Consultant, Writer And Trainer
HR - Aone Biz
It is becoming increasingly clear that, in today's dynamic business environment, companies that want to remain competitive must adopt a more strategic approach to retention.
Two major trends point to the growing importance of retention as an HR issue. One is the ongoing rise in turnover rates in virtually every economic sector and region that, if left unaddressed, can have a significant impact on bottom-line results and organisational success. The other is the ever-climbing cost of turnover, especially when it involves high performers.
A report released last year by the Bureau of National Affairs in the US showed that turnover rates (which exclude layoffs) have soared to their highest levels of the decade, increasing for companies in both the service and manufacturing sectors. Employers in all parts of the country now face higher levels of turnover and, as a result, higher replacement costs.
Though the direct costs associated with losing an employee are well documented ranging anywhere from one to three times the employee's salary-these calculations often fail to factor in the hidden costs of turnover. These include lost productivity and missed revenues, as well as intangible repercussions such as reduced morale and diminished company reputation. If the lost employees are high performers, turnover costs could rise dramatically.
Responding to what many experts now consider a retention crisis, some companies are implementing aggressive programmes to manage turnover and hold on to those employees who contribute most to their business success. Microsoft, for example, has set up a special department within its corporate HR function that focuses exclusively on keeping annual attrition low, and Ernst & Young has founded an Office for Retention.
Another US company conducted more than 1,000 exit interviews to identify the key drivers of retention in the organisation and then used the results to develop a formal retention strategy. Another company performed a retention analysis to determine what had to be done to hold on to high performers in the acquired organisations.
Although such approaches can be highly effective, they are not yet common. In a recent study of more than 600 U.S. companies, only a third reported that they have developed strategies for retaining employees.
According to McKinsey & Co., only 40 per cent of HR executives in major corporations track the departure of high performers or document their reasons for leaving.
Why are so few companies taking action to manage retention better? One reason may be the pervasive belief that high turnover is inevitable today, given the tight labour market and the "new employment contract," (ranging from one year to two years) which tacitly endorses more frequent job changes. Some managers believe that, just as high rates of turnover seem almost endemic to certain industries (like health care) or certain professions (like sales), relatively little can be done to improve retention in a business environment characterised by rapid growth and rock-bottom unemployment.
Another reason why companies often fail to address the retention challenge is that they lack effective strategies for managing turnover or, when they do apply specific retention techniques (such as stock options), achieve only limited results because their approach is incomplete or misdirected. Perhaps the best way to manage turnover and retain high performers is to implement a well-planned and coordinated retention strategy, which sometimes requires fundamental changes in how a company selects, develops, and rewards its employees.
An effective retention strategy begins at the earliest stages of the recruitment and election process. Identifying and attracting good candidates for hire helps companies to select the "right" people-those who not only possess the skills that are needed but also demonstrate the attitudes, personality traits, and behaviors that ensure organisational "fit" and promote commitment.
Introduce recruitment practices that focus on cultural fit. The best way to gain an accurate picture of what a candidate needs to succeed at a job in a particular culture is to conduct a strategic job analysis. This involves gathering data to establish the skills and competencies required for the job, analysing the cultural context in which the job will be performed, and spending time with employees who excelled at the job in the past or with high performers who hold similar jobs.
Dr. John Sullivan, head of the Human Resource Management Program at San Francisco State University, has written extensively on this subject. He claims that most companies need to reconstruct their orientation programmes so that they make more favourable first impressions and "close the sale" on new hires. Some of his suggestions:
# Involve the families of new employees in orientation programmes.
# Ask senior managers to participate in orientations to show new recruits that they are important to the organisation.
# Assign a departmental mentor to assist new recruits during their first month.
# Give line managers control of the orientation process, to integrate new employees into their work "family" as quickly as possible.
I hope this is of help,If you need sme more information do let me know.
11th September 2006 From India, Delhi
11th September 2006 From India, Madras
The Reward & Recognition Program that i am aware of are :
*Best Performer of the Month / Year : Based on their Performances
* Early Promotions & Early Confirmations to high performer
*'Thanks you cards' or ' I Appreciate You ' cards are given to the employees
*There is an Appreciation Program in few companies where in any employee can appreciate any other employee for reasons like contribution to project /society, help / support given to them
* Lunch / Tea with the Senior Management
*Mention of the contribution of the employee in Notice Boards , Company Magazines , broadcast mails to all
* Appreciation mails/ certificates
These are really motivating factors for the employees provided they are instant . Reward delayed is hardly effective .
11th September 2006 From India, Mumbai
MOTIVATION Dave Balm (www.drclue.com )
There’s an old story that goes like this:
"An elderly man has endured the insults of a crowd of ten-year-olds each day as they passed his house on their way home from school. One afternoon, after listening to another round of jeers about how stupid and ugly and bald he was, the man came up with a plan.
