Talent Relationship Management
By Gregory P. Smith

The antidote to high turnover is talent relationship management (TRM) - the process of attracting, selecting, caring, training, developing, and keeping a workforce to perform their jobs in an organization.

Talent relationship management has as its ultimate goal creating a work environment that allows good employees to stay as long as possible...allows mismatched employees to leave sooner or find more compatible jobs elsewhere...and allows employees to become more productive.

Although some employees may be more vulnerable than others-a good IT engineer may get three to four job offers each week-every employee contributes to the bottom line. Even a customer service person in a laundromat or a server in a restaurant is a key employee, especially if she makes each customer's experience as pleasant and productive as possible. Her departure would definitely impact her customers and the success of the business. So, while you might want to invest many more dollars in strategies for high-priced, high-profile, hard-to-replace executives, it is important to spend time and money on everyone. In a tight job market, recruiters and other employers feel no shame about shopping for good people inside your organization. If someone offers a service that another company wants, he or she is vulnerable.

No matter what kind of job your people work in, someone is looking to steal them away. Don't blindly believe that your employees are happy and content. Just because you are happy and content in your job doesn't mean everyone who works for you is. Accept the fact that 30 to 50 percent of your workforce is considering leaving your job for another. They maybe perfectly happy with their job and still think about leaving. 30 percent of the respondents to my survey answered "yes" to the question, "Are you presently considering leaving your job for another?" Another six percent answered "maybe."

A Great Return on Investment

The first and foremost reason to practice TRM is cost. Even a small effort can save plenty of money. Studies show that at minimum, it costs $4,000-$7,000 to replace an hourly low-wage employee and up to $40,000 to replace a mid-level, salaried employee. One Silicon Valley company I know estimates that the cost of replacing the average employee is $125,000. The Saratoga Institute and Hewitt Associates estimate that the productivity cost of replacing employees can cost between 1 to 2.5 times of the salary of the job opening. The annual impact of multiple departures can be staggering.

The most effective strategy is prevention. Recruiting and replacing your workforce is much more expensive. Spending most of your time on recruiting is like having your house burn down instead of purchasing a smoke detector-or having your lung removed instead of quitting smoking. Prevention is always less expensive, and wiser, especially when it comes to replacing top performers.

Consider the economic cost of replacing these key individuals:

• Average engineer in Silicon Valley-$200K
• Engineer at Cisco-$250K
• Top microchip product development team leader-$29 million
• Airline Pilot who makes a mistake-??

Why Doesn't Everyone Use Talent Relationship Management?

In spite of the staggering cost of turnover, Development Dimensions International says that 54 percent of businesses do not have a formal retention program. On my survey, 61 percent of the respondents gave their organizations a failing grade on the question, "How would you rate the efforts of your company to retain good people?"

Why don't these organizations have retention programs?
• Blind acceptance that certain jobs have high turnover
• Failure to accept responsibility for retaining good people
• Responsibility for retention seen as HR's alone - not management's
• Belief that a counteroffer can prevent losing a good employee
• Unaware how much turnover really costs the bottom line
• Feel it takes too much time
• No management accountability system.

Reasons to have a TRM program

• Improve company reputation
• Reduce turnover of critical employees
• Keep competitors from stealing your workers
• Positive word-of-mouth from existing employees
• Increase productivity
• Reduce costs and time spent replacing workers
• Simplify time and effort for managers
• Knowledge stays with the company
• Good companies attracts good people
• Remove the stigma of returning to your organization if other job doesn't work out

Talent Relationship Management Process

To find out whether you need a TRM process, write "yes" or "no" on a separate sheet of paper for each statement.

1. I measure the jobs in my organization that have the highest turnover.
2. I conduct post-exit interviews 30 to 90 days after the employee leaves the organization to find out the real reason they left.
3. I hold my managers accountable for turnover in their department.
4. I reward my managers for high retention in their department.
5. A part of every meeting is dedicated to staff retention and morale.
6. We have a good orientation program for new employees.
7. We go out of our way to communicate with our employees.

If you get more than two "no's" you need to get serious about TRM.

