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I Said it was the Money; But I Lied

Written by: Jennifer Loftus

Article Overview: As the economy continues to strain, recruiting and retaining talent will become even more important than ever. This article tackles this urgent topic, explaining many ways to help organizations go about their recruiting and retention methods. If you need any help with this, here is a great way to kick off your program.

I Said it was the Money; But I Lied

It will be slim pickings for employers looking for employees to fill positions in the coming years, but individuals looking for job opportunities are going to have a field day. The Bureau of Labor Statistics (BLS) estimates that the labor supply will grow only 12 percent between 1998 and 2008. The 45-to-64-year-old work force will grow faster than any other age group. The number of 25-to-34-year-old workers will decline by 2.7 million. These factors all point to a predicted shortage of 10 million workers in the next 10 years. The BLS pegs the seasonally adjusted unemployment rate at 5.7 percent in March 2002, a level not seen since 1995.

These demographic trends and current economic realities make effective retention techniques imperative for all organizations. A satisfied and motivated work force enables an organization to succeed in difficult economic scenarios.

WHAT DO EMPLOYEES WANT?

To find out what employees want from their employer, simply ask them. Many employees, especially “star” or key employees, are willing to share their thoughts, concerns and ideas with those who will listen. In addition to learning what employees desire from their employment relationship, listening to employees will enhance employee morale and commitment when workers sense the organization is taking an interest in them. Employers can discover both the positive and negative aspects of the organization by listening to employees. These discoveries can provide impetus for investigation and, if appropriate, positive change.

Companies can explore employees’ points of view via:

• Opinion surveys
• Focus groups
• Town hall meetings
• Initial impressions (surveys of new employees 30 to 60 days into the employment relationship)
• Surveys of employees who have transferred between departments or divisions
• Surveys of “non-hired recruits” (employees who were offered a position at an organization but declined it)
• Exit interviews.

With the exception of exit interviews, these mechanisms for increased communication come with a caveat. If a firm cannot treat findings respectfully, seriously and confidentially, and then take some action, employees may construe it as distrustful and declining employee morale can result. Employees need to receive some feedback, even if it is management saying that although they hear employees, they cannot take action now because of fiscal, legal, economic or other constraints.

HOW CAN EXIT INTERVIEWS HELP?

Employee turnover often ranges from 10 percent to 150 percent, depending on the organization’s industry and unique culture. Because employees leave firms, it makes sense to capture as much information as possible from them before they depart. They may be less hesitant than current employees to speak the truth on organizational issues. Their exposure to other organizations may provide them with additional insights that could be valuable to the company.

Exit interviews help firms to continuously improve their systems and processes. Conducting them over a period of time facilitates trend analyses. If change is made to an organization’s systems, and corresponding feedback on the systems becomes positive, exit interview data then becomes a valuable tool in demonstrating the program’s value and return on investment (ROI).

Exit interviews encompass a number of logistical issues:

• Who should do the interview? Human resources, the employee’s manager, a neutral third party, or a combination approach?
• When should it be done? On the employee’s last day, during his/her last week, within a month of termination, or a combination approach?
• How should data be captured? Rating scales, forced rankings, open-ended questions, or a combination approach?

When designing an exit interview system, there is no single best model to follow. The organization’s culture, the skills of the work force being surveyed, and any potential language barriers by non-fluent English-speaking employees drive the best system for the firm. In general, a combination approach to all three logistical issues listed above tends to work best. Capturing consistent, reliable data from former employees still is the primary consideration. Multiple data sources achieve this goal.

When using exit interviews, there are several concerns that should be addressed, including respondent honesty, financial and temporal costs, and management response.

Face-to-face exit interview effectiveness depends on the relationship between the employee and interviewer. While an employee’s manager is best positioned to understand operational concerns, an employee may hesitate to provide truthful information for fear of harming future employment opportunities. A neutral third party, such as an HR professional, may encourage employee candor. Outsourcing the entire process, and truly keeping individual data confidential, provides the greatest opportunity for employees to speak freely. Using a combination of these methods, and then correlating findings highlights which approach generates information with the highest ROI.

