Retention – keeping the best and the competent

A certain level of staff turnover is healthy. It creates space to promote the deserving people and to bring in new talent and incremental skills. However, the economy is facing a very real problem caused by the ‘Great Resignation’. Following lockdown and the issues it caused, many people are considering their future and, most importantly, what matters to them. Research by Gallup before Covid hit us showed 70% of employees were ‘actively disengaged’!

The issues emerging from the reactions to Covid, and the lockdown include an understanding of the value and critical nature of some of the lowest paid roles in the Health service, care industry, emergency services, transport, and food sales. Not only have the people realised their worth but they have seen how little society has been valuing and rewarding them. They have literally risked their lives and been met by pay constraint.

Many people in the private sector have a better perception regarding the relative worth of their jobs. Increasingly, job holders are asking themselves, ‘Am I really working 50 to 60 hours each week to achieve success for an organisation of questionable ethics or is my output making a difference?’

In simple terms, many people have come to the conclusion there is more to life than the traditional sell your labour to an employer who will get away with paying as little as they can. This is accentuated when the employer is the government.

Gertner has found 65% of staff reconsidering the role of work in the overall context of their life. Further, they estimate an increase in staff turnover rates of more than 50%. Additionally, more than 100000 people in the UK alone have voluntarily withdrawn from the jobs market due to the effects of ‘Long Covid’, according to a report from the Institute of Fiscal Studies.

For people with marketable skills, it is a candidate’s market. There are a similar number of job hunters as there are vacancies, but issues of location and skill mean there is little marriage.

Making a wide range of assumptions, all of which can be challenged, one calculation of the financial downside of losing a competent person through resignation is three times their base salary. Given the nature of the role, it could be devastating. How many organisations have robust plans for overcoming the loss of a key member of staff?

Many companies react to a resignation by offering the individual more money if they are willing to stay. Frequently, the reaction to the offer is rejection because if they are that valuable then that should have been the salary before the ‘threat’ of departure.

One factor for which companies cannot legislate is ego. Paul Pogba was angry at Manchester United for not showing how much they want to keep him. The contract extension offer was a measly 3.5%, albeit this meant a base of £290000 per week, or around £15 million per annum. He laughed apparently, and in a documentary said they ‘offer me nothing’!

There is, of course, a ‘Law’ which says the employees who contribute the least will be the last to leave. Ways to elicit a greater impact may also reflect the approaches to use to retain the talented.

It begins with the recruitment process. A great deal more is reflected in our paper about Recruitment but, at this point, it is enough to say the process must be transparent, timely and honest. The role must be necessary and described in a way that ensures the successful candidate wants it and can perform it. The onboarding process begins at the point of offer, not on the first day of employment. By the commencement date, the new member of the team should have a good grasp of the organisation, the new ‘boss’ and the immediate agenda. The induction should build on these factors and not just a Health and Safety video to watch.

Some very proactive and positive organisations are assigning an internal mentor or independent coach. New jobs are very stressful, and not just for people entering employment for the first time (or for the first time in some years) and it can be bewildering. Our experience has shown a coach is invaluable.

The culture of the operation is the key aspect. More than the words on a laminated document, it is the manner people are treated. An espoused ethos is great but how does it translate throughout the organisation? There is never one culture, but a myriad of sub-cultures which need to meet the overarching principles. One bad manager can undermine the efforts of numerous other leaders.

Naturally, pay is important, but it isn’t the differentiator in and of itself. People want affiliation:

• A product or service for which there can be a sense of pride. Tobacco companies, for example, may struggle here.
• A moral compass, perhaps strong green credentials. Do not assume only young people are environmentally concerned.
• Leadership, not micro-management. Space to contribute and be creative are fundamental for many people.
• Concern for health, from the basics of H+S and ergonomics, through to prevention of mental and physical illness.
• Recognition for contribution, especially not observing others taking credit for their inputs. Something some ambitious managers may do.
• Proper teamwork. We use Five Behaviors of a Cohesive Team to facilitate this, and it has the potential to be the source of day-to-day mutual support.
• Non-monetary benefits such as an EAP scheme. This is both useful and a clear indicator of the broader thinking of the senior management.
• Development, not necessarily for promotion but certainly to make more of an input.
• Some flexibility, especially after many of us have seen the benefits of working from home. It isn’t just about location; it may be about being treated as adults.
• A job which matters, which makes an obvious contribution and in which they can take pride.

