What Turnover Really Means for Companies - Ideas for Implementing Successful Employee Retention Strategies

Performance-Based Retention

Many companies focus on building an employee retention strategy by addressing critical work-life issues such as day care, health care, elder care, vacations, flextime, sabbaticals, and charitable work. However, addressing work-life issues alone doesn’t necessarily align employee retention with critical organizational goals.

It’s not enough to have satisfied employees; success comes from having satisfied employees motivated to continually improve performance. So, companies seeking a performance-oriented approach to employee retention might seek to enhance work value in some of the following ways:

• Employee involvement in job design, goal setting, and selection of rewards.
• Clear communication about company goals and ways employees can contribute to and share in its success.
• Incentive programs that reward people for significant and measurable performance improvements.
• Recognition programs offering meaningful recognition to employees for both tangible and intangible contributions to their company.
• Project-oriented approaches in which all employees can work on diverse, limited-term assignments rather than being sequestered within a single department or function.
• Developing talent exchanges to enhance careers by connecting employees with appropriate projects, roles, and positions within their companies.
• Training through coordinated programs designed to enhance employee knowledge and then rewarding employees for that increased knowledge. Consider crosstraining to enhance skills and improve productivity. This both satisfies employees and equips them to perform better.
• Fostering feelings of support by setting clear goals for employees and rewarding them upon accomplishment, and by promoting consistent values and recognizing people who embody them. This directs retention resources to actions and values that have a measurable benefit to the organization.
• Creating an atmosphere of fun with spot "atta-boy" rewards, contests, or meetings, specifically related to organizational goals and values. This creates an atmosphere conducive to retention while keeping the focus on achieving goals.
• Addressing the measurement issue by instituting "real-time" goal setting, performance measurement, and skills development programs to ensure that people always know where they stand, and to address performance issues and skill gaps before they become problems.

Other key points:

• Compensate fairly. No one said that compensation will have no effect on turnover and retention. Determine a fair wage in your labor market and do what you can to meet it. A fair and equitable wage and benefits package is the foundation for a successful employee retention strategy.
• Build trust. As mentioned above, a “climate of trust” is one of the factors that influence employee retention. Trust is built with employees through fair working conditions, management responsiveness to employee concerns, realistic performance expectations, and open communication, including one-on-one communications between managers and employees whenever possible.
• Don’t limit motivation efforts to star employees. Incentive, reward, and recognition programs should be expanded to include as many employees as possible, rather than just the top 5 or 10 percent. Remember, it’s that large middle range of employees that can contribute the most in terms of improved productivity and lower turnover costs.

An employee retention program’s success will rely on the efforts of frontline managers and supervisors across your organization. Training managers on retention tactics and holding them responsible for implementing a retention strategy will be critical.

Based on the compelling economics of reducing employee turnover, it shouldn’t take a labor shortage to force companies to wake up to the benefits of implementing a comprehensive employee retention strategy. Many companies that fail to understand the economics might have no choice in the coming years, when they find themselves continually outbid for the best employees.

Read our full article for more insights into the connection between employee turnover and corporate profit margins.