Exit interviews generate dollar and time costs. Financial costs include printing and distributing questionnaires or the fees of an outsourced vendor. Conducting the process in-house takes time from both parties’ days. If the information generated is not perceived as adding value, the hours spent with each terminated employee may be better spent on activities with a higher ROI.

Another cost to consider is that of not discovering and addressing critical organizational issues. While not every issue has an easy fix, time and money spent addressing perceived problems may, after a cost/benefit analysis, be less than the cost of continued turnover.

Management response to exit interview findings is another concern. If management chooses not to address discoveries unearthed during exit interviews, lower employee morale may result. Employees and former employees often keep in touch. Word can spread about the impact of employee comments on organizational change. Without some management action, time, money and effort spent in gathering data may cause a negative reaction from current employees. It may be better not to solicit feedback than to pay lip service to the process.

WHAT DRIVES TURNOVER?

Astron Solutions has tracked exit interview data for a number of organizations since 1999. As of June 1, 2002, the exit interview normative database contains responses from approximately 2,500 employees in all position levels nationwide. A variety of industries are represented. The normative database is updated quarterly with newly received data.

The data collected from each organization’s former employees is analyzed using unique demographic data. While some use analysis factors such as age and termination status, most find job title, department and, for multi-facility organizations, work location to be most valuable. These factors are not universally transferable between organizations. Statistically speaking, breaking the overall database down by age, years of service or other universal factor is not sound, given the relatively small sample size of each.

Future analyses may address the distinctions in findings, if any, between top, average and poor performers. Currently, this data is not tracked due to two factors:

• Administrative/time constraints on gathering this information
• Organizations’ lack of confidence in their performance management tools to make accurate, viable distinctions between performance levels.

The first question asked of former employees is what their primary reason is for leaving the organization. Employees’ primary reasons for leaving are:

• Miscellaneous, or “life happens”
• Change of career objectives
• Higher salary
• Dissatisfaction with supervisor
• Relocation
• Work hours.

Other reasons, including retirement, returning to school, and co-workers, make up considerably smaller portions of the total.

The term “miscellaneous” appears deceptively easy to disregard. This factor, more appropriately referred to as “life happens,” captures a whole host reasons heavily weighted toward work/life balance issues. Respondents in this category often cite reasons such as the birth of a first, second, third or even fourth child, the desire to be a stay-at-home mom, the need to be a stay-at-home caretaker for an elderly parent or parents, physical illness, lack of babysitters, and lack of transportation to or from work. While these issues are outside the scope of an organization’s day-to-day business activities, family-friendly benefits, flexible scheduling, work/life balance initiatives and certain voluntary benefits programs may help to stem this source of turnover.

Managers may think that if a certain employee isn’t given a 10 percent or 20 percent increase in base pay, he/she will surely be lost to the competition. Why then, is higher pay cited by only 11.6 percent of employees as their primary reason for leaving? Generally, employees will be neutral about their pay and benefits, at best. Pay may drive someone to leave a firm, but it will not retain someone for very long in the presence of other factors. Pay also serves as an excellent scapegoat for leaving a job. Pay takes the human element out of the equation. Pay doesn’t reflect poorly on the employee’s manager. Pay doesn’t burn bridges. Few individuals would not enjoy the prospect of making more each week.

THE RATING GAME

Former employees are presented questions on HR programs, the work environment, the employee’s department and his/her supervisor. A 1 to 3 rating scale is used, with 1 meaning the item “does not meet my expectations;” 2 means the item “meets my expectations” and 3 equates with “exceeds my expectations.”

Since 1999, respondents consistently rank a number of items highly. Both the flexibility of employees’ work schedules and the supplies and equipment provided to do their jobs are rated 2.4, the highest rating of all survey questions. The organization’s overall concern with customer service is rated 2.3.

