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TCPI News Vol. 3, No. 7

April 2, 2004

In this issue:

  1. Why Do Employees Leave?
  2. Retention Strategies
  3. What Can Managers Do?

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1. Why Do Employees Leave?

Losing your best employees to other companies or having workers burned-out from increased workloads due to low retention, are all problems that most companies are currently facing. Finding and keeping good employees has become a global issue. Most countries are now focusing on how to retain their employees. India, which has one of the largest workforces, is using stock options and mutual funds to attract and keep their workers. Other companies are rewarding employees for having many years of service. These types of compensation will only last for a short period of time if there is dissatisfaction

According to several studies, compensation ranks among the lowest concerns for employees. During the last decade, it has been common to hear of the scarcity of employees. Employers have been known to resort to many techniques to attract qualified applicants. “Most employees who have voiced dissatisfaction will still leave even after the company has increased pay or benefits in an effort to make them stay”, said Terri Kreps of HR Advantage in Colorado. Today’s employees have the mobility and freedom to roam. The Saratogo Institute in California found that the average exempt position remains vacant for 75 calendar days and costs a minimum of a year’s salary to hire and train the new employee to regain the lost customer and supplier contacts.

Why do employees still leave? Is the prospect of a better job the only reason? Linda Berens of the Temperament Research Institute has found that employees seek to gratify their needs in one of four ways. These fundamental needs can be classified as:

  1. The way to better understand the meaning and significance of one’s own life.
  2. To seek mastery and self-control- to be universally knowledgeable and competent in whatever they undertake. They prefer to engage sills and strategy of design.
  3. To seek membership or belonging to a group and solidify this alliance by fulfilling responsibilities or duties for the group. They emphasize planning and logistics in their interaction
  4. The need for freedom to act according to the needs of the moment, so as to make a unique impact on others or the situation. They use their tactical intelligence to solve real time problems.

By looking at Berens’ fundamental needs theory, one can see how an employee with core needs left unfulfilled will lose interest in their work. According to Berens, employees will seek to satisfy these needs regardless of the company’s agenda. Therefore it is important for employers to incorporate these needs into employee’s daily work in a constructive manner.

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2.  Retention Strategies

According to the 2000 Bureau of labor statistics, by 2010 there could be as many as 10 million more jobs available than there are employees in the United States. (Michelman, 2003) For companies that do not have employee satisfaction and retention strategies on their minds, this problem could be very severe. “When you want’em you can’t find’em, and if you find’em you can’t afford’em” so says the country auctioneer holding up a rather dubious looking lamp. Like it or not, some of your best workers are going on the auction block.  

In an August 2003 study by Accenture, 48% of U.S. middle managers surveyed said they were looking for another job or planned to do so when the economy recovered. (Michelman, 2003) For the companies that believe the quality of their people is central, they need to rethink the “they have no place to go” strategy of retention. 

When employees look at their job in the long term and career opportunities are available, they are more likely to stay. Much of the responsibility for retention rests with individual managers and their ability to hire competent people and motivate them. When an employee is engaged in a fulfilling work experience, they are less likely to look elsewhere.

Another strategy for retention is providing work that best suits individuals. David Lewan of UCLA’s Anderson School says, “individuals differ greatly…A company should exert some effort and undertake some analyses to determine the non-monetary interests and preferences of its key employees, and then attempt to meet these preferences in action.” (Michelman, 2003) Managers need to be compensated for retaining employees and helping them move up in the company.

Companies also try to improve morale when there have been significant layoffs within their company. Some strategies for this have been, one on one meetings; a commitment to top-down improvement in communication and information sharing; more flexible working schedules; actual payment of cash bonuses n the current year subject to meeting published net income targets. Managers also need to establish a clear baseline of employee opinion and priorities.

“The real trick is creating a culture that sustains all employees.” Pricewaterhouse Coopers in Australia introduced an initiative called High Performance Culture that aims to inspire and develop staff by driving the organization’s values into everyday business behaviors. Culture can’t change if it is solely directed from above. It also needs to come from below.

 Michelman, P. 2003, Why Retention Should Become a Core Strategy Now, Harvard Management Update, pp.-6

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3.  What Can Managers Do?

The costs are incredible when a good employee walks out the door. Among them are-

In the past, managers could assume that an employee left because they were unhappy with the company or found a better job. Today, though, people also leave for the same reasons, but others that involve how their manager treated them. An employee’s relationship with their direct boss is more important for retention than company wide policies such as pay and perks An employee may be lured to a new job with high salary and perks, but it is the relationship with the immediate manager that will determine how long they stay.

There are several things managers can do to keep as many good employees as possible.

These are not the only things a manager can do to retain their employees, but by starting out with these two, employees will sense the commitment to keep them.

One important thing a manager can do is to craft a job offer that attracts the people you want and who will fit best with the company. The most successful offers need to be holistic and include the following four point of appeal:

  1. Money
  2. Personal growth
  3. Work life
  4. Corporate future

Hiring and keeping good employees is an issue that is going to be an item of major importance if the labor shortage is going to increase. Managers have the chance to prevent an employee from leaving if they react to the warning signs and address the issue up front. In the 2000 Rewards of Work survey, four in ten respondents reported feelings of distrust in management and supervisors. This should encourage managers to take the initiative and create an environment that encourages employees to stay.

“Managers are being called on to respond to the changing demands of a disenchanted work force. If they are unable to meet these demands, they will have failed their primary role and their organization will suffer the consequences.: ( Marvin Gottlieb and Lori Conkling, Managing the Workplace Survivors: Organizational Downsizing and the Commitment Gap , Quorum Books, 1995, p.xi.

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For information on Marvin Gottlieb’s other publications.

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