Conceptual Strategies on Employee Retention

Sharika Gupta

Employee retention is the foremost problem; which all organizations are now facing in the global competitive environment. In this conceptual paper, the author has attempted to bring out some employee retention approaches, which have developed over a period of time, in the industrial and Internet era. Retention strategies for knowledge workforce, for achieving com­petitive advantage are also highlighted. In the concluding part, some critical guidelines for developing a retention strategy by an organization are mentioned. Read on...

In this paper, I shall discuss under noted aspects relating to employee retention:

1. Concept of employee retention.

2. Is employee retention manageable?

3. Growth of strategies for employee retention in different periods.

4. Developing retention strategy in an organization.

1. Concept of Employee retention

Employee retention means many things to many people in each organization. There is no single definition of employee retention. Some views mentioned by J. Leslie Mckeown are as under: ­

'Employee retention means stopping poop Ie from leaving this organization.'

'Employee retention is all about 'keeping good people.'

­'Getting our compensation and benefits into line with the marketplace.'

'Stock options creche facilities, and other perks.'

'It's got to do with our culture and how we treat people.'

Infact, the concept of employee retention arose in response to increasing number of employees leaving the organization due to various reasons.

2. Is employee manageable (i) manageable?

It is viewed that employee retention is 'controllable element' by the organization, as a phenomenon is, some times, very specific to each organization. To quote again J. Leslie Mckeown that there is 'No single plan that fits every situation. Instead, we will have to discover how to define employee for our organization, and even for specific departments or divisions in our organization. We will learn how to establish realistic, organization­ specific employee retention goals, how to select the right strategies and tactics, and learn to gauge their success. Finally, and most importantly, we'll learn how to monitor and vary our employee retention goals, strategies, and tactics over time, as our organization circumstances change.'

3. Growth of strategies for employee retention in different periods.

The approach to employee retention has developed gradually and has undergone focused attention in various periods. (J. Leslie Mckeown):

(i) Paternalistic 'Status quo' employer-employee relationship to reduce rate of employee turnover. This was dominant up to 1980' s.

(ii) Focus on providing hygiene factors. However job mobility and turnover of employee increased due to changes in job market and opportunities outside the organization. People did not remain with one employer for long or for career in working life, so employees started voluntarily leaving the organizations. Thus to retain employees, organizations laid emphasis on providing Hygiene factors (Herzberg two factor theory of motivation) i.e. compensation, benefits and physical aspects of working environment (health, safety and comfort) at workplace. The focus was to reduce employee turnover and also to workout data i.e. to maintain turnover rates on regular basis in the organization.

(iii) Thrust on motivating factors. Then came another change when emphasis of employers became dominant on motivating factors (Herzberg) such as:

• Feeling of achievement.

• Recognition.

• Challenging work itself.

• Career advancement.

• Increased responsibility.

• Opportunity for growth as a person.

The emphasis was equally on growth or higher order needs of A. Maslow social needs (affection, friendship, acceptance, belongingness in work group), esteem or ego needs (status, recognition, self-­respect, etc.) and self­-actualization needs (growth, achieving one's potential, self­-fulfillment etc.).

(iv) Improvement in quality of work life. Later organizations started providing various job-­redesign and improvement in quality of work life (QWL) measures to enable individuals to satisfy variety of needs. These measures are meaningful work, challenge in learning and problem solving, control over one's job, a chance to collaborate with one's colleagues. Nature of work one' is involved has a profound impact on shaping individual's personality, determining performance, commitment and job satisfaction.

(v) Building organization culture. Other areas of focus have been j such as making compensation rewards and benefits more competitive so as to have a difference with other organizations and also building organization culture. During 1990's it came to be realized that corporate culture is important for corporate growth, success, excellence and survival. It has motivating" effect on employees as it influences initiative, trust, support and innovation. Good culture is usually typified by quality of excellence, openness in communication, participation in decision-making, high standard of safety, good corporate citizen. This is sustained employee retention called 'holistic approach' that dealt with employees' higher needs, such as acceptance, esteem and self-fulfillment.

(vi) Retention factors for knowledge workforce. According to J. Leslie Mckeown, the current approach in employee retention is to lay emphasis on following factors in know ledge era.

(a) Core competencies and out sourcing stratategies.
C.K. Prahalad and Gary Hamel emphasized that organizations have to adopt core competency model (i.e. skills and activities that are essential to an organization's success) and must do well to formulate a competitive strategy. Organizations will focus on hiring employees only for their core activities and will be purchasing non-core products and services externally. This trend is continuing.

(b) Concentrating on perfor­mance related rewards
Concentrating on performance related reward systems to meet expectations of employees who have their own core competencies (knowledge workforce) and provide them work-life balance programs. Employer has to attract high caliber individuals and keep such individuals who can perform the organization' s 'mission-critical' (core-competencies) tasks. Employer has to offer different ‘retention stimuli’ in winning potential employee and not allowing him to go elsewhere. This is also referred as 'employee value proposition' approach, which emphasizes the benchmarking activities and involving organizations in adopting the employee retention best practices of similar organizations.

(c) Employee retention strategy, an ‘employer of choice’.

