The Multi-Dimensionality of Retention

Friday, March 05, 2010

Which is the proper question to ask about employee retention? Why do employees stay? Alternatively, why do employees leave?

In his 2010 "Rethinking Retention in Good Times and Bad", Richard Finnegan lays the groundwork for retention by reexamining the three “P’s”: People, Products, and Processes. In doing so he concludes that Processes, not People and not Products, are the key to retaining the organization’s best talent. The “Processes” that he focuses on are those dealing with the acquisition and retention of talent. Certainly some of those Processes are concerned with how talent is rewarded. However, Finnegan goes deeper by looking at the work environment by asking why employees “stay”. His answer is that employees stay, “for things they get uniquely from you”, the employer. While this may sound like a simple and all too obvious answer, upon introspection a multi-dimensionality of reasons become apparent, “unique” to each employee.

Consider the working mom who wants to be near her young child’s school and her home and accepts a job in a nearby office to avoid a long commute. Maybe she gives up a higher salary, better benefits, and peer recognition for what she can uniquely get from this employer. Examine why a young IT staffer accepts employment at a small, innovative software company. It wasn’t for the pay and benefits. Was it for the exposure to the leading edge technology being developed? Why would a top 1% Ivy League graduate turn down numerous job offers from the Fortune 100 to work for a small public policy think tank? Was it because of only what that small public policy think tank could offer her?

So if employees stay, for those things they can only get from their employers, why do they leave? According to Finnegan, employees quit “because they can”! Even during a down economy, good performers have opportunities. Some of those opportunities are self-generated, i.e., they open their own business. Competitors, looking to gain a strategic advantage may generate opportunities. I once worked with a bright co-worker who when passed over for a promotion jumped ship and went to a direct competitor who gave her the promotion and used her skills to help build market share. Market share that my employer lost. What did my employer lose? They lost a 20-year veteran employee, a mid-level manager with technical skills, and an individual with intimate knowledge of the interworkings of her former employer’s business operations.

Is there a catalyst in retaining the organization’s best and brightest? Finnegan believes that supervisors should be held accountable for turnover. Assuming supervisors have hiring authority, they are responsible for selecting the right or wrong candidates. They are also the focual point of contact between the employee and the organization. While Finnegan states that retention should be driven from the “top down”, supervisors shape the opinions of employees more than any other person in the organization. Supervisors are also the persons who should be conducting both the “exit” and the “stay” interviews with employees. It is often reported that a military unit runs on its non-commissioned officers, then businesses must run on its supervisors.

Employee retention is not just about the tangible aspects of the employer-employee relationship; rather it is enveloped in what Finnegan refers to as the concept of the “Employee Value Proposition”. The Employee Value Proposition is a concept very much akin to product branding. Moreover, the Employee Value Proposition is a holistic concept driven by “things they get uniquely from you” and only from you, the employer!