How To Create An Effective Employee Retention Strategy

  • The exodus began to steamroll with little or no warning.

    Starting in the early months of 2017, employees began to run for the exits and quit their jobs at an unprecedented rate.

    “People left their employers at the fastest pace in 16 years. Federal government data reveals that 3.22 million Americans said, “I quit” in January 2017. This was up 11% from the previous January, and was the nation’s single highest monthly quit count since 2001.”

    For exiting employees, there may be a sense of revenge following a decade of wage stagnation and workplace conditions that range from the uninspired to the unbearable.

    For employers, this presents an unmistakable wake-up call, a reminder of the value of employee retention strategies and plans.

  • Why an Employee Retention Strategy Matters More Than Ever

     “In our work, we find that C-level leadership realizes the need for enhanced employee retention,” says John Parikhal, ‎Partner at New York-based Breakthrough Management.

    “But very few organizations have created a formal strategy to address this need or the commitment to follow through with it. In our experience, those who move beyond lip service, engage with their HR departments, and commit to putting meaningful plans in place can turn employee retention from a good intention into a best practice.”

    Jack Kelly, Principal of Corlea Group, a San Diego-based sales and business development acceleration consultancy, agrees.

    He says an employee retention strategy is vital, “especially now with the shorter life span of employees. If a company puts the effort forth to retain their best talent, then they will have a competitive advantage. If you compare it to the efforts to retain clients, often employee retention gets shorted. The cause and effect is you most likely will have trouble retaining clients if you can’t retain talent, stalling your growth.”

    The work that leads to creating an effective employee retention plan begins when an organization’s senior leadership makes two commitments. One is to assure the consistent execution of the strategy by making sure front line managers understand and value the importance of employee retention.

    The other is the recognition that effective hiring and effective retention are inextricably linked.

  • Why It Takes Best Fit Employees to Drive an Employee Retention Plan

    Improved retention is driven by improved hiring.

    Organizations which appreciate the quantifiable benefits of employee retention are looking for ways to hire more thoughtfully. In larger companies, hiring teams are looking for ways to make life easier for retention teams by bringing new employees onboard who will make an impact from their first day on the job.

    Traditional assessments can often miss or inaccurately measure the actual qualities of an employee that will result in an improved opportunity for retention. A new breed of predictive performance assessment is better able to illuminate these qualities, and to help organizations hire people whose skills and values are more closely aligned with the organization.

    “We’re collecting data on incumbents about their performance, their retention, and their performance on the candidate pre-interview,” says Sarah Croft, Director of Assessment and Instructional Design with Koru.

    “This can help better predict whether people in their candidate pool will be high performers. We’ll keep refining the model as people advance in their careers, more hires are made, and we’ll get even smarter and better to help understand what drives performance.”

    The Koru7™ Impact Skills illuminates a candidate’s grit, ownership, curiosity, polish, teamwork, rigor, and impact.

    The likelihood of an employee and an employer forging a long-term relationship can be increased when ownership and impact are strong.

    “Ownership is closely related to impact and shares similar qualities in terms of being service to others,” says Croft. “Curiosity is the lesser understood Koru7™ Impact Skills. People who are curious tend to show more interest in the process and the bigger picture. This is a sign that somebody cares.”

  • The Understood Employee

    Organizations which make a deliberate effort to understand the needs and desires of their employees are in a better position not simply to keep their people, but to benefit from their professional growth.

    “The major reason that employees leave a company is not because of money,” says Breakthrough Management’s John Parikhal. “It’s because they don’t perceive that they have been listened to, heard, understood, valued, and grown.”

    This feeling of being heard comes through an ongoing exchange between the employee, the employee’s associates, and supervisors.

    Real time feedback is replacing the annual review. According to the Deloitte 2017 Global Human Capital Trends, “Traditional performance appraisals have been abandoned by more than a third of U.S. companies. Many are moving instead to frequent development-focused conversations between managers and employees.”

    Adobe began to shift away from traditional reviews in 2011 and placed greater emphasis on continuous assessment and feedback.

    Juniper Systems, Dell, and Microsoft have each moved in a similar direction.

    Colorcon, an Irvine California-based pharmaceutical company, scrapped annual reviews in 2002.  Managers and supervisors don’t just hand out real time feedback. They hand out weekly cash bonuses to employees they see doing a good job.

    Leaders who grasp what employees really want, and the roles they want to be cast in, are in a better position to make the adjustments necessary to serve the needs of both the organization and the workforce.

    Conversations centered on a project, where feedback is both given and taken, changes more than the method used to gauge employee performance.

    It changes the culture.

    Assumptions are replaced with knowledge. A narrow focus is replaced with a broader perspective. And most significantly, these collective efforts mark the beginning of a retention strategy that creates a rewarding employee experience.

    According to Deloitte, “Organizations are developing an integrated focus on the entire employee experience, bringing together all the workplace, HR, and management practices, that impact people on the job.”

  • Creating the Employee Retention Strategy

    The effective employee retention strategy leads to a plan that gives companies a way to focus on the employee experience from multiple vantage points. It examines all the factors that contribute to employee satisfaction and the retention of employees.

