By Barry Sweeny, © 2010
- Why “Invest” In New Employees?
- The Strategies To Address in a Retention Plan
- 1. Attracting and Recruiting
- Funding New Employee Retention Efforts
- 2. Reducing Attrition
It is often a great frustration to managers that staff, in whom the organization has invested, gain experience in one place and then take their increased skills and marketability to another organization. That frustration has led some managers to conclude an organization should “conserve” it’s investment in new hires, and only support development of staff which have first demonstrated loyalty to the organization by staying there.
Others have argued that staff will not stay in an organization that does not support their professional growth and success.Until recently, this argument has been like the proverbial debate, “Which comes first, the chicken or the egg?” Research clearly shows the “wait and see” approach to be wrong and counter productive.
Settling this argument is all the more critical now as we experience a large number of retirements in the “baby boomer” age group, the attitudes of the younger generations we hire, tighter standards for entrance into some professions, budget cuts and attendant financial woes in many organizations, and enormous demand for new skilled employees due to population growth and the changing nature of the work to be done.
There is now ample evidence to end this argument and to guide your positive, even proactive action. The “winning” view point is that organizations which want to attract and retain quality staff need a multi-faceted set of strategies and must invest in new employee support and success. Moreover, effective support of employees is not just the most helpful way to attract and retain new staff – it is now known to be the most COST-effective as well. This conclusion has been reached, in one case by the year 1997 by the California Legislature.
Given the recent evidence, effective new employee recruitment, mentoring, and induction programs can now be shown to be a win-win process for all stakeholders, including those whose eyes are on the “bottom line”.
To make this case locally in YOUR organization, the leaders of mentoring and other development programs need answers to two questions.
- How can their mentoring programs deliver increased retention and performance of employees?
- How can they demonstrate the cost effectiveness of their programs to their decision makers?
As in any program improvement effort, we must start with a solid plan and then conduct an assessment of the current situation (see the “Retention” section of this web site). In that way we are better positioned to show later that improvements have occurred related to implementation of our programs. (“Sustaining the program” section of this web site)
Think of the number of employees your organization needs as a bath tub full of water. Keeping the tub full of “quality” water requires several concurrent efforts:
- Adding good new water to replace spillage and leakage;
- Minimizing spillage over the top;
- Plugging the drain and fixing the leaks;
- Ensuring that the water is kept hot and soft.
The key concepts here are that organizations need to plan strategies for addressing the four challenges of effective employee recruitment, development, reduction of attrition, and improvement of retention.
Further, these four strategies need to extend across the entire career of the employee. This is true because it is no longer sufficient to actively recruit qualified staff without also considering how they will be retained, even by keeping them from leaving at the first opportunity to retire. The lessons that have been learned relevant to each of these four strategic topics and addressed on this and other web pages in this section of the web site.
A. The problems –
In 2004 information out of Florida showed why attracting and recruiting have been the major areas to receive attention from many other kinds of organizations. For a number of reasons, Florida public schools needed to hire about 25,000 employees for the fall 2003, which was about 60% more than the previous year. That number was a big concern since Florida universities only produced about 7,000 education graduates each year. This meant that Florida had to compete nationally for 72% of the teachers they HAD TO hire. With educator salaries ranked 31st in the nation, Florida administrators and policy makers were very concerned.
Florida is just one example of this concern. Attracting and recruiting quality employees has been the primary focus for organizations across the world because of the need to compete for the dwindling supply of quality employees. In education, this pattern has been especially true for urban districts with more challenging demographics and lower performing schools, but there are a host of other equally challenging problems which effect recruitment efforts. For example, Teton County School District in Jackson Wyoming is working with leaders in their resort community to reduce the problems of hiring new staff who cannot afford to live in the community in which they teach.
That’s a critical recruitment and retention problem for any organization in affluent areas. Chances are that your organization has these or similar concerns and challenges. Here’s another noneducational example of the extent of this problem.
In the article titled “The Jury is Still Out”, published in Mortgage Banking in August 2002, on page 85, author Andrew Hubbard reported that HMC, a mortgage company, reported a 50% attrition rate in its loan officers during their first year of employment.
Can you document your attrition rate?
