We’re 3 months in to 2017. 2016 was a pretty giant s*** show. This year is also starting out very shakily. As March will become April and before you get real deep into your product launches, repositions, new value props, etc here’s a round-up of the most interesting and most prominent management ideas in employee retention strategies for 2016.
I read dozens of articles and spent countless hours so you don’t have to, from Harvard Business Review (here, here, here), FirstRound (here, here) Gallup (here), Medium, Deloitte (here, here), Pew Research Center, New York Times, etc. I’ve highlighted their key findings, summarized them, and laid them out like a gift, so you can craft your strategy using the best practices, resources, and case studies out there. Let’s get started.
Step 1. Your employee retention strategies should start from the start
Like everything, retaining employees is a process. It doesn’t start when you get word that someone wants to leave. It’s got an arc, starting with talent acquisition through to employee engagement and ends, eventually with exit interviews and offboarding.
“The absolute worst time to have a conversation about someone leaving your company or team is when they have already decided to leave”. James Pratt, Reflective Management.
Talent Acquisition - Start Retention Right at the Hire
The reason that the right employee retention strategies start right at the hire is because obviously if it’s the wrong fit from the get-go, even if that person is brilliant, it’s a doomed partnership to begin with.
Let's look at 3 companies who stand out with smart hiring strategies.
- Location Lab boasts a 95% employee retention rate and has never laid off a single person.
- Facebook is known for creating positions for people with talent.
- Pal’s Sudden Service has only had seven general managers leave the company in 33 years! Annual turnover among assistant managers is 1.4 % and for front-line employees, turnover is just one-third the industry average.
Case Study 1: The Right Hire through Referrals
According to Location Lab, “Referral rate is a great leading indicator of retention”.
About 60% of their employees have referred another person that is also working at the company. Over 40% of their new hires are referrals, some are even referred by people who no longer work at the company.
So what did Location Lab do? They also have a quite rigorous hiring process that includes:
- honest and personable job descriptions,
- training of interviewers (not interviewees),
- and interviewing for values and potential over hard skill.
You can read more about their comprehensive hiring process here.
Case Study 2: Facebook Finds Detractors, Let’s employees pick their own teams
Facebook has a different and equally refreshing take on the hiring process. Although they want to hire the best and the brightest, they also make it a point to be on the lookout for those who show signs of detracting from the team. To screen for these types of detractors Jay Parikh, Global head of Engineeering at Facebook, cautions to
“Look for empire builders, self-servers, and whiners in the hiring process — and don’t hire them”.
They also add additional criteria to screen for the ability to calibrate to a team environment. They ask questions like:
- “Describe your responsibilities as a leader.”
- “Can you tell me about four people whose careers you have fundamentally improved?”
- “What does office politics mean to you, and do you see politics as your job?”
- “Tell me about a project that you led that failed. Why did it fail and what did you learn?”
“After these questions, a successful candidate should clearly demonstrate that their priorities are company, team, and self — in that order.” Jay Parikh, Global Head of Engineering at FB
When the interview is said and done, Facebook employees use a clever hack to discourage “group think” / conformity, that we’ll talk about in the next section. In hiring, feedback for each interviewee is written and logged by all interviewers (and is visible for everyone involved in the hiring process) but interviewers can’t see others’ feedback until they’ve submitted their own. Doing so, stops group think about a particular candidate. The result is an honest opinion of the interviewer and not the feedback the interviewer thinks his or her boss wants to hear.
In terms of purpose / fulfilment - FB encourages engineers who join the company to choose their team, basing the decision in part on where they believe they will have the most meaningful impact, and in part on organizational needs.
Case Study 3: Keeping Part-Timers in High Turnover Industries through Learning
You should stand up and take notice of Pal’s Sudden Service, like HBR did in their cover story piece. This fast-food chain averages about 18 seconds at the drive-up window and 12 seconds at the handout window to receive the order, which has won the prestigous Malcolm Baldrige Quality Award awarded to the likes of FedEx, Cadillac and the Ritz-Carlton.
