Where Did Everybody Go?

Here are some ways to avoid ‘quick quits’ and strengthen retention efforts.

Experts have been predicting a shortage of skilled workers during the latter part of this decade for some time now because of aging baby boomers and the drop in birth rates in generations following the boomers. The Bureau of Labor Statistics estimates that the United States will be at least 10 million workers short by the end of the decade. Employers are experimenting with technology solutions where possible to substitute for labor-intensive work, and they have moved some jobs to other countries. Many boomers will continue to work into their post-retirement years.


Unacceptable Turnover

Everyone has heard that turnover is costly, but it may be even more costly than you think. In Impending Crisis: Too Many Jobs, Too Few People, authors Roger Herman, Tom Olivo and Joyce Gioia explain a software tool called the Bliss-Gately Tool, that can be used to effectively calculate the real cost of turnover. It factors in the cost of employees filling in for the employee who quit; the lost productivity of the fill-in employee; the cost of an exit interview; the cost of the manager’s time; the cost of company-provided training; lost department productivity; severance and benefits continuation; cost of lost knowledge, skills and contacts; increased cost of unemployment insurance; cost of losing customers; recruitment costs; training costs; lost productivity costs; new hire costs; and lost sales costs. The model comes from Bill Bliss of Bliss & Associates Inc. of Wayne, N.J., and Robert Gately, an engineer.


Still, most employers know they’ll be facing a skills shortage, if not an actual labor shortage, soon. The shortage will change the labor market and once again allow talented and skilled employees to set the terms of their employment. Most employers will want to be known as a good place to work to compete for skilled workers.

In Impending Crisis: Too Many Jobs, Too Few People(Oak Hill Press, 2002), authors Roger Herman, Tom Olivo and Joyce Gioia suggest that in a couple of years employers in all industries will be facing what health care is facing today. A shortage of nurses, pharmacists, laboratory and imaging technologists, and billers and coders exists right now.

Health care is a unique case. The government regulates health care prices through its administration of the Medicare and Medicaid programs, which represent a large percentage of the industry’s revenue. Nevertheless, there are parallels that can be drawn with other industries. Increased customer demand, lower profit margins and high turnover due to adverse working conditions—such as long shifts and few resources for nurses—have presented the health care industry with significant human resource challenges.

Forward-thinking health care executives are meeting these challenges by benchmarking their recruiting and retention efforts, adopting processes for continuous improvement and creating an organizational climate that encourages employees to stay.

No Opportunity Like the Present

Now is a good time for employers in other sectors to begin examining their recruitment and retention practices and to find ways to raise the bar. Many experts are concerned by the current lack of employee loyalty and commitment. The loyalty survey conducted every other year since 1999 by Walker Information in Indianapolis has shown consistently that many employees don’t feel much loyalty toward their company. In the latest statistically significant survey, conducted in 2003, 34 percent of the 2,400 people surveyed were at high risk of leaving their employer. Out of the 2,400, 450 were new hires, and, of those, 41 percent were at high risk of leaving. There are many reasons for employees to distrust their companies and be loyal only to themselves. What employers must understand today is how important it is to recognize the potential painful consequences when the labor market is tight.

One way to avoid painful labor shortages, expensive recruiting costs and organizational disruption is to have fewer “quick quits”—employees who are hired and leave before the organization can recoup its investment in recruiting and organization-specific training. First and most obvious, it’s important to get the right fit for the position through effective recruiting, screening and interviewing processes.

One of the factors in the low loyalty quotient of employees today is that, in their desire to get good people, employers often don’t present the jobs realistically, says Chris Woolard of Walker Information. “The employee is expecting one thing, and the job is different, so it’s not a good match.”

After-Hire Prevention

It may be just as important to focus on the time just after the employee is hired as it is on the recruitment, screening and interviewing processes. There are a number of things companies can do after an employee begins work to help avoid quick quits. For example, Walker Information has found in its consulting work with individual companies that many employees desire a structured mentoring program. Woolard recommends organizations assign a mentor to new employees. This person can answer questions the new hire might not feel comfortable asking a supervisor. The mentor should feel mentoring is an honor awarded only to those who are the most competent and knowledgeable.