In essence, people want connection: connection with the leadership, their team, the ethos, the need for their role and the offering to customers. No longer are our staff grateful for a job, they have expectations, and if we are not seen to be trying to meet them in a thoughtful manner, they will walk away. They aren’t unrealistic and know there isn’t a bottomless pit of money, but they do want more than many organisations are giving now. This isn’t because managers are bad people necessarily, but it may be nobody has told them (Exit Interviews shouldn’t be carried out by internal staff).

One barrier to some of the broader progressive ideas is territorial managers. They block promotions, delay release for another job in the same company, and they resist allowing people to become members of project teams or set-term secondments. This short-termism conflicts with the organisation needs. Perhaps a key management assessment criterion could be the development of the team and the willingness to support career moves. Some years ago, an engineer was loaned to Purchasing. It addressed an immediate need; the impact ran into many thousands of pounds thanks to his alternative perspectives and gave the engineer real experience. It was strongly resisted by the Engineering Director, as he was ‘losing’ a top performer and it highlighted areas for improvement in the way Purchasing operated.

More enlightened organisations know that if staff are motivated there is a positive knock-on effect for customers. Staff and customers stay because it is what they want.

This short article touches numerous themes which need to be developed. The first thing to do is a straightforward assessment of the current situation. It is a truism that ‘what gets measured gets done’, so it is crucial the correct things are measured and that they reflect the priorities of the executive, the business plan, and the needs of the staff if they are to be delivered. Our people deliver everything, which may be very little if they resign or become demoralised.

Naturally, Work Horizons can help organisations with the correct ambitions to create the environment which is employee focused. If we consider the individual, the organisation will inevitably benefit and progress. A final thought, for every £1 invested in wellness, the payback is £5. These are not costs!

---

Context

A greatly underestimated aspect of business is the loss of staff members. Too many organisations just accept that people will leave and, therefore, limit the amount invested in them.

An old adage is people leave bosses, not jobs. This has a strong kernel of truth, but people today are becoming more discerning about the brand, its principles, and the products of their employers.

If someone dies or wins the lottery there is nothing we can do.

What can it really cost a business?

---

Assumptions

For the purposes of this projection a number of assumptions are made. It will always be the case that the specific situations the employer faces is different to this but, hopefully, it will make the point. All of the assumptions can be challenged; however, this is not scientific, merely indicative.

• The notional resigning employee is competent, and nobody wants to lose her. She isn’t a highflyer and certainly isn’t in a performance management process.
• She is a member of a six-person team, reporting to a manager who, for the purposes of this calculation doesn’t take on any of the work left by being one person below headcount.
• The other five people absorb equally the extra workload which, in effect, reduces their effectiveness by 20%
• The role is necessary
• It takes three months to recruit the new hire (in itself optimistic)
• An employment agency is used to source candidates
• Technology isn’t used to sift and long list
• Management time in preparation, interviewing and decision making for six candidates and two second interviews equates to two weeks at twice the salary of the new hire
• Administration e.g. acknowledgements, invitations, references, contract
• The prime candidate accepts the job
• The new hire doesn’t leave in the first three months, which is occurs in a third of cases!
• The salary of the new hire is £40K
• Onboarding takes two weeks and to be competent takes three months

Real Value of the Competent Person

The ‘cost’ of a person on £40K is actually about £45K to employ.

For any business to be profitable (and this also applies to not-for-profit operations to be effective) each person needs to contribute at least twice their cost.

So, in this case the calculation is based on £90K not £40K. Finance Directors should be encouraging additional people IF they can be fully utilised. It truly is an investment, not a cost.