He met the children on his lawn the following Monday and announced that anyone who came back the next day and yelled rude comments about him would receive a dollar.
Amazed and excited, they showed up even earlier on Tuesday, hollering epithets for all they were worth. True to his word, the old man ambled out and paid everyone.
‘Do the same tomorrow,’ he told them, ‘and you'll get twenty-five cents for your trouble.’ The kids thought that was still pretty good and turned out again on Wednesday to taunt him.
At the first catcall, he walked over with a roll of quarters and again paid off his critic. ‘From now on,’ he announced, ‘I can give you only a penny for doing this.’
The kids looked at each other in disbelief. ‘A penny?’ they repeated scornfully. ‘Forget it!’ And they never came back again."
How do we motivate people? How do we de-motivate people?
In the story above, the sly old man successfully turned the kids away from their favorite after-school activity - senior citizen baiting - by first incentivizing the process, and then gradually diminishing the rewards.
What had, for the kids, originally been a fun and intrinsically motivating endeavor became something they were now doing for extrinsic, monetary gain. When the cash stopped, so did they. The question that begs to be answered here is, “What actually neutralized the children’s motivation – the incremental reduction of the prize, or the fact that a prize (any prize) had been introduced at all?”
Alfie Kohn explores this question and more in his fascinating work, Punished by Rewards .Kohn’s conclusions are always well-researched, always controversial, and always very much worth examining.
In the beginning (of our economic era), writes Kohn, there was the word, and that word was “behaviorism.” As advocated by psychologist B.F. Skinner, behaviorism preached the message that “the best way to get someone to do something was to provide a reward when they do it the way you want them to.”
Or, as Kohn summarizes it, “Do this and you’ll get that.” Behaviorism has so permeated American culture that we no longer question its validity. It is simply a given that “Do this and you’ll get that” is the logical way to raise children, teach students, and manage employees. Whether it’s a teacher awarding stickers, stars and certificates to her students, or a manager offering incentive trips to the department’s top employees, what they all have in common is a belief that external rewards lead to increased motivation. But are rewards right, just and respectful? And more significantly, do rewards, prizes, and incentives actually work?
To answer the first question, Kohn asserts that rewards are, by their very nature, unjust and dehumanizing. Those who wield rewards assume that people are like pets - easily and necessarily manipulated by the promise of treats. They take it as fact that people are inherently passive and unmotivated and can only be roused into action by the dangling of goodies.
Rewards are necessary, according to this argument, because people are lazy; if incentives also tend to be calculating and controlling, then so be it. In Kohn's words: “There is no getting around the fact that the basic purpose of merit pay is manipulative”.
The boss is seen as a father figure whom you must please in order to receive rewards. The person at the reins, controlling the incentives, maintains a strong power position over all those below him.
As to the second question, Kohn outlines five reasons why rewards fail, as follows:
1) Rewards Punish – When a parent says, “If you don’t behave, I’ll take away tonight’s treat,” he is both offering a reward and threatening a punishment. Although rewards and punishments may seem like two separate and opposite things, they are, in fact, simply two different sides of the same coin. Implied in every “do this and you’ll get that” proposition is the fact that just as rewards can be given, so can they be taken away. Raises and bonuses can be rescinded as well – so you’d better do as the boss says.
2) Rewards Rupture Relationships – Especially in business, rewards are often associated with competition. Who will be the next Employee-of-the-Month? Who will receive the cash prize for being top-performer? Although motivating in the short-term, rewards like this tend to create a feeling of artificial scarcity. As there are just so many prizes to go around, you may come to see your co-workers as obstacles in the way of your success. Says Kohn, “A good working relationship is characterized by trust, open communication, and the willingness to ask for assistance” .
Reward-based recognition systems, with their emphasis on scarce and limited prizes, disrupt such positive working relationships and interfere with the process of collaboration-building and cooperation. In short, an employee with her sights set on becoming top performer is unlikely to ask for help from others or share resources.
3) Rewards Ignore Reasons – Ask yourself this question: Which is easier – taking the time to find out why a child is acting up, or sending the child to his room? Similarly, which is more expedient – probing for the true sources of low worker motivation, or concocting a newer and more enticing incentive program?
Searching for underlying reasons and causes, and bringing about meaningful, long-term change is difficult and time-consuming. Reward-giving is much faster – a quick fix that “masks problems and ignores reasons” . The underlying problems, however, continue apace.
4) Rewards Discourage Risk-taking – Once a goody is dangled, an odd thing happens. Focused now on achieving the prize as quickly as possible, we tend to do exactly what is necessary to attain the reward – and no more. Work, at its best, should be “an open-ended encounter with ideas”.
Reward-seeking, by contrast, is more like a race for the ring, with risks something to be minimized whenever possible. Writes Kohn, “our objective is not really to succeed at a task at all (in the sense of doing well); it is to succeed at obtaining a reward”. Devoting time and energy to quality work will just slow you down, or so says the argument.
