Leaders can improve their ability to retain top talent by understanding and adopting practices to promote long-term employee engagement
The cost of employee turnover for businesses is high; it’s time for leaders to step in
No one is indispensable (whatever be the potential of the quitting employee), is the clichéd logic given when an employee is asked to hang up his or her boots. Sometimes the decision to ask an employee to leave doesn’t even spark second thoughts. Understandably, the present business dynamics believes in ‘doing more with less’ and in this quest many organizations end up losing key people. In such cases it is apparent that statements like ‘our people drive the businesses are superficial. Of course, in the short term, there is a reduction of expenses; yet what is not realized is that the pain (monetary and otherwise) is usually felt post the cut which is neither reported to the CEO nor is factored into the organization’s bottom line. Besides what makes more sense is to know the additional ‘ramp-up’ costs that is required to bring a new hire to the same competency level as the departing employee. A reason why this is not factored in an organization’s bottom line could perhaps be the lack of a robust process in place to estimate the turnover costs. However, the cost of employee turnover for businesses is high, regardless of the level of wages being paid to the departing or incoming employees. To put a numerical value, the Society of Human Resource Management, SHRM, estimates that it costs about $3,500 to replace one $8.00 per hour employee. Estimates by various research sources note that it costs 30 - 50 percent of the annual salary of entry-level employees, up to 150 percent of middle level employees and up to 400 percent for specialized, high level employees. Given these numbers and its implications, it makes sense to put in place workplace policies that improve employee retention and can help companies reduce their turnover costs. Can leaders play a role here? If yes, then what can they do to retain and motivate employees?
It is a common phenomenon that employees are drawn to leaders who offer optimism and new possibilities, not despair. Thus leaders can improve their ability to retain top talent and at the same time support broader business objectives by understanding and adopting practices to promote long-term employee engagement. At this juncture it is important to understand that engaging and retaining high-potential leaders requires more than traditional incentives such as competitive pay, benefits and good physical working conditions – high-potentials can easily be lured by rivals with better pay and benefits. Leaders can earn the loyalty of employees by putting in place a disciplined engagement strategy, by listening to their employees on two levels – what they say and what their unsaid emotions reveal, and encourage a consistent follow-through from senior management. They must develop sophisticated programs to address the problem of retaining their best people and finding more to further accelerate their growth.
Research points to several practices that a leader can use to retain and engage talent and positively impact the bottom line:
• Create a sense of purpose: Engagement and retention improves when people understand how they connect to the ‘Big Picture’ and how they make a difference. Feeling connected to the people one works with helps create a sense of purpose.
• Provide meaningful work: Allowing people to do what they do best and make a significant contribution is critical to engagement and retention. Leaders should actively listen and acknowledge the employees current roles as well as their aspirations for the future. Knowing what types of work they find stimulating, what they would consider a dream assignment and taking measurable steps to help them progress toward those career goals would be like icing on the cake.
• Solicit ideas: Leaders can solicit employees’ opinions on business challenges and workplace issues. Involving people in decision making gives them a sense of control in uncertain times, shows them that they are valued and that their opinions matter. While it is good to publicly recognize and reward the sources of ideas, it is equally important not to discount employees whose ideas are not used. It is best to meet with them one-on-one, thank them for providing thoughts, and explain how their idea could lead to another initiative later on. This also helps in improving decision acceptance rates.
These are not exhaustive. Giving honest feedback, setting tough yet realistic goals, enhancing trust and communication et al would go a long way in engaging as well as retaining people who matter. In essence, leaders need to do more with more-more interaction with employees, more communication, more partnering, and more coaching. Only then can they create the work environment necessary for increased productivity and employee loyalty. Else employee retention will continue to remain an expensive proposition.