    The general objective of the strategy is much the same for every organization: to minimize the disruption of turnover by providing talented employees with the best possible resources, compensation, leadership, environment, and fulfillment.

    The specific objectives of the strategy are tailored to the needs of the organization, just as the skills of the employee are  tailored to the needs of the organization.

    Considerations the organization should keep in mind as it starts to develop a strategy include:

    • Visibility from senior leadership… to underscore and reinforce the importance of the initiative.
    • Consistent execution and measurement… so everyone in the organization understands that retention is more than a “strategy du jour.” Measuring the employee retention rate quantifies the value of the process. Based on its own criteria, the organization can decide how best to calculate the employee retention rate.
    • Frontline manager development training… which enables the caliber of execution required to deliver desired outcomes. The better managers grasp the importance of retention, and how to lead, the more effective they will be.
    • An examination of structure… assumptions about existing reporting structure and workflow should be challenged, and alternative, more flexible methods of assigning employees to functions should be identified.
    • An audit of current hiring practices… traditional approaches to hiring may not serve the interests of retention. As a growing number of employees work on teams and move from project to project, and as hierarchies evolve, the organization may need to rethink what type of people are best fit hires.
  • The 6 Elements of an Employee Retention Plan

    1. Recognize That Retention Is Not For Everyone

     Retention is only a sound strategy when the employee is a keeper. While establishing and cultivating a positive, supportive environment and opportunity for everyone, there is an accompanying understanding that growth and advancement is for those who earn it.

    Senior management needs to accept this and understand that people who feel passed over will leave. The challenge is to insure employees who do feel passed over are not employees the organization values, would like to keep, and grow. 


    1. Make Sure The Right Person Is In The Right Seat

    Ongoing communication between employees and their supervisors must be sufficiently candid and substantive. It should address specific issues relating to the current assignment and possible future advancement.

    Not all employees who consider themselves promotable are. But they may be best cast in their current position. If advancement is not realistic, possible opportunities for reassignment to another lateral task should be identified and discussed.

    Some employees are content to perform at their current level. Others who do not see themselves as promotable are promotable, capable of performing at a higher level.

    Whatever the case, ongoing dialogue between the employee and the supervisor is essential.  One of the benefits is the type of preemptive intervention used by organizations such as Credit Suisse.

    At Credit Suisse, an internal recruiter will often cold-call an employee and inform them of an opening within the company. This program reduced attrition by 1% in 2014 by shifting 300 employees into new roles. The firm estimates that it saved $75 million to $100 million in training and rehiring expense.


    1. Provide Tailored Benefits

    The benefit package is not simply what attracts employee. It can be what keeps employee.

    Benefits go well beyond health care. Different motivators and different workstyles are factors.

    A recent “Glassdoor Employment Confidence Survey” found that 80% of employees chose additional benefits over a pay raise.

    Low expense benefits such as flexible hours, additional paid vacation time, and work-from-home options, can be highly valued when they are tailored to address specific employee needs. So can a culture that encourages employees to use vacation time.

    Benefits with an actual financial expense attached, such as student loan or tuition assistance, should be considered based on the organization’s capabilities.

    Flexibility that allows for a degree of work-life balance is particularly valued by parents.  Gender differences should be considered in terms of ranking importance of benefits.


    1. Engagement Doesn’t Assure Retention

    What is employee retention achieving? There are stark differences between employees who feel engaged and employees who are productive.

    Engagement is ambiguous. It is a feeling, and difficult to quantify. There is no objective way to gauge its precise degree, and the number of hours an employee works doesn’t correlate to the degree of engagement.

    By the same token, business results don’t correlate to positive engagement. A manager may have to dismiss or reassign an employee who claims to be highly engaged, but falls short of performance requirements.

    This means that when it comes to planning a retention strategy, and developing an employee experience, the organization’s leadership should strive to create a culture of engagement that is accompanied by productivity.

    In 2016, Gallup reported that more than half of America’s employees were “not engaged” and another 17.2% were “actively disengaged.” The resulting discussion focused more on what to do about engagement than what to do about finding and retaining the best fit employees.

    As innovative organizations focus on employee retention, one of the tactics being used is a fundamental shift in hierarchy.

    Valve Corporation, a Bellevue, Washington game developer and distributor, gives its employees the opportunity to select projects they want to work on. Assignments are made based on both the employee’s interest and skill level.

    Approaches such as this create what is being referred to as a hyper personal workforce experience. Work is done in small, independent, project driven teams where people with different disciplines are brought together. These teams function within a relatively flat hierarchy.


    1. Rethink The Role Of People

     Employee retention programs should embrace more than the issues of assignments, benefits, and compensation. They should address the issue of environment.

    The environment is defined as much by people as by architecture and design.  Relationships between employees shape perceptions of the environment and the organization itself.

    Associates matter. They can define standards and demonstrate adherence to policy. They set the tone for the front lines of the organization. As peers, the influence they can exert is formidable.

    When employee satisfaction is strong, and the influence of associates is generally positive, sour grapes sentiments are rarely a concern. But because the opposite holds true, the impact of coworkers should not be overlooked.

