Lawyers who found little opportunity to change jobs in 2009, may just have a change of luck in 2010. Dr John Sullivan compiles a list of retention strategies that firms can employ to hold onto their staff.
Even for long-term human resources managers, this might be the only comprehensive list of retention strategies you have ever seen. This is true because retention is not yet a distinct discipline, and because most retention managers and consultants laser-focus on their favoured approach.
In order to provide you with a big-picture view of the available strategies, I've used my extensive experience and research in retention to compile a comprehensive list. It provides a brief overview of each of the major retention strategies that corporate leaders can employ.
Classifying strategies based on their primary retention lever
Retention strategies are best classified based on the primary lever (or treatment) that the firm uses to motivate employees to stay.
Typical retention levers include pay, benefits, engagement drivers, promotions, and development actions. Individual levers can be combined into thousands of situation- specific solutions.
The following list of strategies has been separated
into two broad classifications: laissez-faire and all-employee.
Category I: Laissez-faire approaches
This group contains decentralised, do-nothing retention strategies. The primary success measures affected by this category are departmental turnover rates and average time-to-fill for positions vacated voluntarily.
1. Individual managers' own retention
- Goals of the strategy - the goal is to get the manager (who knows the employee best) to "own" the retention process and to select the best approach for each unique situation.
- Identifying turnover causes - it relies on employee self reporting and exit interviews.
- Benefits/weaknesses of the strategy - giving managers ownership of the retention process means that they will probably pay more attention to it.
Unfortunately, managers are not retention experts, so they will probably learn by trial and error. Managers will also frequently rely on their emotions rather than more effective data-based approaches.
2. React with a counteroffer or a retention bonus - this strategy involves waiting until employees announce that they're leaving and countering any outside offers that can reasonably be matched. Incidentally, if you don't also fix what is wrong with the job, it is unlikely that a counteroffer or a retention bonus will work long term.
3. Rely on effective recruiting - under this strategy, no formal action is taken to reduce turnover. Instead organisations focus on developing excellent employer branding, recruiting, and talent pool processes that provide talent on demand.
4. Do nothing - this strategy, by far the most common, starts with the assumption that turnover is normal, and involves taking no organised action.
Category II: All-employee strategies
This group contains the most commonly used formal strategies. Their popularity is largely driven by ease of implementation. It is assumed that the same causes of turnover are shared by all employees, and that all employees must be treated equally.
The primary success measures under this category are average turnover rate and time-to-fill for positions vacated voluntarily. Yet with rare exception, blanket treatments fail miserably.
Not everyone with a fever has the flu, and treating everyone as if they do will result in some ill people dying.
5. Improve employee benefits
- Goals of the strategy - this popular strategy attempts to tie employees to the company over the long term using "benefit handcuffs" because surveys show that better benefits can be both a powerful retention and recruiting lever.
- Treatments for countering turnover causes - the benefits that are offered vary with the firm but improved health coverage, more time off, educational benefits, better work/life balance, and better on-site amenities (i.e. food, exercise facilities) are common choices.
- Benefits/weaknesses of the strategy - improving employee benefits can have significant retention impacts on lower-paid employees and those with either medical conditions or large families. Benefits are generally not taxed as income, so employees get more "net" value from them than from salary increases of the same cost. Unfortunately, improving benefits for all employees can be very expensive.
6. Improve training and development
- Goals of the strategy - to improve retention rates by focusing on providing more learning and employee-development opportunities.
- Treatments for countering turnover causes - these vary with the firm but improved soft skills training, leadership development, job rotation opportunities, and technical skills training that prepare employees for promotion are often choices.
- Benefits/weaknesses of the strategy - improving employee training, learning, and development can have significant retention impacts on your firm's top performers because of their keen interest in continuous learning. Training and development, in addition to being a retention lever, also directly helps the firm by improving the capabilities of its employees.
On the negative side, training and development activities are expensive and they take time away from the job. Providing training and development to build skills but not following up with sufficient opportunities to use those new skills may actually contribute to increased turnover.
7. Increase compensation
- Goals of the strategy - this strategy assumes that the causes of turnover captured during exit interviews (compensation matters most) are valid, so it focuses on increasing compensation to prevent turnover.
- Treatments for countering turnover causes - these vary with the firm, but options generally include across-the-board salary increases, cost-of-living adjustments, increasing the compensation "percentile" target for the firm, adding performance bonuses, increasing 401(k) matching contributions, and offering stock options or stock.
- Benefits/weaknesses of the strategy - improving employee compensation can have significant retention impacts on those employees primarily driven by money. Stock options (because they must be held) may act as a "golden handcuff" to tie individuals to the firm for a significant period. Unfortunately, increasing compensation is extremely expensive and even more so if it's not tied to increases in performance. Giving every employee an equivalent increase in compensation may anger top performers and actually increase turnover among the best.
8. Improving employee engagement
- Goals of the strategy - the goal is to improve retention rates by focusing on the factors that increase employee engagement.
- Treatments for countering turnover causes - offerings depend on which areas within your engagement survey are scored low. Most efforts to improve engagement scores involve increasing communications, building trust and reinforcing values.
- Benefits/weaknesses of the strategy - engagement surveys are relatively easy to administer but they are not inexpensive, if you count the employee's time in filling them out. Unfortunately, there is little statistically credible corporate data directly connecting improving employee engagement scores and decreased rates of turnover. Most engagement processes are anonymous. So a firm cannot directly connect an individual's low score with the fact that they quit or even connect their stated reasons why they quit and their low-engagement areas.