Woolard says Walker’s work shows that employees want to feel that their employer is fair and caring. They also want to feel a sense of achievement when they go home at night. Training is important and work/life balance is something today’s employees value.

Stretching Orientation To Onboarding

Effective orientation programs can help employees become productive more quickly. But taking things one step further, Beverly Kaye, president of Career Systems International, and Steven Sreb, managing partner for Prana, advocate re-recruiting. They recommend a series of structured, powerful conversations between the employee and manager that take place over the first few weeks of an employee’s tenure. The time it takes a new manager to develop relationships with new employees is directly related to the employee’s early productivity, loyalty and commitment, they say. Onboarding takes the basic concept of employee orientation and stretches it to include a structured way to ensure long-term that employees get what they need to be productive and stay motivated. Herman, founder of The Herman Group and a futurist and management consultant, and Gioia, president of The Herman Group, write that onboarding is successful only when both HR and line managers are involved. The goal is to establish a long-term relationship with the employee that begins even before the employee is hired and will endure the everyday trials of the workplace. It’s a particularly useful concept when the new employee holds skills and talents in short supply.

Onboarding includes structured ways to give newly hired employees more information about the company, as well as more opportunities to understand company culture, mission and goals. It also includes a system for structured interviews with managers and company executives during the employee’s first few months, with the aim of strengthening the employee bond. It should help employees know where they can fit into the company and how their talents can be used to advantage for the organization.

Herman and Gioia say it’s important to make employees feel welcome and to send the message “we’re glad you’re here.” This can be done, first, with a well-run orientation program and, second, with a longer-term onboarding strategy. Supervisors should participate in at least part of the orientation. A gift that symbolizes the “welcome” message to employees when they come onboard is a nice touch, the authors say.

Include early, structured opportunities for the new hire to meet other company executives, Herman and Gioia recommend. Equally important: the employee’s supervisor needs to clarify expectations and set goals for how the employee can grow in the job early on. One reason talented employees leave soon after being hired is that the job isn’t what they thought it would be, so it makes sense during the period just after hire, as well as during the pre-hire period, to give employees as much information as possible about how they’ll be expected to perform on a day-to-day basis.

In the Walker surveys, the relationship with the employee’s supervisor or manager and with co-workers is usually related to how loyal the employee feels toward the company. “Training on how to be a good leader and a good supervisor will go a long way toward avoiding early resignations,” says Woolard.

Handle Internal Transfers Well

One reason in-demand employees leave quickly is that they get a better offer. Employees who see that there could be other career opportunities within the company and that they have a viable career path are less likely to take off so soon for greener pastures. A few years ago the Hay Group did an analysis of its survey data. Out of millions of employees surveyed worldwide, an astonishing one-third planned to resign within two years. Those that planned to leave were much less likely to think they were using their skills and abilities to the fullest extent. They saw fewer advancement opportunities or opportunities to learn new skills than those who were committed to the organization.

Companies that send the message that employees will have access to tools that will help them advance because the organization cares about their career growth have a better chance of retaining valued employees.

This idea is supported by research. Companies that have a systematic and visible internal hiring process achieve better retention results than those that don’t, according to the Recruiting Roundtable, a member organization of the Corporate Executive Board.

The Roundtable studied how companies handle internal transfers. The system an organization has in place for promoting or moving employees laterally has the capacity to help or hinder recruiting efforts and retention strategies. That’s because employers who develop a reputation for promoting from within develop an employer brand that is favorable. Also, employees who know they have a satisfactory career path within the organization are less likely to leave.

The Roundtable wanted to see how the internal transfer practices affect both employee productivity and effectiveness and employee satisfaction. Through analysis of 28,000 employee survey responses across organizations of all sizes, including 5,000 internal transfers matched with information from supervisors and managers about how employees actually performed, Roundtable researchers concluded that onboarding for employees who are transferred to another position within the organization is just as important as it is for new hires.

The success with which companies handle their internal transfers varies widely, says Dave Williams, who heads the research efforts for the Recruiting Roundtable. At the most successful organizations, almost one out of every five internal transfers is an optimal fit, but, at the least successful organizations, the number is one in 100 transfers, defined as employees who are satisfied with their work and are ranked as high performers by others in the company. Among those things that can make the employee more productive faster are an early verbal review, training for the new job, support from co-workers and an orientation process for the particular business unit or department in which the transferred employee will be working.