5) Rewards Affect Intrinsic Motivation – If “extrinsic” motivation can be said to be energy offered from the outside in the form of rewards, prizes, praise, and incentives, what then is “intrinsic motivation?” Kohn sees it as a driving interest in performing a task simply for the sake of the challenge involved.
In other words, if we find our jobs interesting, challenging, and meaningful, regardless of the payment involved, it’s likely that there’s intrinsic motivation at work. Kohn believes that internal motivation is far stronger, and more long-lasting, than the external variety, which he deems “artificial.” Intrinsic motivation, however, tends to be undermined by the imposition of extrinsic incentives. Rewards, argues Kohn, actually decrease our interest in the task at hand, for the following two reasons:
a) The Bribe Factor – The recipient of a reward will inevitably ask himself, "Why am I being bribed to do this task? It must be something not worth doing for its own sake." Notes Kohn, "Anything presented...as a means toward some end... comes to be seen as less desirable".
b) The Control Factor – Human beings instinctively rebel when they feel they are being controlled. Kohn explains: "Rewards are usually experienced as being controlling, and we tend to recoil from situations where our autonomy has been diminished".
So what is the alternative? Kohn believes that we cannot motivate people extrinsically, for all the reasons outlined above.
Nor can we somehow provide people with intrinsic motivation, which needs to be self-generated. We can, however, set up the conditions for intrinsic motivation to develop.
We start by abolishing incentives – which isn’t to say that people should not be paid a fair wage in alignment with the success of the organization. Because they should. Once the pay rate has been established, though, Kohn advocates putting money and rewards out of people’s minds and allowing them to concentrate on the tasks at hand.
Here are his three "Cs" for creating the conditions for authentic motivation:
1) Collaboration: Kohn observes: "People are able to do a better job in well-functioning groups than they can on their own. They are also likely to be more excited about their work".
If you want to inspire intrinsic motivation, provide employees ample opportunities for collaboration. Offer them the chance to work in teams. Encourage the exchange of ideas, resources and talent. And make sure work groups are supported by management.
2) Content: In a survey of industrial workers from 1946-1986, people were asked what they looked for in a job. "Good wages" was fifth out of ten possible factors. In a more recent survey, interesting work was number one.
One of the best ways you can inspire intrinsic motivation is by providing employees with stimulating, meaningful tasks – jobs that are relevant and seem to "make a difference." Offer workers considerable variation in tasks; allow them the opportunity to learn new skills; and let them acquire and demonstrate competence.
3) Choice: Kohn writes: "We are most likely to become enthusiastic about what we are doing...when we are free to make decisions about the way we carry out a task". Choice is crucial to the development of intrinsic motivation. So give employees a degree of latitude in how they do their work.
Don’t lean over their shoulders, commanding and controlling them. Empower people with real choices. And allow them to participate in making substantive decisions regarding the organization.
In a sense, the children at the beginning of the "Old Man Story" possessed all the ingredients of intrinsic motivation: a community of friends, a pleasurable (if negative) activity, and lots of choice in how they could do it. The Old Man cleverly interrupted all that with the introduction of rewards, de-motivating the kids (to his benefit).
"Motivating" by rewards is easy; restructuring our workplaces to inspire intrinsic motivation is a bit more difficult. Moving away from the “reward-giving-habit,” at home and at work, will take some thought and effort, but as Kohn skillfully demonstrates, it’s certainly worth considering.
Couldn't have said it better.
12th September 2006 From United States,
My company has stated a Reward Scheme this year. The performers were decided by the top management. Out of the 300 employees only around 90 have been selected. No body knows what was the basis of selection. Most of the Sr.executives i.e. departmental heads have been rewarded and in some cases 2-3 of the people in their team. The HR is in the dark regarding the procedure. This was cash reward and quite a big amount.25,000 to 1 L. Most of the employees are demotivated because of this. Now it has become very difficult to bring back their morale.
Is this natural. How should it have been ? How do I manage now ?
31st July 2007 From India, Mumbai
The problem is not with the employees but with top management.
Unless and until top management publishes the criteria for the Recognition/ Reward program (the first being that Senior Management will not be eligible to enter, select, or judge the nominees, but merely present the awards, at a monthly quarterly semi-annual or annual meeting; the second is that a secret ballot will be used to nominated and select candidates for recognition by all employees below the Senior Management level; third, HR will monitor and control the nomination and selection process), as well as the prizes to be awarded, you will have a difficult time improving employee morale.
Employees are not stupid. They see the program for what it is - an additional benefit for top management, their friends within the organization, and those who curry favor. The result may be an employee revolt - "working to rule", sabotage, waste, inefficiency, and the departure of promising employees who have been disillusioned by top management's actions.
The most serious consequence of such self-indulgence is the demise of the organization and the loss of income affecting all stakeholders.
2nd August 2007 From United States,