Managing employees: retention, commitment, long term relationships
Managers who don’t create the right opportunities for their employees, don’t communicate with them, and don’t appreciate them often find themselves dealing with a high turnover rate. Good managers are people you keep in touch with even after you leave a position. Bad managers are people you keep track of so you can avoid them in future.
Why does any of this matter? Because long-term retention of committed, talented personnel means higher productivity - it's as simple as that.
Reasons People Leave. Although there are exceptions - the reasons that most employees leave can usually be attributed to one or more of the following responses:
"I'm not sure there's a future here for me."
"I just don't feel like this is the right place for me."
"I'm not sure I want to be doing this for the rest of my life."
"I think I can make more money elsewhere."
For purposes of this discussion, we will define the "4 Keys to Retention" as follows:
Compelling Future - This means that employees perceive that the company is "going somewhere," it has ambitious but achievable goals for growth AND they (the employees) see themselves playing an integral role in that future.
Positive Work Environment - This key means that employees like the nature of the work they do as well as the team of people they work with, they feel there is enough support and communication to accomplish their role in the organization and there is a fit between the values of the organization and their personal values.
Opportunities for Personal and Professional Growth - Here we mean that individual employees fell as though their distinctive talents and abilities will not only be used in the organization, but will be enhanced and strengthened in a way that leads to expanded roles, responsibilities and opportunities. This implies not only that there is somewhere to go, but that the company knows how to get the most out of its people.
Financial Rewards - The meaning of this key is perhaps the most obvious. With this issue, employees want to know that if they achieve the expectations the organization has of them, they will be rewarded in a way that fulfills their current and future financial needs and goals.
In examining those four categories, it is easy to see that if any one of them is weak, the company's likelihood of retention is diminished.
The Role of Compensation and Benefits
Certainly, all of the issues summarized under the 4 Keys above can not be addressed solely with compensation and benefits - no matter how effective they might be. However, that isn't the issue. The issue is whether compensation and benefits help to reinforce the vision, strategy, roles and expectations of the organization and its workforce. Compensation and benefits primarily deal with the Financial Rewards key mentioned earlier - however, their reach is really much broader than that.
Compensation is a tool for reinforcing vision, acknowledging and rewarding unique abilities and contributions, enhancing team or unit or company cohesion, cooperation and productivity and meeting the cash, security and wealth building needs of employees. And each of those issues are right in the "sweet spot" of the Total Rewards elements defined by the Four Keys summarized above.
As it relates to those the cash, security and wealth building elements of compensation, an organization should think in terms of eight potential components of a compensation "pie" that should be considered as part of the total financial rewards offering.
- These would include:
Salary
Short-Term Cash Incentives
Long-Term Cash Awards
Equity Awards
Core Health and Welfare Plans
Executive Benefit Plans
Qualified Retirement Plans
Non-Qualified Retirement Plans
Each of these components play a different role in helping companies meet the cash, security and wealth building objectives and expectations of employees. (Each also has a different emphasis and "weighting" depending on the growth goals of the company and the focus required of especially the key people in the business.) You might think of these compensation and benefit elements being allocated among three categories relative to the needs of your employees. Once you make that allocation, you may want to determine which elements are most lacking in your organization's value proposition.
Cash Needs
Salary
Short-Term Cash Incentives
Security Needs
Core Health and Welfare Plans
Executive Benefit Plans
Wealth Accumulation Needs
Long-Term Cash Awards
Equity or Phantom Equity Awards
Qualified Retirement Plans
Non-Qualified Retirement Plans
Total Economic Value Proposition
When looking at compensation and benefits within an organization, we are really examining a subset of a "Total Rewards" value proposition that must be effectively developed if retention and sustained productivity are to be achieved. We might best call and define this as the Total Economic Value Proposition of the company. This issue is key in a retention effort. To know how your organization is doing in this regard, you should ask yourself the following questions:
Is our total rewards package designed to appeal to the type of people we need attract and retain?
Will it focus those people on our key desired results?
Is the value of our package sufficient to drive behavior that is challenging?
Does the (compensation) package properly reward people for long-term results (thereby keeping them focused on those goals and not just short-term goals)?
Do we have long-term plans that result in "think about it" forfeitures that assist in retention?
At the core of your Total Economic Value Statement there must be a fundamental philosophy that guides what you do and the decisions you will make. That philosophy could be articulated as follows (as an example):
Fair salaries, strong benefits, great upside for short and long-term growth and profitability
A business addresses this issue because of three defining questions its employees will ask themselves about the company's Total Economic Value Proposition
Does it meet my cash flow needs?
Does it provide the level of security I desire?
Does it offer a meaningful long-term wealth accumulation opportunity?
Communication, Communication, Communication
Is it possible to apply all 4 Keys of a Total Rewards Value Proposition "in spades" and still fail to retain key people? Absolutely. In fact, attrition will be inevitable even in that scenario if you fail to do the following:
Failure to effectively and consistently communicate the company's vision of the future
Failure to communicate the opportunities for growth
Failure to communicate the total rewards proposition
In Conclusion
Retention of key employees is not a complicated issue - just a neglected one. Once a company realizes the range of factors that have to be planned, initiated, managed and reinforced, they can organize an effective effort to build a compelling value proposition. Doing so is worth the investment of time, focus and energy. To do otherwise is to perpetuate an outcome that can be costly and drain the company of its highest potential for growth and productivity - its people.
source: Forbes articles, vladvisors advisory group articles...