“This is important because cultures aren’t monolithic; in fact, there is a tremendous amount of variation throughout a single organization,” says Williams.

The Roundtable research also showed that employees who interviewed with their new supervisors and co-workers had stronger rates of retention than those who didn’t. “Many of the drivers of strong retention and good fit are outside the recruiter’s traditional job descriptions,” says Williams. “So the challenge is in developing a new partnership with hiring partners to make sure the activities that have been shown to drive performance don’t fall through the gaps. It’s difficult because these are groups that traditionally haven’t worked well together—hiring managers and recruiters. Organizations may need to have a formalized structure for it. In other organizations, it’s baked into the culture.”

Williams says looking at an organization’s internal transfer processes is a way to retain current talent, which will become more important as the labor market tightens. “An efficient internal labor market ensures that talent moves to its point of highest return within the organization,” he says.

A best practice for organizations that want to improve their internal hiring is creating a way for employees to assess themselves and their skills against the jobs that are open. There are many good web-enabled career development tools and competency systems that can help, Williams says.

The First Week Is Critical

While there is sufficient evidence to show that strong onboarding programs, good internal transfer processes and a concerted attempt to make new employees feel welcome can contribute to lower early turnover, many companies still don’t get it, says Gregory P. Smith, who runs an organizational development consulting company called Chart Your Course International in Conyers, Ga., and who authored Here Today, Here Tomorrow: Transforming Your Workforce from High Turnover to High Retention (Dearborn Trade, 2001). Smith says that, many times, new employees are treated like they have a contagious disease, as those around them focus on critical business issues rather than on making new hires feel comfortable. “New employees decide the first week on the job whether or not they will stay,” Smith says. “If companies were aware of the impression they were making, they would change their behavior.”

Smith’s own daughter was hired by a large department store as a college student. Before she was allowed to run the cash register, she was supposed to be certified through an online learning program. But on her third day of work, her boss left and told her to take over—before she had completed her training. She had a customer who wanted a refund, which she had not been trained how to give—and she didn’t have a key to the cash register. Shortly after this incident, she left for another job at the other end of the mall.

Ideas To Make Employees Feel Welcome

Here are some of the practices Smith sees his clients and others using that are working to help avoid quick quits.

La Rosa’s, a large restaurant chain in the Northeast, surveys new employees after 30 days. New employees are asked to rate their boss on a scale from A to D. Any boss who gets below a B is investigated, and top management steps in to fix the problem.

The Boys and Girls Clubs of America designates one department each month to be responsible for taking new hires to lunch.

Other organizations give the new employee a reserved parking space near the building entrance or send gifts to their parents that send the message “We’re glad your child is here.”

One employer gives the new hire a “go to” list, for answers to commonly asked questions. Another uses a “dumb question” coupon book, so that employees get the idea it’s all right to ask questions for which the answers may seem obvious to others.

At some organizations, top executives are asked to find the answers to information about as many as five new employees, such as where they were born and whether they have any children. This forces the executives to interact with new employees. Face to face communication is critical, says Smith. While e-mail is efficient, it often doesn’t send the right message about being welcoming and caring.

One powerful tool is to have an “entrance” interview with employees before their first 30 days are up. During this time, they will tell a company representative what they think more frankly than they will later, when they have more knowledge of company politics and perhaps more of a sense of ownership in the company. These early interviews can be especially helpful if an organization is trying to weed out bad bosses.

At some organizations, the interview, with key executives, happens after 90 days and new employees are solicited for their ideas of how to make the organization better.

“There has to be a structure for following up with new employees, even if it’s easier to just ignore them,” Smith says. Sometimes a check sheet that includes things supervisors should do for new employees is helpful.

“We are in danger in this country,” says Smith. “The emphasis on short-term profits and cutting costs is putting many organizations in jeopardy. Until top leadership starts demanding a different outlook toward employees in general, it will be hard to change the culture.”




Share with:

archive, career, HR, job