Conversely, former employees consistently rate a number of survey elements lower. Both base pay programs and advancement opportunities are rated 1.8, the lowest of all survey elements. Average ratings of 1.9 are given to growth and development opportunities provided, departmental communications, top management’s responsiveness to issues raised as concerns by employees, the supervisor’s ability to coach employees to improvement and regular employee/supervisor meetings.

ETHICAL QUESTIONS

Former employees are asked another series of questions focusing on the prevalence of illegal and/or unethical activities occurring in the organization:

• 4.6 percent of respondents say they were personally asked to do something illegal at work
• 10.4 percent report seeing others being asked to do something illegal at work
• 17.5 percent report being aware of any employee violating the organization’s Code of Ethics or Code of Conduct.

The details provided by respondents cover a wide variety of activities, including taking illegal drugs while at work, enduring sexual harassment, falsifying medical records, and consuming food and beverages directly from production facilities.

It is difficult for a company to accept that these types of activities may be occurring. Confidential exit interview data provides a starting point for investigating potential issues and, if appropriate, implementing corrective action and new procedures. Current employees will undoubtedly be thankful for positive change.

WHERE ARE EMPLOYEES GOING?

Survey respondents are asked if their new position is with a competitor organization. Some 77.1 percent of respondents are, in fact, moving to organizations that are considered non-competitors of their former employer. This should not be surprising, given that the largest group of employees leave their firm primarily because of changing career objectives.

SHORTER JOB HUNTS

When survey respondents were asked how long their job search took, 51.1 percent said that it took them one to three months to find a new position. Another 21.7 percent said it took four to six months. Only 13 percent took more than one year to find a new position.

Over time, this trend of short job searches has been increasing. With less time to react to employees’ dissatisfaction with their current work relationship, it is imperative for organizations to implement proactive, positive changes toward becoming an employer and workplace of choice.

THE EMPLOYEE WORK EXPERIENCE

When asked whether employees found their overall work experience to be positive, negative or neutral, 58 percent report positive. Another 25.3 percent found it to be neutral.

Respondents were asked whether they would return to work at the company in the future and 50.7 percent report they would return in the future. Another 28.9 percent indicate they would return under certain circumstances. These conditions typically focus on having a different supervisor, working in a different department or working a different shift.

WHAT TO DO

Ask any HR professional what the best method for retaining employees is, and you will receive a plethora of responses. High base compensation, competitive benefits packages and trendy benefits such as telecommuting, casual dress and concierge services often float to the top of the list. Certainly a well-structured and clearly communicated total remuneration package should be in place. Without it, becoming an employer of choice is an uphill task.

In reading respondents’ answers to open-ended narrative questions, it’s clear that employees:

• Want to be part of active organizational communication
• Need their ideas, concerns and observations to be heard and responded to in some manner
• Want to know what’s happening in the organization
• Desire continual performance feedback
• Want to see their managers on a regular basis.

Personal growth, development and career advancement within an organization are also important elements of employee retention. A full-day orientation, rather than a 10-minute introduction, goes a long way toward retaining employees. Corning Glass found that 69 percent of employees are likely to still work there three years after experiencing a positive orientation. Devices such as internal corporate certification programs, dual-career progression ladders and career/competency matrices address growth and development and advancement needs simultaneously.

Identify your organization’s key employees. Ask them about their views on their employment relationship. Investigate some or all of the retention issues and solutions presented here to determine if there is an appropriate fit for your organization. Positive action now helps prevent or reduce undesired turnover and retains those employees critical to your organization’s success.

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Article Tags: 10 million, age group, bureau of labor, bureau of labor statistics, demographic trends, discoveries, economic realities, economic scenarios, employee morale, employment relationship, exit interviews, focus groups, impetus, initial impressions, job opportunities, negative aspects, opinion surveys, slim pickings, town hall meetings, unemployment rate



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