Tight labour markets, the increasing cost of losing key employees and a changing economy have made employee retention one of the key challenges facing organizations.
New research reveals that employers need to use a range of retention strategies to keep key employees. Employees generally do not leave an organization solely for external reasons. They need to feel some dissatisfaction with their current employer before considering a move. Most employees leave because of a lack of career path, long working hours and remuneration.
More than 120 human resource managers and other senior managers participated in this survey, conducted by Drake Beam Morin, which investigated why employees leave an organization and the effectiveness of retention strategies.
The international study included participants from Canada, Australia, New Zealand, Singapore, Hong Kong and the United States. The research showed that most organizations (82.9 per cent) are concerned about losing key employees.
In the United States, 82.4 per cent of executives rated employee selection and retention as their number one business challenge.
The Canadian and U.S. economies are booming and skilled people are in demand. However, as demand increases, supply is shrinking. The tight labour market is expected to continue.
In the next 15 years there will be a 25 per cent increase in demand for people aged 35-45. Over the same period, there will be a 15 per cent decrease in the availability of those people.
In the new world of work, employers offer less security and employees are less loyal. These factors have created a new perspective on the nature of work and careers. Job-hopping is becoming more common and acceptable and is no longer frowned upon by employers.
But, there are also numerous costs, both tangible and intangible, incurred by an organization when it loses key employees. Replacement costs typically average one to two years’ salary for the position being replaced. Other costs associated with employee departure include loss of customers, loss of intellectual capital, increased stress and anxiety on remaining employees, loss of productivity and impact on customer loyalty and the organization’s competitive position.
The main reasons cited by employers for why employees leave include lack of career path, lack of advancement opportunities, long working hours and remuneration.
Different employee groups have varied requirements when it comes to retention. For middle managers, for example, career development is key.
For senior managers career development is also important.
However, this group requires a broader range of retention initiatives including remuneration and lifestyle.
Strategies
The research investigated the effectiveness of 23 retention strategies finding a high degree of correlation between the use of certain strategies and employee turnover. These correlations enable the strategies to be grouped into six retention “hot buttons” that link to employee turnover. Employers who use more retention “hot buttons” generally have lower turnover than do those that use fewer strategies.
These “hot buttons” cover a broad range of strategies including, in order of effectiveness:
1. Career development strategies – career management and training and development.
2. Remuneration strategies – bonuses.
3. Lifestyle strategies – flexible work hours.
4. Job flexibility strategies – the opportunity to telecommute to work and job sharing.
5. High-roller strategies – share offers and the opportunity for international travel and postings. Characteristic of larger organizations.
6. Body and mind strategies – gym membership and life insurance coverage.
Tailoring retention strategies to employees at different stages of their careers is imperative. Each employee group will have different needs, and a blanket of strategies covering all employees may not necessarily be successful.
Increasingly, organizational survival is dependent on an organization’s capacity to learn, adapt and anticipate future developments.
The traditional competitive edge of new products or technology is now short lived, since within six months they can often be replicated by competitors. People and their intellectual capital, however, cannot be as easily copied. Today, successful companies will be those that can attract, develop and retain skilled and talented employees.
Denis St-Amour is president, Drake Beam Morin-Canada. DBM is a leading international outplacement and career management consultancy. For more information visit www.dbmcanada.com.
SIDEBAR
The impact of turnover
It is estimated that the cost of replacing an employee, including recruitment and training, averages one to two years’ salary for the position in question.
Other costs associated with employee departure include:
•loss of customers;
•loss of intellectual capital;
•increased stress and anxiety on remaining employees;
•loss of productivity;
•and a negative impact on customer loyalty and on the organization’s competitive position.
New research reveals that employers need to use a range of retention strategies to keep key employees. Employees generally do not leave an organization solely for external reasons. They need to feel some dissatisfaction with their current employer before considering a move. Most employees leave because of a lack of career path, long working hours and remuneration.
More than 120 human resource managers and other senior managers participated in this survey, conducted by Drake Beam Morin, which investigated why employees leave an organization and the effectiveness of retention strategies.
The international study included participants from Canada, Australia, New Zealand, Singapore, Hong Kong and the United States. The research showed that most organizations (82.9 per cent) are concerned about losing key employees.
In the United States, 82.4 per cent of executives rated employee selection and retention as their number one business challenge.
The Canadian and U.S. economies are booming and skilled people are in demand. However, as demand increases, supply is shrinking. The tight labour market is expected to continue.
In the next 15 years there will be a 25 per cent increase in demand for people aged 35-45. Over the same period, there will be a 15 per cent decrease in the availability of those people.
In the new world of work, employers offer less security and employees are less loyal. These factors have created a new perspective on the nature of work and careers. Job-hopping is becoming more common and acceptable and is no longer frowned upon by employers.
But, there are also numerous costs, both tangible and intangible, incurred by an organization when it loses key employees. Replacement costs typically average one to two years’ salary for the position being replaced. Other costs associated with employee departure include loss of customers, loss of intellectual capital, increased stress and anxiety on remaining employees, loss of productivity and impact on customer loyalty and the organization’s competitive position.
The main reasons cited by employers for why employees leave include lack of career path, lack of advancement opportunities, long working hours and remuneration.
Different employee groups have varied requirements when it comes to retention. For middle managers, for example, career development is key.
For senior managers career development is also important.
However, this group requires a broader range of retention initiatives including remuneration and lifestyle.
Strategies
The research investigated the effectiveness of 23 retention strategies finding a high degree of correlation between the use of certain strategies and employee turnover. These correlations enable the strategies to be grouped into six retention “hot buttons” that link to employee turnover. Employers who use more retention “hot buttons” generally have lower turnover than do those that use fewer strategies.
These “hot buttons” cover a broad range of strategies including, in order of effectiveness:
1. Career development strategies – career management and training and development.
2. Remuneration strategies – bonuses.
3. Lifestyle strategies – flexible work hours.
4. Job flexibility strategies – the opportunity to telecommute to work and job sharing.
5. High-roller strategies – share offers and the opportunity for international travel and postings. Characteristic of larger organizations.
6. Body and mind strategies – gym membership and life insurance coverage.
Tailoring retention strategies to employees at different stages of their careers is imperative. Each employee group will have different needs, and a blanket of strategies covering all employees may not necessarily be successful.
Increasingly, organizational survival is dependent on an organization’s capacity to learn, adapt and anticipate future developments.
The traditional competitive edge of new products or technology is now short lived, since within six months they can often be replicated by competitors. People and their intellectual capital, however, cannot be as easily copied. Today, successful companies will be those that can attract, develop and retain skilled and talented employees.
Denis St-Amour is president, Drake Beam Morin-Canada. DBM is a leading international outplacement and career management consultancy. For more information visit www.dbmcanada.com.
SIDEBAR
The impact of turnover
It is estimated that the cost of replacing an employee, including recruitment and training, averages one to two years’ salary for the position in question.
Other costs associated with employee departure include:
•loss of customers;
•loss of intellectual capital;
•increased stress and anxiety on remaining employees;
•loss of productivity;
•and a negative impact on customer loyalty and on the organization’s competitive position.
