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Increasing
Employee Retention or Reducing Attrition?
By Barry Sweeny, © 2008
INDEX:
It may be that these two topics seem to you to be
the same thing. They are the "flip side" of each other
alright. But when it comes to demonstrating the impact of mentoring
and gaining support for your program, there is a critical difference.
One works with decision makers, such as CEOs, Board members, and
state legislators, and the other does not.
Retention
Solutions
The most frequent methods for increasing employee
retention have been to provide orientation and some level of mentoring
support and guidance, at least for novices if not all junior employees.
This author’s reviews of such programs find that they DO increase
retention to some extent, perhaps 15-20%. However, this “bump”
is not as significant as is often desired, nor as high as a more
comprehensive mentoring program can provide. A comprehensive mentoring
approach can attain retention rates as high as 96% over five years.
(Texas A & M at Corpus Christi, etc.) In fact, it could be
argued that one would not even want a higher retention rate, for
surely, not everyone who tries a specific career will be effective
in that career.
What a comprehensive mentoring program should provide will be
discussed later in this article. Our purpose at this point is
to affirm the value of an effective program for what it can mean
to employees and the organization. Clearly, even when an organization
can not offer the top salary, it can still effectively compete
for and keep quality employees by treating them professionally
and by expecting and supporting effective employee performance.
The more an organization can demonstrate to candidates and new
employees that it can help them achieve their original career
goals, the more effectively that organization can be in recruiting
and retaining those employees. However, such a statement is easier
said then done. Never-the-less, there is now extensive documentation
of the power of mentoring programs to increase employee success
and, thereby, to improve the ability of an organization to attract
and retain the best new employees. Simply stated, mentoring program
success breeds staff success, which breeds organizational success
in attracting and retaining successful employees, which increases
the quality of overall performance.
Funding
Employee Retention Programs
The most typical way to provide a new employee
support program has been a “common sense” approach, which is founded
on two assumptions:
- Since we all were once beginners, we all know
what is needed to better support our recent new hires.
- Every one accepts the value of increased support
for new, and especially novice employees.
Each of these assumptions contain some element
of truth of course. But experience has clearly demonstrated that
each contains unexamined fatal flaws. Regarding providing a program
based on our own initial year experience ignores the dramatic
changes in our profession which have occurred since that time
and the fact that mentors, our very best employees, do not feel
they have all the answers as themselves. This flaw has led to
the wide spread discovery that “Not every good employee makes
a good mentor”, and to mentoring programs which have “eased the
stress for new employees, or support junior employee development,
and helped a bit with their retention, but not helped us to improve
the quality of staff and organization performance or increased
the desired results.
Finding funding for “common sense” mentoring and mentoring incentives
has been a challenge too. While mentoring programs seem so logical
to employees, sadly, such programs are often perceived as less
than essential by the people who are decision makers, state or
provincial policy, and legislative levels. This has led to inadequately
supported and abbreviated programs which do not have the capacity
to provide the desired results, or to stronger programs while
grant funding endures, but which cannot be sustained when the
grants are unavailable. Clearly, the case for common sense approaches
to new and junior employee support are not as compelling nor as
valued as we need.
A more recent approach has been to focus efforts to generate
funding for mentoring programs on increasing employee retention.
This can be viewed as an attempt to demonstrate one of the major
the benefits of effective mentoring, which is increased numbers
of effective employees. Many studies in every kind of demographic,
field and geographic setting have shown the ability of effective
mentoring programs to increase retention. Two examples of the
impact of mentoring on employee retention in education follow.
This is crucial information for NON educational organizations
since education is one of the more challenging fields in which
to improve retention:
- Texas A & M University, Corpus Christi,
whose program has delivered a 96% retention rate after five
years.
- The New Teacher Center at the University of
California, Santa Clara, which is directed by Ellen Moire and
has reported about 95% retention after 3 years.
As powerful a demonstration of “success” as these
programs are, many decision makers still question the value of
mentoring and even increased retention. This may be because the
intended benefits of retention, improved employee performance
and results, are less concrete, although no one doubts they occur
to some extent. The bigger challenge has been that it’s harder
to demonstrate these benefits have occurred as a result of effective
mentoring.
Reducing
Attrition
Clearly, we need a different strategy if we are to create and adequately
sustain the mentoring programs we know we need. To do so, we have
begun to look for a clearer connection between our programs and
the “bottom line”. The goal has been to collect and present local
data which clearly show a monetary value for better support of developing
employees. This is why the most recent strategy for gaining mentoring
support has been to demonstrate the true cost of employee attrition,
which is the negative “flip side” of the more positive retention
factor. In other words, rather than trying to show the less tangible
benefits of increased retention, we must show the cost-effectiveness
of decreased attrition.