Retention Means Productivity

Costs alone won't persuade you to invest in a retention strategy. Consider the issue of productivity.
Productivity and retention go hand in hand. Improve one, and you improve the other. Why?

Many traditional, hierarchical-based organizations restrict the free exchange of ideas and discourage individual initiative and motivation. After all, ideas and initiative create change-and many systems simply don't want to. They protect themselves with complex bureaucracy and unwieldy procedures that become obstacles to productivity. Workers become slaves of the system. They end up feeling blocked, unchallenged, and little more than robots waiting for the next command.

Constant reorganizations, a stultifying routine, co-workers with bad attitudes, micromanagement, suspicious management, no authority to fix errors or implement ideas, people who play the "who can stay latest" game-all these are impediments to productivity as well as an incentive to leave. No one really wants to work-or can-in this kind of environment!

Retention means nothing if workers merely take up space. In a survey conducted by the Public Agenda Foundation in New York, 50 percent of the respondents said they fail to put effort into their job over and beyond what is required. Three out of four people said they had the capability of becoming more effective than they were.

In a high-retention work environment, employees can become more effective. If you pay people well and provide good leadership - create a sense of belonging and purpose and eliminate the frustration of constant reorganization that drives people out the door - then it's possible to transform average or even poor performers into highly productive people.

In fact, while top performers are important, I think it's a bad idea to focus exclusively on them. "A" students may be top performers in school, but that doesn't necessarily mean they are going to be successful, hold a job, and make good decisions.

If you invest in programs that improve the work environment and raise the performance bar, you can help everyone become a top performer. And performance is a prerequisite for building a productive, competitive organization. Together, performance and productivity are the gold standard of today's business climate. If your company is not productive, it will be overwhelmed and perhaps eliminated by a younger, more athletic company whose work environment does promote productivity and performance for all.

Leadership Makes the Difference

Leadership is the most critical factor in determining whether a company invests in creating a high-retention culture.

I called my company "Chart Your Course" because I believe businesses, like sailing ships, need a captain to keep them on course. It's up to the captain to keep his or her eye on the destination and direct the crew to carefully trim the sails for maximum performance, speed, and direction.
Leaders are more than just figureheads. In carrying out their responsibility of setting the direction, speed and performance of the individuals within a company, they are ever present: touching, motivating, talking, and checking, barrier removing, training, preparing, breathing, active, moving about, and creating change. Responsibility for setting direction can't be delegated or left to a computer. Businesses that have replaced their leaders with technicians, their brains with a hard drive, are in for a rude surprise.

Leadership is responsible for everything the organization does or fails to do. It's up to leaders to scan the horizon for challenges, obstacles, and catalysts for change. They also need to look below the surface for problems within the ship. Leadership needs to listen to the crew below the deck, for they usually have the best ideas and solutions.

It's also up to leaders to keep an organization from becoming rigid, inflexible, and difficult to steer towards change. Course changes happen quickly. Leaders need to encourage the kind of communication that lets information flow freely to everyone on all decks, so that everyone knows what to do if a sudden course correction is required.

My nautical theme may sound old fashioned, but it's very pertinent today. A strong, effective leader is a prerequisite for a successful retention program. In fact, it can't be created without one. When the captain is invested in TRM, the crew will follow suit.

The Eight Elements of Talent Relationship Management

There are many ways to create a TRM culture. In my years as a consultant, I have identified eight basic elements that are essential. While each one, like the sails of a ship, can harness the power of the wind, all eight are needed to transform an organization. A sail that is not properly set or is missing hinders the ship and causes frustration among the crewmembers.

1. A Clear Sense of Direction and Purpose
People want to be part of an organization that stands for something and gives them personal fulfillment and meaning. When an organization means something, people are willing to give more. That's why people work for non-profit organizations, or spend their off-work hours leading scout troops and building houses for Habitat for Humanity.
Employers can create meaning and purpose, align employees with its mission, and nurture a more dedicated, productive, and profitable crew.

2. Caring Management
Interpersonal skills are an essential element of the TRM culture. People want to feel that management cares and is concerned for them as individuals, yet poor "soft skills" are one of the biggest factors that drive people away. Leaders must create an environment that values relationships and people.

