Businesses today generally understand the need to capture and retain their customers’ loyalty. Many have formal measurement programs in place to gather customer feedback and assess levels of loyalty on a regular basis. There are some organizations that include a customer loyalty metric in their corporate dashboard, treating it as a key performance indicator just as they would revenue or sales. There is little difficulty in seeing the connection between customer loyalty and business success.
Employees are a vital resource for nearly all organizations, especially organizations in the professional services and technology industries. Most organizations achieve and maintain their competitive position based primarily on the value of their human capital assets. For these organizations, the ability to innovate, adapt and deliver demonstrably differentiated value to their clients rests primarily on the quality of their employees, rather than on a tangible product.
Acquiring and maintaining human capital assets requires a significant investment in terms of sourcing, recruiting, compensation, benefits, career development and training over the span of time that the employee spends with the organization. There is considerable expense for replacing an employee, in both monetary and opportunity cost. The impact of employee turnover, whether voluntary or involuntary, has not just monetary, the effect is cumulative and affects cash flow, morale, institutional knowledge, client experience and perception, culture, and inhibits an organization’s ability to grow.
For many service-based businesses, the employee in the field is the organization, and any disruption in management, delivery or perceived stability materially affects the company’s ability to grow within its embedded base of customers as well as affects its ability to acquire new customers through positive references. Dissatisfied former employees contribute the erosion of the corporate brand, and may adversely affect the organization’s ability to recruit, further eroding its ability to sustain growth.
Organizations that are in the middle of the pack often find it difficult to attract and hold high quality employees. They may find that their employer brand is too weak and that they are perceived as not capable of providing prospective employees with the experience that competitors can provide, or they may be able to attract high-quality employees but find that turnover of their best assets inhibits their ability to move ahead. For these organizations, the challenges tend to center around employer branding, sourcing and recruiting and compensation.
Organizations that experience high growth are susceptible to culture-dilution, and may find that in order to meet the demands of a growing business they are forced to hire less than ideal assets, diluting the overall quality of services to the client. For these organizations, the challenges can be complex, involving not just sourcing and recruiting, but training and education, career development, branding, middle-management quality and benefits.
1. Employer Branding
Many organizations actively pursue potential employees through a “push” strategy, saturating job boards, recruiting events and professional organizations with postings. Their strategy is to publish their opportunities with the expectation that prospective employees will find them. The fact is that the best assets rarely look for their next career move in these areas. They best tend to be either actively recruited, or referred by a former colleague into an organization. Current employees tend to be a most effective sourcing modality, but are constrained by the size of their networks as well as the demands placed on them to accomplish their primary responsibilities. Building an employer brand creates a “pull” in the market for employees, just the same as it does for customers. Attracting high-value prospective employees to your company can be accomplished in much the same way; through a combination demographic specific advertising, positioning and sourcing-communications. By developing and communicating an employer brand that is attractive to prospective prospects, you can clients have reduce your reliance on employee referrals and outside recruiters, and greatly enhance and enlarge your source and candidate pools.
2. Sourcing and Recruiting
Identifying and targeting the best sources of qualified candidates that will provide the highest sustained value to the organization with the shortest lead time is an often overlooked area. It’s not just about recruiting; it’s about increasing the number and diversity of lead sources, which has the added value of increasing the diversity within the cultural framework of the organization, adding diversity of thought, perspective and value.
Implementing a culture-based recruiting process ensures that candidates are fully and properly vetted and screened for competence, quality, cultural and behavioral fit, and ensures that both the candidate and the organization are positioned for long term success. Involvement from a diverse set of internal constituencies creates an environment of inclusion, and marries the success of the new employee to the success of existing employees as well as the organization. Those involved in the recruiting and on-boarding process become invested in the new employee’s success, increasing the likelihood of successful transition from candidate to long-term, value-adding asset.
3. Performance Incentives, Compensation and Benefits
Creating a performance incentive and compensation scheme that matches employee success to corporate success is integral to the accomplishment of the organization’s strategic and tactical goals. Aligning employee focus with corporate goals is the cornerstone of an effective PIC program. Successful organizations provide incentives based on what motivates the individual employee, matching those incentives to employee interest. This has the additional benefit of enhancing the leadership and management skills of mid-level managers and above, requiring managers to understand and what motivates their teams.
Compensation plans should tailored to reflect employee contribution and take into consideration the employee’s level and ability to contribute. Incentives are based on individual performance as well as contribution to the overall success of the organization and the community. Every employee should go into the performance period with a concrete understanding of expectations and the ability to self-manage to goals, reducing the level of effort required of managers at review time.
Creating a meaningful benefits program requires employers to have an understanding their employees stage-of-life needs. We’ve found that establishing a menu of benefits within a defined cost structure has a positive impact on recruiting and retention. Innovative benefits programs provide meaningful assistance to employees, allowing them to focus their attention on their work, and increasing their productivity.
4. Career Progression
Career progression is an integral component of retention, succession planning and key personnel loss mitigation. The overall value of the organization is enhanced as its individual employees’ value increases. For service and technology-focused organizations, human capital quality is essential to organizational growth. Well communicated career paths provide incentives for the individual and provide constant quality improvement for the organization. Establishing a career progression program that enables employees to identify the experience, training, education and certifications required for promotion reduces subjectivity in the promotion process, and provides transparency and a perception of fairness, fostering loyalty. Employees and their managers should be capable of self-managing their career progression.
For many of my clients, dual career tracks ensure that thought leadership and subject matter expertise receive the recognition and compensation necessary to provide the organization with the innovation, credibility and expertise necessary to provide their clients with the highest quality services and technology without sacrificing the individual employee’s ability to achieve financial and peer recognition necessary for to retain institutional knowledge.
5. Training and Education
In order to achieve their organizational goals, companies must have the assets in place with the requisite skills to meet client and customer demand, comply with professional certification requirements, and meet expectations. Hiring to the top of the organization chart has many risks, especially in high growth organizations, where culture is the engine that drives growth. Without an effective training and education program, companies are forced to go outside the organization for specific skills, which can have a deleterious effect on morale, dilute culture, and create barriers to growth. Organic assets with institutional knowledge, who know the organization, its processes, clients, history and culture, are at risk for flight to competitors without a program in place to provide the requisite training and education that will enable them to take on new professional challenges.
New employee training ensures that compliance with standards, culture and internal processes are inculcated quickly and allow the new employee to efficiently make the transition to the organization with a minimum of disruption. Statistic show that voluntary turnover in the first six months of employment is largely based on a new employees frustration with their inability to navigate the complexities of a new environment.
As employees progress along their career path, level-specific training and education makes the transition to a new position more likely to be successful and creates a foundation for success. By making training and education a prerequisite to promotion to the next level, organizations increase the chances of success for the newly promoted employee and greatly reduce the learning curve.
How to Measure This Stuff
Once you have the program up and running, here are the metrics that you should track to determine how well your program is doing:
· Size of candidate source pool
· Candidate quality
· Reduction in Days Outstanding Open positions
· Short and long term retention, and a significant reduction in turnover
· Reduced recruiting costs
· Increased morale
· Increased customer satisfaction (via surveys)
· Overall reduction in per-employee benefit cost
· Reduced management overhead relative to performance reviews
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