    This takes on increasing importance as more team projects are undertaken. An insular employee isolated from collaboration is less susceptible to the influences, either positive or negative, of coworkers.

    But in many team-oriented organizations, as siloed employees working solo become the exception rather than the norm, environment is the result of interactions between employees.

    Best fit employees can inspire, support, and feed on one another. Collaboration can move from successful teamwork to breakthrough innovation.

    Improving employee retention and reducing turnover gives relationships between employees an opportunity to mature.


    1. Insure Proactive Frontline Manager Involvement

    When we look at how to improve employee retention, we need to look at the role of the frontline manager.

    Because a superb strategy poorly executed is essentially worthless, the organization should measure the performance of frontline managers in terms of the retention of their direct reports. This can help insure an effective approach and consistent execution.

    Frontline managers need to be familiar with the organization’s employee retention program. They should be shown how to manage relationships with their direct reports in ways that are conducive to retention.

    Managers should be trained to understand employee’s motivations and respond appropriately. They should understand that one of their most important functions is to grow the people who report to them. When managers feel threatened or intimidated by talented employees, the managers should be identified and replaced.

    One of the challenges managers face is how to insure the systems and processes of the organization are adhered to. At the same time, these should be balanced and tempered with sufficient flexibility to appropriately address individual employee’s motivations.

    Collaborative leadership becomes an increasingly important skill. When managers define goals, they may invite employees to suggest a process to achieve the goal. Often, the frontline manager can provide a direct report with the focus and freedom to perform the task.

    Alongside effectively communicating the objectives of specific tasks, the manager should be adept at illuminating big picture topics.

    “Share the vision of the company and connect it to the employee’s role,” says Corlea’s Jack Kelly.

    “How do they contribute to the outcome? What are the opportunities to grow and make an impact? This needs to be clear. I can’t tell you how many times I’ve heard, ‘I just wish I knew where the company was going.’”

    The employee retention plan should provide a structured system for managers to stay in touch with employees to gather continuous, and ideally real-time feedback. Conversations are warmer and more effective than surveys. They become an essential emotional ingredient.

    When organizations change, and the roles of employees change, there is an opportunity to leverage the benefits of retention.

    At AT&T, what Chief Strategy Officer John Donovan describes as a “talent overhaul” is underway.

    280,000 employees, with an average tenure of 12 years, have access to an online self-service platform that provides “a host of tools and processes for performance management, career development, and talent planning.”

    The platform was accessed 6 million times 2015. Employees have been able to see hiring trends within the company, make informed decisions on their career path, and if required, access training.

  • 18 Step Employee Retention Plan Audit Checklist

    1. The retention strategy, and the plan that enables it to be executed, has the support of the organization’s senior leadership.
    2. The organization is designed to provide the employee with an experience rather than a job.
    3. This experience is created through meaningful work, a team of managers committed to retention, a positive work environment, clearly defined opportunities for growth, and trusted leadership.
    4. The strategy recognizes that retention and hiring are inextricably linked.
    5. Current hiring practices and protocols are audited with the goal of bringing “best fit” employees into the organization who exhibit a stronger likelihood of remaining with the company.
    6. There is a simple method for measuring progress, with practical metrics to track.
    7. The retention plan identifies specific ways the organization helps employees address the challenge of balancing professional and personal demands.
    8. The plan provides ways for frontline managers to help align their professional goals of their direct reports with the purpose of the organization.
    9. There are mechanisms for institutional knowledge transfer between longer and shorter-tenured employees.
    10. There are multiple opportunities for employees to learn, formal and informal, directed and self-directed.
    11. Processes are evaluated with an eye toward creating an employee experience.
    12. Annual reviews are replaced with ongoing evaluation, assessment, and coaching.
    13. Resources for learning are made available.
    14. Frontline managers are coached and instructed in leadership skills that drive higher employee retention rates.
    15. The organization’s structure is examined for ways to provide employees with more choices on issues ranging from the projects they work on to the hours they work.
    16. Benefits are tailored to address the needs of individual employees.
    17. Because it is difficult to quantify, engagement is not measured, but productivity is.
    18. Structured systems are put in place to insure positive communication between managers and their direct reports.
  • Moving Forward With An Employee Retention Plan

    Efforts to improve employee retention start at the top. 

    “The CEO casts the vision for the company and if retention is not a high priority, then I suspect their tenure will be short-lived,” says Craig Eggleton, Senior Consultant with The Human Capital Group in Brentwood, Tenn.

    “More often than not, poor retention is directly correlated to a poor leader. If retention is an issue, start at the top and work to get to the root cause.”

    As a growing number of companies make the connection between better hiring and better retention, the sting of attrition can be softened. New employee retention ideas will develop organically.

    According to the Harvard Business Review, “Attrition has always been expensive for companies, but in many industries the cost of losing good workers is rising, owing to tight labor markets and the increasingly collaborative nature of jobs. As work becomes more team-focused, seamlessly plugging in new players is more challenging.”

    When an employee retention strategy is in place, these challenges diminish.


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