Staff retention in nine steps
As headhunters, we love recruitment. But we also spend a lot of time advising our clients on retention strategies. After all, if you can retain good staff, it saves you recruitment time and expense, builds your reputation as an employer, and will lead to more ‘virtuous’ recruitment – unsolicited approaches from candidates who have heard great things about you.
Here are a few of the key areas which help drive retention. Most can be achieved at minimal cost, but may require some serious attitude changes from within the business.
Recruit ‘stayers’
Your retention strategy starts with who you recruit.
In more experienced staff, it is easy to see who has a tendency to hop around: if someone has had eight jobs in ten years, the chances are that they will get itchy feet soon enough. This can be challenged in interview, but, all things being equal, a candidate with a number of three-to-five year stints might be preferable.
In first or second-jobbers though, this is trickier. When interviewing them, look for “finisher” behaviour: someone who has completed a second degree, perhaps, or undertaken a large personal challenge. Daft though it may sound, someone who has received the Chief Scout Gold Award or the Gold DofE is more likely to have the staying power to return some of your investment.
Business culture
Clearly, your business culture has to be fit for purpose. But it needs to be fit for purpose for all members of the team – or at least the members you wish to retain. Is your business a place where people feel free to express themselves? Where the contribution of junior team members is valued and collaboration encouraged? Where you celebrate colleagues’ success? Last year, Oliver wrote a blog about the challenges of managing millennial and Generation Z employees, who are used to instant feedback and constant appraisal: it’s a very different world from the culture of “minimum expectation is excellence” and annual reviews.
It is also incredibly difficult to change an established business culture: people who have thrived in a top-down, fear-based culture are unlikely to want to embrace an emotionally-intelligent and collaborative approach. But they will clearly lose a lot of potentially very effective staff to more inclusive companies and suffer in the long term.
Office environment
The physical space people work in has a dramatic effect on retention of employees. If you are sceptical, there are numerous studies on this. But more obviously, look at the quadrillions that Facebook, Google, Microsoft and others have spent on their castles. It all adds to a feeling that employees are valued.
Clearly, this is an expensive and difficult thing to change. But attention to detail can make a lot of difference. Take down light-reducing old curtains, replace broken chairs, discover the source of that strange smell, ensure the toilets are clean and the carpet washed regularly. Arrange the desks in a way that is collaborative. Put flowers in the offices, not just in reception. It needn’t cost the earth, but might make all the difference.
Colleagues
It is a commonplace that people spend more time with their colleagues than their families. It really helps if they like each other. If possible, involve potential colleagues in recruitment decisions: it can really help teams gel, and has the added benefit of making those colleagues feel valued – a key component of retention. And a really affordable way of team-bonding is the good old occasional trip to the pub (see picture).
Of course, you can’t always guarantee that your colleagues will like one another. But by good management, you can ensure that they respect each other and work together well. Mix teams up, give them different responsibilities, give them permission to ask for help from their co-workers, and ensure that the co-workers are briefed to assist, not condescend. And, yes, structured team-building events can work.
Working Arrangements
According to a study by the Fawcett Society, 68% of people consider the work/life balance when looking at job opportunities. Presentee-ism is a product of 1950’s US corporate culture and has been shown time and again to be a negative influence on productivity, staff retention, and the health of individuals.
More businesses should consider a “results only” approach. It encourages a focus on outcomes rather than exercises in box-ticking. It ensures that people know that they can rely on their colleagues’ output, whilst also not being hide-bound in terms of insignificant indicators (such as number of meetings attended). In an age of increased technological ease, most of the office-based functions that we perform can be managed in a far more employee-friendly – and productive – way. It doesn’t suit every business, but it at least provokes some interesting ideas.
Compensation
Or “pay”, as it used to be called. Clients typically go through agonies about levels of pay when recruiting people, but then forget that there is an outside world. Your employees have friends working in lots of other businesses. Shocking though it may be, studies show that young employees DO talk about their packages in a way that my generation did not. You do need to be around the median for your industry, at least, to compete.
Bonuses and / or commission are also vital ingredients. Old school media companies paid their creative and marketing teams a base salary, and their sales people base plus commission. It’s a little like giving a tip in a restaurant: you should be commending the whole organisation. Almost every business that I know of which has started up in the last fifteen years has offered bonuses or equity to non-sales staff. After all, a good product makes people buy – and makes the job of sales people so much easier.
Benefits
Free gyms and canteens, healthcare, onsite masseurs, weekly flossing and staff psychologists. All of these are offered by other businesses that might be attracting your current staff. (Apart from the weekly flossing: I made that up.)
Of course, most businesses are not in a position to offer a huge range of stuff like this. But take a sensible look at what is affordable. A local gym membership at £30 per month per employee? A day off for their birthday? All of it makes people feel valued and connected with their workplace.
The daddy of all, of course, is equity. If people can be offered the chance to earn a stake in the company by achieving a reasonable set of KPIs, studies shows that staff loyalty will increase. Share options or LTIPs are powerful incentives for senior staff: and a pathway that shows even junior staff what they need to achieve in x number of years to be on that ladder can be massively incentivising for a young and ambitious contributor.
Corporate Social Responsibility
A horribly deadening phrase for actually caring. I don’t think I know a single business or business leader which doesn’t contribute to a favoured charity or two. Research shows that millennials really value this aspect of the companies they work for. While they may not be proud to say in the pub that they sell subscriptions to B2B newsletters, they are proud to say they ran a 5k for Water Aid (one of the great charities we support, by the way).
Without being cynical, the halo effect is strong: and your choice of charity really should reflect the values of your business.
Personal Development
Above all, ensure that people keep learning. Let people know what their career path might look like when they join you. Be open to the fact they may develop more quickly – or more slowly – than others, and be flexible with that plan. Be prepared, as the landscape changes, and as they come forward with fresh ideas, to hand them ownership of new projects. Take for granted this simple rule: when good people feel they are stagnating, they will look to move on.
But remember: too much retention is not a good thing
…and, conversely, this rule: when poor workers are too contented, they will never move on.
I have a client who was proud that his churn rate (loss of employees) was 3%. In a large organisation, this is simply not healthy. One, you need new blood to revitalise a business from time to time; two, it may mean people are too comfortable and don’t have proper performance management; and three, it could indicate that none of your competitors rate your staff highly enough to poach them. Unless you are a very fast-growing business who can accommodate and grow everyone in a developing structure, that 97% retention rate is likely to suggest a sclerotic or complacent business.
Retention is a brilliant ambition for business. It can help grow internal IP, develop great knowledge of, and relationships with, your clients, and ensure consistent continuity of delivery. It can also save a huge amount of time, money and effort spent on recruitment.
But ‘retention’ must not be a slavish mantra. Find great ways of keeping the good employees, and develop systems and processes which help others to realise that their ambitions might not be best fulfilled in your business.
That healthy balance should ensure a healthy company.
Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.