Companies with high employee retention aren’t necessarily successful; however, successful companies almost always have high retention. For as important as this metric is, it doesn’t get near the attention it deserves. That’s the impetus for this paper: to bring employee retention to the forefront and share proven strategies for hiring and retaining top performers.
Your workforce is in constant flux. That’s normal. Although reasons vary (changing demand, strategy, regulations, etc.), management and employees are constantly making decisions that affect the size and make-up of your employee base. In addition, healthy businesses are constantly pruning under-performers or those individuals that just don’t fit. All of that is a natural part of a businesses life-cycle. However, if management is not aligned, retention can become a major problem.
Executives understand that high employee turnover ultimately manifests itself in lower revenues and profits. The insidious part of turnover is that it has a short- and long-term effect. It can negatively impact your company in five primary ways:
- Lower Customer Satisfaction
- Increased Costs
- Distraction to Operations
- Loss of Institutional Knowledge
- Low Employee Morale
However, there is a new retention challenge. Gone are the days of a homogenous, one-size-fits-all workforce. Today, the workplace has 4 distinct generations: Baby Boomers, Gen X, Millennials, and Gen Z Kids. Each group has a unique set of priorities and beliefs, the most interesting of them being how they define their career. On one end of the spectrum, Baby Boomers focus more on job stability and disposable income (to acquire assets such as cars, houses, etc.). On the other end, Gen Z Kids are looking for personal fulfillment, opportunity for growth, and free time to “experience” life. These diverging priorities make retention a much more complex issue than just a few years ago. That, and the fact that as of 2017 millennials make up the largest segment of the workforce. This demands thought…and flexibility!
The Foundation of Retention
Your top performers are the reason you are successful. Without them, you have no business, so you need to protect them at all costs. Top performers have some fundamental requirements, regardless of company or industry, which I refer to as the Hierarchy of Retention. I represent it as a pyramid on its point because it’s a constant balancing act, and from the bottom-up, as each builds off the foundation created by the other.
When it comes to success, culture is both critical and ethereal. I’ve seen definitions range from having a clear mission statement framed in the boardroom to allowing employees to bring their dogs to work. That’s clearly inadequate. Culture is the collection of social behavior and norms that ultimately motivate employees to act. I define culture with two simple dimensions. Is the culture positive or negative; is it strong or weak. High-performers gravitate to strong-positive cultures where they believe they can thrive. Do individuals look forward to coming to work? Do they treat each other with respect? Do they want to win as a team? Zappos is an excellent example of a strong-positive culture that attracts top talent. On the other end of the spectrum is Radio Shack, a bankrupt company that continues to downsize and where employees are at best ambivalent about their future.
Now that you’ve defined your culture, you can instill it in the most important asset in your company – your managers. Throughout this paper I use the word “manager” in the most general business sense. A manager is simply a person in charge of the activities, tactics, and development of a team. A manager can reside at any level in the organization. I also use some descriptive words interchangeably, including “best manager”, “top-performer”, and “high-performer”. To me, these mean something specific – those that rank in the top quartile (25%) of the normal performance curve. We refer to these individuals as Strong Leaders and certify them along behavioral and practitioner lines.
With the right culture and people, you can now empower them. NOTE: Don’t waste your time hiring great managers if you won’t empower them. Many executives make the mistake of bringing on top talent and then micromanaging them right out the door. Remember, they have options. Bring on the best, set expectations, put a few guardrails in place, and get out of their way. Make midcourse corrections as needed, but ensure they have the resources they need to succeed and that’s a good start. One final item: I have seen companies that empower their people only to crush their souls with stifling bureaucracy, including overly complex processes and redundant authorizations. I’m a proponent of SOPs, but don’t enslave your employees and hinder their creativity.
Managers leave for two primary reasons. They are either underpaid or over-worked…or both. We determined the root cause for managers leaving is that they have not been armed with the skills to make their life less chaotic. In other words, because they are unable to address the inefficiencies and opportunities in the business, they become “burned out” and leave. Very early in our company’s history we analyzed the behavioral and performance data for top managers with tenure over 7 years. We found they shared a common trait – they made decisions as if they were the owner. From this single observation, we created a complete leadership training certification process called H.A.L.O, or How to Act Like an Owner. This online 90-for-90 (90 seconds for 90 days) micro-training complements your corporate training and focuses on leadership skills such as goal-setting, team-building, issue resolution, and communication.
These four building blocks form the foundation of a best-in-class company with low employee turnover. This conclusion isn’t controversial, but it’s not obvious to many executives.
- James Adams
- CEO and Co-Founder
- Revolution Trucking, LLC
- (330) 975-4145