3. Flexible Benefits and Schedules Adapted to the Needs of the Individual
In today's workplace, flexibility rules. One-size-fits-all approaches to benefits have long since lost their effectiveness. Workers will migrate to companies whose benefit packages and schedules help them meet the demands of their lives, whether they are single parents, adults who care for aging parents, older workers, younger workers, part-time workers, and telecommuters.

4. Open Communication
In our technological age, people have a large appetite for information, and they want it instantly. TRM workplaces place high priority on delivering the right information to the right people at the right time using the right methodology. Companies that leave employees in the dark risk damaging morale and motivation-not to mention compromising their ability to make a quick course change in the marketplace.

5. A Charged Work Environment
People want to enjoy their work. They shun boring, bureaucratic, lifeless work environments. That's why high-retention workplaces don't bother with the traditional ways of doing things. They find new ways to make work mentally engaging and physically energizing. They also ask for, listen to, and implement the ideas and suggestions of those who work for them.

6. Performance Management
It is becoming increasing more difficult finding competent, motivated workers who have good attitudes and work ethics. Because of this knowing how to manage performance is much more important in creating a TRM workplace. Performance management includes a series of tools, techniques and processes that can help align an individual and his or her behavior with the goals of the business enterprise.

7. Reward and Recognition
All humans need to feel appreciated. Reward and recognition programs help meet that need. A positive workplace that rewards and recognizes people builds higher productivity and loyalty and can create consequences for desired behavior that leads to organizational success.

8. Training and Development
Today's workers want opportunity. They want to develop their skills and potential and enhance their ability to contribute and succeed. Training and development gives people greater control and ownership over their jobs, making them more capable of taking care of customers and creating better management-employee relationships.

SAS Institute: A Calm Ship in a Sea of Turbulence

An example of an organization that provides a holistic work environment is SAS Institute Inc., located in North Carolina's Research Triangle Park.

SAS resembles a college campus more than a software development company. Everything from the baby grand piano in the company cafeteria to the giant outdoor chess board gives clear indication that this is a world apart. Fortune magazine lists it as one of the "Top 100 Best Places to Work," and employees agree. Turnover hovers around 3.7 percent and has never exceeded 5 percent in its twenty years of existence. The national average for most industries is 15-20%. Many employees have loyalty stronger than any glue seen. One graphic designer routinely turns down job offers from Silicon Valley for as much as 40 percent more money.

Many people say working at SAS is like working with your family. Their 5,400 employees find a nurturing environment and in some cases is the closest thing to a real family than many people have experienced. The benefits and perks go beyond what most businesses are willing to do for their employees including:

• Unlimited sick leave: There is no limit to how much sick leave employees can use. Bob Goodnight, SAS President, PhD and billionaire believes if you treat adults like adults they will act as adults. Whether you are out sick for six days or six months it is not a problem.
• On Site Daycare: For $250 a month, employees can place their children in the day-care facility. Parents are encouraged to eat lunch and dinner with their children. The company cafeteria is equipped with highchairs.
• Free Family Healthcare: In lieu of health insurance SAS staffs a medical clinic 24 hours a day for employees and their family members. This saves the company $300,000 a year in health insurance costs.
• Equal Pay for Equal Work: Many businesses run off good employees because new hires are able to start making higher salaries than the "old" employees. Not at SAS. If SAS has to hire new employees and pay them more, all employees with the same skills levels receive the same pay raise. The average salary is $50,000 a year.
• 35-Hour Workweeks: All employees work five seven-hour workdays. Everything closes up at 5 p.m.
• Break Areas & Free Food: Each floor has its own break area stocked with complimentary refreshments, including all the M & M's employees can eat. SAS spends $45,000 annually on 22 tons of the little chocolate candies.

Loyalty can't be bought by benefits and perks, but SAS appears to have created a workplace where employees know they are cared for, trusted and treated like adults.
 

Gregory P. Smith's websites are www.ChartCourse.com and www.HighRetention.com.

Reprinted from Brass Ring