---

The Calculation

Aspects                                                                                                %age of a ‘Person Year’

Demotivated leaver for one month @ 50% effective                        4

Five team members operating @ 80% effective for 6 months          50

Management time                                                                              8

Administration                                                                                    2

Employment Agency (£20K)                                                               50

New Hire efficiency average 50% for 3 months,                                12
including onboarding 

Total                                                                                                    126     

Therefore:

126 % @ £90K = £127K

---

Conclusion

The loss of a totally notional leaver is £127000. This makes no accommodation for demotivated staff, lost customers, diminished supplier relationships…

NB If the salary had been £20K the effect would be £64K, albeit it is quicker to recruit and train lower salary roles if candidates are available.

Imagine the costs, for example, in a Call Centre with annual attrition rate of 100% of staff, and the impact on quality-of-service clients receive.

Sometimes recruitment is quicker but sometimes it takes longer and costs multiply. Even if these assumptions are over egged, this does make the point graphically that we need to keep our productive people.

Of course, on occasions the team just absorb the knock-on effects to their workload, but that prompts the questions do we need to recruit and are the other roles really properly ‘loaded’?

Our paper regarding Retention is available.

Please do let me know your thoughts:

---

Is it a good idea? What are the implications?

For those of us who live with a dog (note not ‘Own’), this is the easiest conundrum to solve; it is an unequivocal ‘Yes’, bring in the pooch. But it isn’t that simple.

What are the pros and cons? Generally, when advocating action the negative aspects are left to last or suppressed all together. On this occasion, let’s consider the downsides first:

• Some working environments make it impossible such as a manufacturing shopfloor, warehouse, kitchen or large retail outlet
• Some colleagues are scared of dogs or allergic to them
• Dogs wee and poo
• Dogs might trip people up
• They may be a distraction as colleagues want to fuss them
• Dogs bark
• Staff will leave their ‘desk’ to walk, water and feed the animals
• Not all dogs are friendly, especially with other dogs
• There are associated costs such as insurance, cleaning and facility adaptation
• It is another potential complication in a busy life

So, what are the benefits?

• It boosts morale. Nestle HQ in the States saw a 24% increase
• It is great for the mental health of the owner and many of their colleagues. Spring Arbor University research shows lower stress levels in 86% of all workers and 92% of managers
• It diminishes the worry of the dog being left at home
• It enhances team bonding and cohesion
• It alleviates the compulsion to leave on time
• Whether we like it or not, some absence is dog care related
• The more relaxed staff are, the more creative they are
• It is good for the organisation’s image
• It binds talented people to the company, it lowers staff turnover
• It differentiates the employer, helping retention and recruitment

This issue is an example of it being easy to ‘prove’ as being too difficult but the value of finding a solution would be great: the science of the impossible versus the art of the possible. There are an estimated 12 million pet dogs in the UK, including mine. I work from home and his company has an inestimable benefit to me. I am lucky because he is a good and friendly boy and will sit at my feet for hours whilst I work.

How could it happen in appropriate workplaces?

It is crucial there is consultation. This will give staff the chance to express concerns or support. No single individual has a veto but if there are health issues they do need to be addressed.

The rules need to be clear and applied consistently. There must be a Policy which includes the right to not accept specific dogs, which might be an emotional situation.

The lease of the property must be checked, as it may preclude dogs.

Clarity regarding who pays for damage.

Clear designated areas for dogs to be drawn up.

Guidance on work/dog balance to be described.

Is it one dog per person? What about cats, rabbits, hamsters…?

Conclusion

There may be a generational issue; 42% of 18–34-year-olds want dogs to be allowed. Done thoughtfully, in the right physical environment, allowing dogs in the workplace would have a significant positive impact on morale and productivity. It is easy to rationalise the reasons not to do it but the benefits of successfully accommodating our ‘best friends’ would make it worthwhile, to the extent HR Magazine states 96% of organisations finding a way for dogs in the workplace have seen positive outcomes.