Matters Column

Employee attraction, retention and engagement, Part 2

April 15, 2016
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In our last article we explained the ARE acronym: Attraction, Retention and Engagement — critical elements in managing employees. We explained the importance of paying attention to your employment brand, which is all things that influence how employees and potential employees feel about working in your organization. Being aware of these matters is important for getting the right people in the door with the necessary skills to do what you need done. This has become much more critical as competition for employees heats up.

We also asked you to consider your willingness to change practices to do a better job of getting the right employees. This extends beyond bringing in new talent. In fact, it may be even more important for employee engagement, which is the focus of this discussion.

Retention is essential

After you have the employees in the front door, you want to make sure they don’t walk out the back door. The cost of replacement is very high when you start adding up all the elements, such as: hiring costs, recruitment time, training time, pay and benefits for employees who may just be learning the job, and lost operational/client knowledge, which may be used against you by a competitor.

There have been studies that try to quantify these costs. They cover a wide range of matters and, when expressed as a percent of annual salary, range from 50 to 150 percent of the employee’s annual salary. Whatever the percentage, it starts to be big money.

Retention is basically a minimum objective. Many organizations retain their employees, but the employees may just be collecting a paycheck but making very little contribution, or in some cases, a negative contribution as they sabotage the work of others. Eventually, you may think it’s better to eliminate such employees, and that has costs associated with it.

Raising the bar

You need workers who are active, contributing employees. You want them to be engaged with their job, their co-workers and the objectives and goals of the organization.

What is management prepared to do to achieve this objective? And will it be worth it?

We’ve been talking about “lost costs” up to this point and taking actions to minimize these expenses. Historically, people have believed that when you have happy employees, you get better results. However, how much better has always been a little suspect; there are even some who believe that just using a bigger whip will achieve more with less cost.

The truth is now being documented, and even to positive thinkers, it is surprising. Engaged employees can add as much as 35 percent to the bottom line. With such numbers involved on the positive side and a big savings on the negative side, why would a company not make this a priority?

How to engage employees

You may not want to hear it, but there is no silver bullet for engaging employees. It is generally a change in culture that has to start at the top for acceptance and enforcement. It also has to involve attitude analysis from the bottom.

For example, in a recent study, stress was recognized by both management and employees as a major factor in low morale among employees. That, however, was nearly the last point of agreement. What caused stress in the work place and how to reduce it was found to be very different. How you approach problem resolution and culture change needs to be thought out very carefully.

There is one main point to keep in mind. The goal is to shift the mentality of the employee; consequently, it is important to see the necessary changes and the impact of changes from the employee’s perspective. It cannot be organized around a theme that says “management knows what’s right for you, and I’m willing to change and bite the bullet and I’ll give you the best solution.” That just won’t work.

Where do you start?

The first step is to open the communication channels. Begin by making sure everyone knows the game plan for the future. Employees may or may not be immediately a part of this, but they need to see where the ship is headed. The critical aspect starts with the alignment of the organization. The leadership team must all be rowing in the same direction. Sometimes people think they are aligned, but when you dig deep, you find inconsistency.

The engagement aspect is about how you are going to get to the place the ship is going.

Often it is important to start with the basics: Job descriptions help people have a true understanding of roles and the associated expectations. Then move on to how people are paid, what is the benefit structure, what are the time-off rules, are the plans administered properly, and most importantly, are they meaningful to the staff?

What is meaningful might be very dependent on the nature of the staff. Many younger employees want flexibility or a work environment that is compatible with how they want to work. Things like free food, child support on special occasions, or clothes with company logos cost little when put on the balance sheet next to reduced turnover cost or productivity returns.

Most employees want meaningful and interesting jobs. Everyone appreciates recognition. Think about how you can align the pay system, performance assessment and training in positive tones, rather than documentation for terminations and holdbacks.

We mentioned that change has to start at the top. It also means the leaders have to “walk the talk” and be aware of what is going on, both businesswise and personally. What is happening to employees outside the workplace is likely to have as much or more impact on their productivity, interest and focus as any internal policy. There is no place for the uncaring supervisor.

Engagement is the emotional commitment an employee has to the organization and its goals. When employees care, i.e. when they are engaged, they use discretionary effort; this is extra time, brainpower, problem solving on their own time, etc. They become creative. The proven results are better employees with lower absenteeism and less turnover, seeking new skills that bring higher profits with fewer management problems.

Creating a culture of performance resulting from engaged employees takes work, resources, time, commitment and consistency. It starts with good managers who see the vision, who will give frequent, open and honest communication. It also means listening to employees and recognizing their impact in a positive way. It is about building a dynamic, cohesive positive employer/employee relationship through an organized engagement plan.

Jane McGrath & Gail Hammontree are principals at P3HR Consulting & Services.

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