Knowing How to Keep Your Best and Brightest

Workforce, April, 2001 by Kevin Dobbs

With turnover a constant in today's workplace, many companies are training managers in the art of retention and holding them accountable when employees leave.

James Daniels, a hot shot software developer for a small engineering firm in suburban Minneapolis, says he could leave is job today and have offers rolling in by week's end. "I've done it before," he says. "It's done all the time."

He's not just another young workplace egomaniac. The 27-year-old computer expert simply recognizes his opportunities. It's an enviable position to be in. But for HR departments, the high demand for skills such as his is a royal headache. On any list of disturbing workforce problems, today's shallow labor pool is certainly one of the most troubling. Even as the once-roaring economy descends from a pinnacle of prosperity--and some companies have been forced to dismiss large numbers of employees in headline-grabbing layoffs--the job market continues to be strong for the well educated and tech-savvy. Given this reality, skilled workers like Daniels are very much in demand, and enjoy plenty of opportunities to jump ship.

People are changing jobs in record numbers, a fact that is fueling the highest turnover rate in 20 years. The Bureau of Labor Statistics reports that the typical American worker holds nearly nine different jobs before age 32. Granted, that estimate was compiled last year, when the economy showed no signs of slowing. But don't be fooled, experts warn. No company, large or small, New Economy or faltering economy, is unaffected by an ongoing turnover epidemic. Consider this: 53 percent of U.S. workers surveyed at the beginning of this year suspected that at least a mild recession was imminent. Yet, 88 percent felt as secure in their jobs as they did a year ago. A study of 1,000 full-time workers commissioned by the online recruitment firm Headhunte.net found that 78 percent would take a new position if the right opportunity came along, and 48 percent of those who are employed are looking for new jobs.

For job hunters, Strong Investments economist Jay Mueller says, "the pillars of support remain in place, and the long-run outlook for the U.S. economy is still favorable."

That said, it's important to note that some degree of turnover is inevitable and can even be positive. It may open doors for promotions and the recruitment of new talent. Excessive staff losses, however, inevitably prove disruptive and costly. Employees are expensive to replace, and customer service and company performance are hard hit by unexpected staff changes. Much of this is due to the mounting importance of industry-specific knowledge that people acquire while with a company.

What's at the heart of all this? The answer is surprisingly simple.

While fair compensation and opportunities to advance are always important factors, most people decide to leave a company for another reason: bad bosses. In recent interviews with 20,000 workers who just left an employer, the Saratoga Institute in Santa Clara, California, found that poor supervisory behavior was the main reason people quit. A recent Gallup Organization study based on queries of some 2 million workers at 700 companies found the same results. It's not so much opportunities for raises or promotion through the ranks that keep employees happy. The length of an employee's stay is determined largely by his relationship with a manager.

"People do not leave companies. They leave bosses," says Beverly Kaye, president of training firm Career Systems International in Los Angeles and co-author of Love 'Em or Lose 'Em: Getting Good People to Stay (Berrett-Koehler 1999).

She and other workplace analysts say that companies in need of a retention injection must focus on making work interesting and building strong, flexible, attentive managers. They insist that such advice comes from legions of dissatisfied working Americans. Daniels, the software developer in Minneapolis, is just the kind of example they point to. "I've worked at six different companies in six years since college, and every time I left, the last straw had something to do with my boss being completely oblivious to the problems his people were having."

The Role of HR

HR's role in sorting through this maze, experts advise, is to get managers to take responsibility for retention. That, of course, is much easier said than done. A labor market low on skilled workers--at least when compared to demand for the technically astute--has managers so strapped for talent that they haven't the time to worry about recruiting and retention. Most would rather attack the retention front by increasing salaries or offering the latest perks, from signing bonuses to vacations and concierge services. Those are all fine recruiting tools, observers say, but when it comes to turnover, they are only stop-gap measures.

So how can companies retain workers and, by extension, increase productivity and boost the bottom line? Help people feel at home by fostering personal connections to the company, including customized responsibilities, long-term learning opportunities, and plenty of informal feedback.