Employee retention concept of becoming an' employer of choice' or 'building company image.' It lays emphasis as under: ­

• Process of becoming an employer of choice begins before hiring highlighting in recruitment literature i.e. advertisement, product branding, company image, management reputation and other releases for public. The object is, to attract right employees.

• It is important what management says and does after hiring, Process continues aspect for retention (beyond the hire stage) to include, treatment with employees, their development efforts and they feel a t home etc.

• Another aspect is to develop retention mindset in the leadership for building a welcome environment when people want to stay. It is developing a retention culture ­a retention way of life. It is about creating a genuinely welcoming place, where employee's love to work based on credibility, respect, fairness, pride and camaraderie. It is good performance management process, which can help improve retention such as­-

• Use of role clarity and annual review of goal achievement,

• Use of performance appraisal mechanism to measure those goals.

• Employer's mentor / coach role to encourage and advise to produce enduring, productive employee-employer relationship.

• Jim Collins - author of 'Built to Last and Good to Great' - explains the first key to success is indeed people. You have to find the right people first, the vision and strategy can follow. According to Deepak Chopra, the ultimate test of business leadership is what happens to a company after the CEO leaves. Business leader to have meaning in his life, should have love and compassion for his employees. It is the people in organization, who are key to success. (Indian Management ­June 2004)

• Still another aspect that has become important is business leaders to fulfill their corporate social responsibilities in the current global context. We have classic examples of such companies in India- as Infosys, Wipro, Tata's which have attained s status of respected companies and are realizing the virtues of brand. These companies have build up their corporate images basically due to role's of their CEOs.

(d) What ticks knowledge workforce

Other current retention approaches are towards following aspects:

·        Provision of fun.

·        Nurture creativity.

·        Continuous learning.

·        Work and life balance.

·        Love and individual dignity.

·        Involvement and team working.

·        Performance related compen­sation etc.

Figure 1: - Continuum showing focus in retention approaches in different periods.

In sum, focus on retention approaches in different periods during industrial, service sectors, information technology (IT) and Internet era mentioned above are summarized as a continuum in the figure above-

4. Developing a retention strategy in an. organization.

It is desirable to plan employee retention strategy by an organization, which should cover following aspects (J. Leslie. Mckeown):

• 'Identify and prioritize key employees that present a current or future retention risk'

• For each key retention group, clarify reasons for wanting to retain them.

• With each group, use interviews (entry, exit-reasons for his taking the job and reasons for his staying. To ascertain what we need to do to retain the employees in that group such as loss of institutional knowledge, which may go to competitors.

• Make the interviews with employee independently and keep them confidential for best results.

• Use the information that is collected to establish clear, quantifiable retention goals for each group of employees.

(a)  Some areas of employee retention, which require particular attention for achieving competitive advantage, are: ­

i. A pleasant work environment.
ii. Work content is associated with performance of goals.
iii. Career and personal growth opportunities as long-term perspective.
iv. Compensation and performance related rewards to be around 30% of total gross pay.
v. The organization culture based on vision, values and a mission. In addition how members do things, communicate and interact.
vi. Employee ownership in the organization.
vii. Participation and empowerment by encouraging decentralization of decision­ making.
viii. Equality or treatment among employees.
ix. Employee centered practices.

(b) Some key expectations of employees are: ­
Work-life balance.
Acceptance of their views and opinions.
Respect for the individuals.

(c) Relationship with the manager.
i. A Manager to be considered as a mentor and coach, generally taking responsibility for each other's welfare in relationship building.
ii. Manager to set realistic, challenging, and relevant goals for employees by involvement.
iii. To implement a realistic, challenging, and. relevant performance appraisal process.
iv. Design and implement an individual growth plan for each employee.
v. To act as a buffer between any employee and other managers.
vi. To act as a representative of employees and play key leadership role.
vii. If people want to work for you, you are 'Manager of choice'. This develops when you have won the trust of your employees, and they are more likely to stand by you during tough times and remain in the organization. It is pertinent to note that an employee's relationship with his supervisor largely determines his view of the company. A company cannot become an' Employer of choice' unless it has 'Managers of choice' throughout the organization who are faithfully implementing best practices in people management.

(d) Employees' work relationship with colleagues.

Though it may be competitive but should provide good opportunities for special interaction, development skills and knowledge.

To conclude, a successful strategy starts with the management's right mindset, which ensures that the strategy adds value throughout the organization, implementing processes sincerely, that the top management is fully involved and their enthusiasm in it is of critical importance.

References: ­

1. J. Leslie Mckeown, Retaining top employee, Tata McGraw Hill ­companies Inc, New York. Gratefully acknowledged.
2. George Fuller, Win-Win Management, Leading people in New Workplace, Prentice Hall Press, Nyo 7652.
3. Barbara Moses, Career Intelligence, Magna Publishing Co. Ltd., Mumbai.
4. Global Competitiveness, All India Management Association Amexcel Publishers Pvt. Ltd., New Delhi - 28.
5. S.K. Bhatia, Boost Your Professional Career, Deep and Deep Publications., N. Delhi.

Sharika Gupta,
E-Commerce, MCSE, MBA, Phd (Pursuing),
Rai Business School, Rai University
Phone: 26959000 (Extn: 336)
Personal Ph: 9811093921
Personal e-mail: sharika_gupta@hotmail.com