When they hire, they hire for attitude and train for skill. The 26 locations employ roughly 1,020 workers, 90 percent of whom are part-time, 40 percent of whom are between the ages of 16 and 18. They have developed and fine-tuned a screening system to evaluate candidates from this notoriously hard-to-manage demographic—a 60-point psychometric survey, based on the attitudes and attributes of Pal’s star performers, that does an uncanny job of predicting who is most likely to succeed.
Among the agree/disagree statements:
- “For the most part, I am happy with myself.”
- “I think it is best to trust people you have just met.”
- “Raising your voice may be one way to get someone to accept your point of view.”
Pal’s understands that character counts for as much as credentials, that who you are is as important as what you know.
Hiring is the first step you can take to ensure the right people walk through your door. If someone leaves because of their boss, that’s a failure in the company’s hiring process — an employee didn’t get enough exposure to their boss during the process, or alternatively, if there’s a history of employees leaving and their boss was the bad hire in the first place.
If your employee retention rate is really taking a blow, perhaps it’s time to revisit the meat and bones of your organization -- the culture.
Step 2. Employee Engagement through Culture - Make Work a Place People Want to Be
In order to apply the best employee retention strategies out there and to foster a culture of engagement, Deloitte University nicely packages 5 elements that drive engagement in what they call, “The Simply Irresistible Organization”.
If you’re at a point where you can refresh your company culture or if you haven’t already cemented one, take a look at our How to Build a Culture Guidelines.
While not diminishing the role and influence of the boss, there are other “culture factors” that can eventually break the camels back and cause your people to jump ship. Here we outline some of the most pressing “culture problems” in 2017 and ways to solve them.
- The Status Quo, Doing Things as they’ve always been done
- Counterproductive Office Politics
- Vague Feedback, Minimal Learning, and Poor Training
- Work-Life Fit for Women
- Keeping Job-Hopping Millennials
The Cultural Problem: The Status Quo, Doing Things as they’ve always been done
You’re at work and there will always be things that don’t jive well with you but you go along because it’s easier or because it’s just not that important to you. But over time these annoyances can wear you down. Francesca Gino, writing for Harvard Business Review in her piece “Let your workers rebel” suggests that conformity in the workplace can lead people to feel inauthentic, which in no way helps the employee retention strategies of the company. It only reduces employees' engagement with their jobs and can eventually cause them to leave.
Here’s what happens when employees feel inauthentic.
What is conformity?
Conformity can take the form of modeling the behavior of others in similar roles, expressing appropriate emotions, parotting common phrases, solving problems in the same way, not challenging the status quo, routinely agreeing with the opinions of managers, acquiescing to a team’s poor decisions, and so on. And although such conformity can provide some degree of group acceptance, conforming often conflicts with our true preferences and beliefs and therefore makes us feel inauthentic.
“Employees who said they could express their authentic selves at work were more committed to their organizations" - Harvard Business Review.
To combat conformity and release what Gino calls “constructive nonconformity”, which promotes innovation, improves performance, and can enhance a person’s standing more than conformity can, management must give employees opportunities to be themselves.
How so. We’ve outlined 10 of her most relevant suggestions here.
- Let employees define their missions.
- Give employees opportunities to identify their strengths.
- Then tailor jobs to employees’ strengths.
- Ask “Why?” and “What if?”
- Excel at the basics
- Maximize variety
- Create opportunities for employees to view problems from multiple angles.
- Look for disconfirming evidence.
- Create dissent on purpose
- Hire people with diverse perspectives
In sum, conformity can prompt employees to leave when they feel inauthentic and unengaged at worked. Organizations need to strike a balance between sticking to the formal and informal rules that provide necessary structure and the freedom that helps employees do their best work. In Danish, this is called “frihed under ansvar”, freedom within the bounds of responsibility.
The Culture Problem: Office Politics
Office politics are often the elephant in the room, the silent hand that influences how decisions are made and who makes them. At best, they are hurtful for individuals and their performance and at worst, they are cancerous for the entire organization.
How to combat office politics that are a normal part of unwieldy human nature? Jay Parikh, head of Engineering at Facebook, explains that FB keeps people from getting tangled in the weeds of “office politics” by:
- Taking the incentive out of “climbing the latter” - When one individual champions their own interests at the expense of the team, everyone suffers. At FB, moving into management is not a promotion. They’ve created parallel tracks instead for “individual contributors” all the way up to the most senior roles. This means you don’t have to manage to move up.
