-how to get the job done.  Problem-solves and analyzes complex issues with ease.  Continuously picks up and integrates new knowledge and ideas.  Has intellectual inventiveness.
   
• Aptitude for Learning: Learns new skills and competencies quickly.  Assimilates learning to fit potential organization / client needs.  Is open to change and is versatile in the midst of changes.  Enjoys learning and seeks to learn from experience.

Applebee’s, one of the nation’s largest restaurant chains, has made retention of their stars a priority. The following is a summary from Workforce Management of Applebee’s employee retention program:

The system at Applebee’s doesn’t reward managers for keeping turnover low; it rewards managers for keeping turnover low among top-performing employees. Applebee’s divides its employees into three groups: top 20 percent, middle 60 percent and bottom 20 percent. The company doesn’t even set retention goals for the bottom 20 percent.

 

The system is based on a working assumption that the loss of a top 20 percent hourly employee costs the company $2,500. The loss of a middle 60 percent employee costs $1,000. But the loss of a bottom 20 percent employee actually lets the company make $500. The system empowers our managers to address underlying performance and competency issues while focusing retention on locking in the top 20 percent of the workforce. Applebee’s retention program produces a positive feedback loop. With retention efforts focused on the top 80 percent of employees, many of the bottom 20 percent group will leave and be replaced by a group of new hires.

 

Applebee’s developed its own Web-based software program called ApplePM (for "people management") that lets everyone from top executives to individual store managers identify their best employees and determine how well managers are doing at retaining those star players.  The ApplePM system includes both hard data--turnover, sales and profits--as well as more subjective data points, such as customer satisfaction and performance reviews. It is possible to evaluate all projects on cost effectiveness, user friendliness and impact.

 

Managers have retention targets that they are expected to meet. That means retaining 80 percent of the top 20 percent group, 70 percent of the middle 60 percent segment and none of the bottom 20 percent. There are no consequences for managers who turn over the entire bottom 20 percent of their workforce.  Under the ApplePM system, assessments are done every six months and involve a consensus assessment made by the entire management team. Managers then split the responsibility of sitting down with hourly workers to inform them of their standing, offer congratulations where appropriate, give warnings where necessary and discuss performance goals.  Managers are also evaluated every six months. Managers can view monthly scorecards on ApplePM containing the key performance indicators on which they will be evaluated, including sales, bar sales, retention of new hires and retention of top 80 percent employees.

 

Quarterly "people metrics" meetings are held and are important drivers of people results. Cribbing from the format of a presentation to Wall Street analysts, Applebee’s pulls a key operator, HR partner and training partner from each of its 11 regions--33 people in all. It gives each group 10 to 15 minutes to present their critical people performance indicators of staffing, retention and turnover. Everybody uses the same scorecard and describes what has worked well in the past and what will be done the following quarter to produce even better results.  All the other regional representatives play the role of analysts and pepper the presenters with tough questions: Why is such-and-such variable trending the wrong way? What are you doing to rectify it? What can I expect to see in terms of an improvement by next quarter? The meetings don’t just promote excellence among participants who want to impress and outperform their peers; they also serve as forums for exchanging best-practice experiences.

If you’re not sure what your key employees’ attraction, retention, and engagement factors are, now’s the time to find out.  Speak with these essential team members, and explore their thoughts and perspectives now…before they become someone else’s star employee.

Next time in Astronology: HR Automation Update: New Tools to Simplify the HR Function