Why does any of this matter? Because long-term retention of committed, talented personnel means higher productivity - it's as simple as that.
Reasons People Leave. Although there are exceptions - the reasons that most employees leave can usually be attributed to one or more of the following responses:
"I'm not sure there's a future here for me."
"I just don't feel like this is the right place for me."
"I'm not sure I want to be doing this for the rest of my life."
"I think I can make more money elsewhere."
For purposes of this discussion, we will define the "4 Keys to Retention" as follows:
Compelling Future - This means that employees perceive that the company is "going somewhere," it has ambitious but achievable goals for growth AND they (the employees) see themselves playing an integral role in that future.
Positive Work Environment - This key means that employees like the nature of the work they do as well as the team of people they work with, they feel there is enough support and communication to accomplish their role in the organization and there is a fit between the values of the organization and their personal values.
Opportunities for Personal and Professional Growth - Here we mean that individual employees fell as though their distinctive talents and abilities will not only be used in the organization, but will be enhanced and strengthened in a way that leads to expanded roles, responsibilities and opportunities. This implies not only that there is somewhere to go, but that the company knows how to get the most out of its people.
Financial Rewards - The meaning of this key is perhaps the most obvious. With this issue, employees want to know that if they achieve the expectations the organization has of them, they will be rewarded in a way that fulfills their current and future financial needs and goals.
In examining those four categories, it is easy to see that if any one of them is weak, the company's likelihood of retention is diminished.
The Role of Compensation and Benefits
Certainly, all of the issues summarized under the 4 Keys above can not be addressed solely with compensation and benefits - no matter how effective they might be. However, that isn't the issue. The issue is whether compensation and benefits help to reinforce the vision, strategy, roles and expectations of the organization and its workforce. Compensation and benefits primarily deal with the Financial Rewards key mentioned earlier - however, their reach is really much broader than that.
Compensation is a tool for reinforcing vision, acknowledging and rewarding unique abilities and contributions, enhancing team or unit or company cohesion, cooperation and productivity and meeting the cash, security and wealth building needs of employees. And each of those issues are right in the "sweet spot" of the Total Rewards elements defined by the Four Keys summarized above.
As it relates to those the cash, security and wealth building elements of compensation, an organization should think in terms of eight potential components of a compensation "pie" that should be considered as part of the total financial rewards offering.
- These would include:
Salary
Short-Term Cash Incentives
Long-Term Cash Awards
Equity Awards
Core Health and Welfare Plans
Executive Benefit Plans
Qualified Retirement Plans
Non-Qualified Retirement Plans
Each of these components play a different role in helping companies meet the cash, security and wealth building objectives and expectations of employees. (Each also has a different emphasis and "weighting" depending on the growth goals of the company and the focus required of especially the key people in the business.) You might think of these compensation and benefit elements being allocated among three categories relative to the needs of your employees. Once you make that allocation, you may want to determine which elements are most lacking in your organization's value proposition.
Cash Needs
Salary
Short-Term Cash Incentives
Security Needs
Core Health and Welfare Plans
Executive Benefit Plans
Wealth Accumulation Needs
Long-Term Cash Awards
Equity or Phantom Equity Awards
Qualified Retirement Plans
Non-Qualified Retirement Plans
Total Economic Value Proposition
When looking at compensation and benefits within an organization, we are really examining a subset of a "Total Rewards" value proposition that must be effectively developed if retention and sustained productivity are to be achieved. We might best call and define this as the Total Economic Value Proposition of the company. This issue is key in a retention effort. To know how your organization is doing in this regard, you should ask yourself the following questions:
Is our total rewards package designed to appeal to the type of people we need attract and retain?
Will it focus those people on our key desired results?
Is the value of our package sufficient to drive behavior that is challenging?
Does the (compensation) package properly reward people for long-term results (thereby keeping them focused on those goals and not just short-term goals)?
Do we have long-term plans that result in "think about it" forfeitures that assist in retention?
At the core of your Total Economic Value Statement there must be a fundamental philosophy that guides what you do and the decisions you will make. That philosophy could be articulated as follows (as an example):
Fair salaries, strong benefits, great upside for short and long-term growth and profitability
A business addresses this issue because of three defining questions its employees will ask themselves about the company's Total Economic Value Proposition
Does it meet my cash flow needs?
Does it provide the level of security I desire?
Does it offer a meaningful long-term wealth accumulation opportunity?
Communication, Communication, Communication
Is it possible to apply all 4 Keys of a Total Rewards Value Proposition "in spades" and still fail to retain key people? Absolutely. In fact, attrition will be inevitable even in that scenario if you fail to do the following:
Failure to effectively and consistently communicate the company's vision of the future
Failure to communicate the opportunities for growth
Failure to communicate the total rewards proposition
In Conclusion
Retention of key employees is not a complicated issue - just a neglected one. Once a company realizes the range of factors that have to be planned, initiated, managed and reinforced, they can organize an effective effort to build a compelling value proposition. Doing so is worth the investment of time, focus and energy. To do otherwise is to perpetuate an outcome that can be costly and drain the company of its highest potential for growth and productivity - its people.
source: Forbes articles, vladvisors advisory group articles...
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