- Making “escalation” legal - People know they won’t be blamed or punished for speaking up or asking hard questions
- Skip-level meetings, where employees meet with their boss’s boss.
- Frequent Q & A sessions with leadership (including the CEO). These Q&As hold leaders accountable for any part of the business, and they surface valuable information and feedback for FB’s leadership team.
- “Hackamonth” - where individual contributors can take a month to help another team on a specific project. This freedom of movement engages employees by allowing them to broaden their areas of expertise and expand or focus their scope by moving to projects at different levels of development.
After all, office politics together with the lack of challenges to the status quo makes for bored employees, who will start to look for new opportunities outside your company.
The Culture Problem: Vague Feedback, Minimal Learning, and Poor Training
Back to Pal’s, because honestly, kudos! Once they select their candidates, they get immersed in massive amounts of training and retraining, certification and recertification.
- New employees get 120 hours of training before they are allowed to work on their own, and must be certified in each of the specific jobs they do.
- Everyday, on every shift two to four employees get recertified in one of their jobs—pop quizzes and names generated by a computer. Employees take a quick test, see whether they pass, and if they fail, get retrained for that job before they can do it again. The average employee gets 2 or 3 pop quizzes per month.
- All leaders at Pal’s are expected to spend 10 percent of their time on teaching, and to identify a target subject and a target student every day.
So we are always training, always teaching, always coaching. If you want people to succeed, you have to be willing to teach them.
Leaders who are serious about hiring also have to be serious about teaching. Pal’s has assembled a Master Reading List for all the leaders in the company, 21 books that range from timeless classics by Machiavelli (The Prince) and Max DePree (Leadership Is an Art), to highly technical tomes on quality and lean management. Every other Monday, Crosby the CEO invites five managers from different locations to discuss one of the books on the Master List.
“All leaders are teachers, whether they realize it or not,” Crosby says.
The Culture Problem: “Work-Life Fit” for Women
This topic deserves some special attention. Because often we clump these employee retention strategies without thinking of the specific gendered aspect of retention. Let’s be clear,
There is one factor that has the greatest influence on their decision to stay in the workforce or leave -- children - Gallup Poll, 2016.
We women carry a unique weight of household management, working plus the vestiges of a patriarchal history.
With more than half the workforce as millennials and more than a million millennials are becoming moms each year, family-friendly, mother-friendly policies are an absolute prerequisite in making “work-life” (and much less the balance) even remotely possible. It’s not a trade-off and we need to stop making women face these false choices.
As one of 8 countries in the world that does not guarantee maternity or paternity leave for parents, the U.S. is doing an abysmal job at making workplaces attractive for wannabe moms.
In “Rethinking the work life equation”, Moen and Kelly professor of work and organization at M.I.T. have argued that the first step is to offer flexibility and shift the language used to characterize why they need it.
That is because we talk about work-life balance, work on one end and balance on the other, and when one is up the other is down — so it’s like a zero-sum game. “Work-life fit’’ instead helps capture the way we try to piece the disparate parts of our lives together.
Offering flexibility might mean: piloting a project where senior staff model the behaviour, creating a rotating schedule of working from home once a week, creating systems where people can shuffle work around and share work seamlessly, extended lunch breaks, there are so many ways to integrate flexibility into a living, breathing action in an organization.
Workplace stress often is more accurately described as workplace guilt, an especially corrosive form of distress: It’s that feeling that nags at you as you rush into the office, sweating, knowing that you are already late, or as you slip out for a ‘‘meeting’’ that is, in fact, a much-needed haircut appointment.
What people told us, over and over again, was that the new policy removed the guilt
The Culture Problem: Keeping job-hopping Millennials
Employee retention stats for millennials are disheartening at best, and one of the most pressing organizational problems for CEOs at worst. Good news though - given the current context of uncertainty, “only” 38% of Millennials expect to leave without 2 years down from a staggering 44% in 2016, according to Deloitte.
