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Employee Retention

The document discusses employee turnover, retention, and the importance of employee engagement in organizations. It highlights various reasons employees leave and stay, the costs associated with turnover, and strategies for improving retention through effective management and a strong employee value proposition. Additionally, it emphasizes the link between employee engagement and business outcomes, suggesting that engaged employees contribute to higher productivity and customer satisfaction.

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2 views

Employee Retention

The document discusses employee turnover, retention, and the importance of employee engagement in organizations. It highlights various reasons employees leave and stay, the costs associated with turnover, and strategies for improving retention through effective management and a strong employee value proposition. Additionally, it emphasizes the link between employee engagement and business outcomes, suggesting that engaged employees contribute to higher productivity and customer satisfaction.

Uploaded by

muntasir-2023717882
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Chapter: Employee Retention

Lecture – 19
30/12/2024 Turnover

Turnover
Employees leave organization for all sorts of different reasons: Voluntary Involuntary

– Finding a new job


– Following a spouse who has been transferred
Functional Dysfunctional
to a different location
– Retiring
– Migration Avoidable
– Getting angry with something and quit on impulse

Unavoidable
Retention
Retention is calculating % rate of how many employees have stayed. A comprehensive
employee retention program can play a vital role in both attracting and retaining key employees, as
well as in reducing turnover and its related costs. All of these contribute to an organization's
productivity and overall business performance. It is more efficient to retain a quality employee
than to recruit, train and orient a replacement employee of the same quality.

Why Retention Matters/is important?


▪ The growing importance of intellectual capital
▪ A casual link between employee tenure and customer satisfaction
▪ The high cost of employee turnover

Importance Of Intellectual Capital


Whenever employees leave, your company loses their knowledge and their (often expensively)
acquired skill. When those employees go to competitor, the loss is compounded

Employee Tenure And Customer Satisfaction


Employees who are satisfied with their work and their work and their company are more likely
to create satisfied customers. Although this may be intuitively obvious, a growing body of research
supports this correlation.
Cost Of Turnover
▪ Direct expenses, including the out-of-pocket costs of recruiting, interviewing, and training
replacements.
▪ Indirect costs, such as the effect on workload, morale, and customer satisfaction.
▪ Opportunity cost, including lost knowledge and the work that doesn't get done while
managers and other employees focus on filling the slot and bringing the replacement up to
speed.

Why Employees Stay


• Pride in the organization
• A respected supervisor
• Fair compensation
• Affiliation
• Meaningful work
• Brand Value of the Organization
• EMPLOYEE VALUE PROPOSITION: Organizations can attract and retain talented people if
they pay attention to what they term the EMPLOYEE VALUE PROPOSITION (EVP). To create a
compelling employee value proposition, a company must provide the core elements that
managers look for – exciting work, a great company attractive compensation, and
opportunities to develop.

Why People Leave

▪ The company’s leadership


▪ Conflict exists with immediate supervisor
▪ Close friends leave
▪ A planned change
▪ An unfavorable change of responsibilities has occurred
▪ Problems of work life balance are present

Managers And Supervisors Are Key

Companies can have terrific pay and benefits, employee-friendly policies, and all the other
things that induce loyalty and retention, but a few rotten apples can spoil the barrel. Specifically,
a bad manager can neutralize every retention scheme organization put in place.
Market Wise Retention
The first step toward market-wise retention is to identify the individuals and employee segments
most critical to the success of your organization. Find out the people who:
– Provide formal or informal leadership to others.
– Consistently create excellent results
– Contribute practical and valuable new ideas.
– Require little or no supervision to accomplish their tasks.
– Facilitate the work of others
– Act as important information transfer nodes within the company
– Have unique knowledge or skills that would be costly and time consuming to replace.
– Could do the company great harm if they defected to direct competitor.

General Strategies For Retention

▪ Get people off to a good start


▪ Create a great environment – with bosses whom people respect
▪ Share information
▪ Give people as much autonomy as they can handle
▪ Challenge people to stretch
▪ Be flexible
▪ Design jobs to encourage retention
▪ Identify potential defectors early
▪ Be a retention-oriented manager

Compensation

• Compensation matters in the sense that you cannot recruit or retain desirable employees if
they view their compensation as unfair and noncompetitive.
• Pay “hot skills” premiums to employees with crucial, rare expertise.
Exit Interview
• Exit interviews are interviews conducted with departing employees, just before they
leave. From the employer's perspective, the primary aim of the exit interview is to learn
reasons for the person's departure, on the basis that criticism is a helpful driver for
organizational improvement.
• Participation in exit interviews by the employee leaving is voluntary. Do not compel
departing employees to attend exit interviews
• Ideally the organization should have a documented policy stating how exit interviews
happen, when, and by whom. Some organizations hand the responsibility to a skilled
interviewer in the HR or Personnel department. Alternatively line-managers or even
supervisors can conduct the interviews.
• Actions resulting from exit interview is feedback analysis, in any size or type of
organization, fall into two categories:
• Remedial and preventative,
for example improving health and safety issues, stress, harassment, discrimination.,
etc.
• Strategic improvement opportunities,
for example improved induction, management or supervisory training, empowerment
or team building initiatives, process improvement, wastage and efficiencies
improvements, customer service initiatives, etc.

Sample Exit Interview Questions


▪ Tell me about how you've come to decide to leave?
▪ What is your main reason for leaving?
▪ What are the other reasons for your leaving?
▪ Why is this important, or so significant for you?
▪ What has been good/enjoyable/satisfying for you in your time with us?
▪ What has been frustrating/difficult/upsetting to you in your time with us?
▪ What can the organization do to retain its best people (and not lose any more like you)?
▪ Have you anything to say about your treatment from a discrimination or harassment
perspective?
▪ Would you consider working again for us if the situation were right?
▪ Are you happy to say where you are going (if you have decided)?
▪ What particularly is it about them that makes you want to join them?
▪ What, importantly, are they offering that we are not?
▪ (If appropriate:) Could you be persuaded to renegotiate/stay/discuss the possibility of
staying?
Employee Engagement: A New Approach To Handle Turnover

• 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. They don’t work just for a paycheck, or just for the next promotion, but work
on behalf of the organization’s goals.

• When employees care—when they are engaged—they use discretionary effort.

• Discretionary effort means the engaged computer programmer works overtime when
needed, without being asked. This means the engaged retail clerk picks up the trash on the
store floor, even if the boss isn’t watching.

• Engaged employees lead to better business outcomes. In fact, according to Towers Perrin
research, companies with engaged workers have 6% higher net profit margins, and
according to Kenexa research engaged companies have five times higher shareholder
returns over five years.

• Engaged Employees lead to…

✓ higher service, quality, and productivity, which leads to…


✓ higher customer satisfaction, which leads to…
✓ increased sales (repeat business and referrals), which leads to…
✓ higher levels of profit, which leads to…
✓ higher shareholder returns (i.e., stock price)

• As former Campbell’s Soup CEO, Doug Conant, once said, “To win in the marketplace you
must first win in the workplace.”

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