B. Retention Solutions
The most frequent methods for increasing employee retention have been to provide orientation and some level of mentoring support and guidance, at least for novice employees if not all new employees. This author’s review of such programs finds that they DO increase retention to some extent, typically 15-20%. However, this “bump” is not as significant as is often desired, nor is it as high as a more comprehensive mentoring and induction program can provide. A comprehensive mentoring and development approach has shown it can attain retention rates as high as 96% for at least five years. In fact, it could be argued that one would not even want a higher retention rate, for surely, not everyone who tries a given career should be kept as an employee.
What a comprehensive mentoring and development program should provide is discussed elsewhere in this web site. Our purpose at this point is to affirm the value of an effective strategy. Clearly, even when an organization can not offer the top salary, it can still effectively compete for and keep the quality employees by treating them professionally and by expecting and supporting effective employee performance.
The more organizations can demonstrate to candidates and new employees that the company can help them achieve their personal and career goals, the more effectively organizations can recruit and retain those employees. However, such a statement is easier said then done. Never-the-less, there is now extensive documentation of the power of mentoring and development programs to increase employee performance and success, and thereby, to improve the ability of a company to attract and retain the best new employees.
Simply stated, mentoring and development program success breeds employee success, which breeds organizational success in attracting and retaining successful employees, which increases the quality of the work force and their results.
The most typical way to provide a new employee support program has been
a “common sense” approach, which is founded on two assumptions:
“Since we all were once beginning employees, we all know what is needed to better support our recent new hires.”
“Every one accepts the value of increased support for new, and especially novice employees.”
Each of these assumptions contain some element of truth of course. But experience has clearly demonstrated that each contains unexamined fatal flaws. Regarding providing a program based on our own initial year experience ignores the dramatic changes in our profession which have occurred since that time and the fact that mentors, our very best teachers, do not feel they have all the answers as teachers themselves. This flaw has led to the wide spread discovery that “Not every good employee makes a good mentor”, and induction programs which have eased the stress for new employees and helped a bit with their retention, but not helped us to improve performance and results.
Finding funding for “common sense” induction and mentoring incentives has been a challenge too. While induction programs seem so logical to many, sadly, such programs are often perceived as less than essential by the decision makers at the highest levels. This has led to inadequately supported and abbreviated programs which do not have the capacity to provide the desired results, or to stronger programs while grant funding endures, but which cannot be sustained when the grants are unavailable. Clearly, the case for common sense approaches to new employee support are not as compelling nor as valued as we need.
A more recent approach has been to focus efforts to generate funding for new educator support programs on increasing employee retention. This can be viewed as an attempt to demonstrate one of the major the benefits of effective induction, which is increased numbers of effective employees. Many studies in every kind of demographic and geographic setting have shown the ability of effective induction programs to increase retention. Some examples of the impact of induction on new employee retention have delivered a 96% retention rate even after five years! That ís significant!
As powerful a demonstration of “success” as these data are, many decision makers still question the value of induction, mentoring, and even increased retention. This may be because the intended benefits of retention, improved learning and performance, are less concrete, although no one doubts that they occur. The bigger challenge has been that itís harder to demonstrate these benefits have occurred as a result of effective mentoring and induction.
Clearly, we need a different strategy if we are to create and adequately sustain the new employee support programs we know we need. That means making a tighter and a clearer connection between our programs and the “bottom line”. The goal is to collect and present local data which clearly show a monetary value for better support of new employees. This is why the most recent strategy for gaining induction and mentoring support has been to demonstrate the true cost of employee attrition, which is the negative ìflip sideî of the more positive retention factor. In other words, rather than trying to show the less tangible benefits of increased retention, we must show the cost-effectiveness of decreased attrition.
The Challenge of Employee Attrition- How Bad Is It?
National research shows that, during the decade of 2000-2010 about 1/2 of all employees nationally had to be replaced, due in part to the retirement of the “baby boomer” generation. While these national level data are alarming decision makers in your organization would rather know their own organization’s attrition rate AND the actual cost of that attrition. Clearly, locally specific staff and cost data are better for motivating local action.
All of this means that for every organization, the strategic starting point to increased new employee support is to be able to clearly show two factors:
- The extent of your organizationís need to recruit and employ new staff during the next five to ten years.
- The actual total and per employee costs of employee attrition in your own organization.
You should use two ways to establish the first set of data on employment needs:
Strategies for doing these two things and the third and fourth strategies are shared on other web pages in this section.