What you also have to understand is that your millennial employee is probably going through a really tough developmental phase. The Harvard Business Review explains that when the quarter-life crisis hits late twenties, early thirties (or entry-mid level career) “One’s late twenties and early thirties, from an emotional perspective, are therefore the worst part of life. It’s during these years that people experience the most negative thoughts and feelings and experience the most mind wandering, a psychological state that has been shown to be detrimental to well-being”.
In hiring and keeping millennials, FB encourages them take initiative and makes it public. Lori Goler explains that millennials seek a sense of purpose, a workplace that allows them to be authentic, that provides room for growth, and opportunities to utilize their unique strengths. Basically, what we advocated for in our piece, “3 things Millennials Want, Written by an actual one”. #hatetobragbutItoldyouso. #trusttheyouth.
The now-famous “rainbow filter” on Facebook, which allowed people to change their profile pic to celebrate the Supreme Court’s same-sex marriage ruling, was the brainchild of two interns, who weren’t asked to create it but they saw an opportunity and ran with it.
This infographic from NOBL dispels some of the common myths associated with the millennial workforce.
So it could be that you have tried various tactics: opportunities for growth, flexibility, fairness, purpose but they are not making a dent. It could just be that your millennial employee is affected by the life stage that is beyond your control.
Step 3. Accepting people will leave: Honest Conversations + Offboarding
In the end if you’ve thrown money, resources, and support at a retention problem and it’s still not any closer to resolution, the last best alternative is, which should actually happen at the beginning, “accepting people will leave”.
In an article for Reflective management, James Pratt argues that the reason we’re uncomfortable talking about an employee leaving an organization is that it makes the danger of these hidden threats more real and like most difficult conversations, it’s just easier just to ignore it. And we make this mistake in our daily lives all the time. We all KNOW that we should plan for retirement. We all KNOW that we should write a will. But many people don’t do these things despite their inevitability. The same with employees who leave.
Accepting the oft-transient nature of employment, especially in tech firms with a 4 year shelf life, Pratt suggests:
- Acknowledge the inevitable “In tech companies, its pretty normal for people to change jobs every two or three years. In 2 or 3 years one or both of us will be doing something different. What’s most important to me is that while we’re working together, we’re getting you ready for whatever that next step is.”
- Talk about what’s next “Connect them with a mentor who is good at helping people think through career transitions. Ask them questions about companies they admire. Jobs they see other people doing that seem interesting. Encourage them to think outside simply “moving up the ladder” in your team.
- Help them move toward what’s next. Are there side projects in the area that they want to work on? Are there people in the org who would be willing to teach them in the area they want to move into? Is it possible for them to “intern” at another team? Could you be radical and allow them to “intern” at a target company for a while?
The Counter Offer: Money
Newsflash. There’s an income ceiling on emotional well-being, according to Gallup.
Money can’t buy happiness, no but it can help alleviate some of the bullshit that makes life unhappy. In a 2015 article, CNN Money reported that "minimal wage growth" is one of the top three reasons that workers in Europe, Asia and North America cite for leaving their jobs.
The Magic Number: $75,000 USD
In their report on high income and emotional well-being, Nobel Prize winners Daniel Kahneman, Ph.D., and Angus Deaton, Ph.D. (former and current Gallup senior scientists, respectively) examine the relationship between experiencing daily emotions and annual household income.
They found that experiencing significant amounts of happiness or stress on any given day improves with income, but only up to an annual household income of about $75,000 USD, regardless of geographic location. That is, people with annual household incomes of more than $75,000 don't have commensurately higher levels of this type of emotional well-being, though their general life evaluations continue to increase.
Put another way: Money can improve daily emotions, but only up to a certain point. Once employees reach that plateau, this element of their emotional well-being doesn't get commensurately higher, no matter how much more they make.
Read the study on Gallup here.
Oftentimes, if you’re at the counter-offer stage, most times you’ve already lost. So figuring out the reason that person started shopping around via an honest conversation right at the beginning, that acknowledges the fact that they will leave, is one of the smart employee retention strategies.
So there you have it, the 2017 Review of Best Employee Retention Strategies. The takeaway? Like a good story, employee retention has a beginning - the right hire, a middle - the company culture, and an end - accepting people will leave and transitioning out.
End of story.