The Challenge of Employee Attrition- How Bad
Is It?
National projections suggest that, during the decade of
2000-2010 about 1/2 of all employees in many major industries and
settings nationally will need to be replaced. This is due to the
maturity level of the "baby boomer" generation. While
these national level data are alarming, most decision makers would
rather know their own organization's attrition rate AND the actual
cost of that attrition to the organization and its stake holders.
Clearly, locally specific staff and cost data are better for motivating
local action.
All of this means that, for every organization, the strategic starting
point to increased new employee support is to be able to clearly
show two factors:
1. The extent of your organization's need to recruit and employ
new staff during the next five to ten years.
2. The actual total and per employee costs of employee attrition
in your own organization.
Organizations need to use two ways to establish the first set of
data on employment needs:
- End-of career attrition, largely a result of
retirement
- Early career attrition
Reducing End-of Career Attrition
Until recently, organizational efforts have most often been
to offer early retirement packages as incentives to cause attrition
of the most senior staff members. The primary motivation has been
to reduce the cost of these high salary employees by replacing them
with less expensive younger employees. Now that the problems are
the quality of performance and having enough good staff for our
business needs, the challenge has reversed to “how can we keep people
who might want to retire?”
The starting point for addressing these concerns is the development
of a profile of the age of current employees and extrapolating the
numbers and dates for their eligibility for retirement. This is
an important set of information to know, since you want to target
them with retention efforts, or at least, you must be able to replace
them.
Improving the retention numbers at the end of the career requires
a different set of strategies than does increasing retention early
in the career. Efforts should primarily focus on increased employee
earnings that will increase a pension later, affirmation of the
value of elder staff contributions, and on providing new, invigorating
leadership responsibilities. Among other possibilities, appointment
as a mentor, serving in mentoring roles, and receiving a mentoring
stipend fit these needs very well.
Reducing Early Career Attrition
While you need to know and address the number of staff who
will retire, you also need to know how many employees are leaving
before retirement age. This is a more critical factor to quantify
as it is one over which your organization can assert considerable
influence. Specifically, the organization needs to determine the
total rate of employee attrition less the number retiring. The
goals are to define and target a specific group of people and
to do so with a different set of strategies than the end-of-career
people need. Since attrition is the “flip side” of retention,
the retention strategies we have discussed are still relevant
to address attrition. What is different here is the need to know
the cost of attrition. These data can be quite powerful, for they
are annually repeating costs which are assumed to be necessary.
These costs are so accepted as to have become almost invisible
expenses.
Your strategy should have three parts:
- Find out how bad early career staff attrition
really is
- Determine the total organization and per employee
cost of attrition
- Present in a compelling way, a comparison of
the cost of attrition and the cost of mentoring support for
development of employees.
If done carefully, you should be able to show
that the organization is spending MORE on attrition than the
cost of mentoring.
In other words, it costs more to do it wrong than
it does to do it right!
This argument is all the more compelling because
your organization does not need new money to do an effective job
of supporting and keeping new staff. Effective mentoring will
reduce the amount of money the organization is already spending
and losing each year to attrition! Effective mentoring more
than pays for itself every year. Further, while that cost
savings alone is enough a reason to do a quality mentoring program,
there are many other reasons as well, like the improving employee
performance and learning, saving supervisory time, and increasing
continuous improvement momentum, significant non financial benefits
in their own right.
Factors
to Consider in the Cost of Attrition
Here are some things to consider that demonstrate
clear financial costs. You basic need is to know the cost to the
organization when an employee leaves or is not rehired?
What you want to identify are your organization's costs for:
- New employee recruitment, especially for recruiting
the kind of diverse staff a great organization wants?
- Management time for trips to job fairs &
colleges, screening applications time, interviewing, meetings
to make decisions?
- Newspaper, journal, Internet and other ads
- Technology specialist time for placing recruitment
and job info on the organization web site
- Brochure and flyer printing, folding, addressing,
and mailing
- Personnel staff time processing applications,
answering phones, dealing with certifications, and other inquiries,
etc.
- Cost of background checks
- New employee initial orientation
- New employee training during the first year
or two? (both that just for new employees and all other organization
training)
- Reduced results during the year or two that
a new employee is learning their new job?
- Reduced results when an employee leaves with
what they have learned from trial and error, and a different
new employee is hired without that hard won experience and starts
over at the beginning again.
- Loss of work flow continuity when employees
leave or are not rehired because they are not as successful
as required?
- Management time spent orienting, evaluating,
coaching, developing, and supporting new employees who are not
retained?
Collect these data and figure it out as a cost for
each individual employee. Then compare that to the cost of mentoring
per employee. In many organizations, you will be thousands of dollars
ahead by doing the right thing.
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