The Current State of Employee Retention

How do we currently ensure retention? Let’s look at who owns retention in our organizations, where the challenges show up, and which strategies we have in place to address these challenges.

Remember the classic boardgame Clue? The object of the game is to solve Mr. Boddy’s murder. Answer who, where and with which weapon he was killed. Well, we’re going to play the game now to answer how we’re killing retention. We’re going to look at who owns the responsibility for driving employee engagement in an organization, where retention challenges arise and with which strategies we are aiming to retain employees.

The role of corporate culture is to employee engagement as vitamin water is to your health. I’m not saying it has no impact. But it’s close to zero.

There is such a mass delusion regarding the role of corporate culture, and most of us know this on some level. For a long time, we’ve put the burden of employee engagement firmly on corporate culture, expecting it to ensure employee engagement with an invisible hand. It’s easy to think that if a company can create the right culture, everything will fall into place. There is a glamorization that with the right messaging, the Internal Communication team, with emails, newsletters and mission statements, should be able to install a winning culture and create harmony. Like a great orchestra conductor.

Yet we all know corporate culture is not like a room scent that can just be defused. The reality is that while corporate culture is important, its impact on an employee’s experience is overestimated and can be in stark contrast with the corporate image. Most people have experienced this firsthand. Below are some examples of perceived corporate culture versus an individual’s lived experience.

• If you’ve changed departments within a company, you have likely witnessed that values lived in one part of the organization have little to do with those lived in another. For example, maybe you recall when Hewlett Packard introduced their “invent” campaign in 1999, as a way to return to its innovative roots? The goal was to rebrand externally as a forward-thinking company as well as reignite a passion for inventing within the organization. However, we can safely assume HP encouraged its R&D team to “invent” more than its accounting team.

• You may have felt firsthand a completely different vibe on one campus versus another. Just imagine the stark difference in values between the legitimate stockbroking business operated from the 18th and 19th floor of the Lipstick Building versus the large-scale fraud perpetrated by Bernie Madoff and a small group of employees on the 17th floor. It’s mindboggling.

Perhaps like me you’ve heard “the fish rots from the head,” meaning if a company is struggling, the problem is likely the top management. Funny enough, it’s not true in either case. Fish rot from the gut first. And while corporate leadership can absolutely set the tone for company culture, especially in terms of authentic values, ethics and compliance, real employee engagement happens on a personal level. Given that 1 out of 4 people don’t even know the name of their CEO, it’s understandable that an individual’s boss, the person they interact with regularly, has far more influence on their job satisfaction than any speech or action from top management.

The reality is that, when it comes to engagement, an organization is only as strong as its individual links. In fact, Gallup’s research shows that engagement can vary by up to 70% from manager to manager within the same organization. This point is so important; you will see that I will repeat it throughout the book.

Would you blame the waiter for your poorly cooked meal or the chef for rude service?

It makes no sense that organizations defer to HR to improve employee engagement and increase employee retention when HR (unlike the direct manager) has little impact on a given employee’s engagement level. How often have you worked in an organization and not even known the name of your HR person?

Even if your HR person has the best of intentions, there is little personal consequence for them if someone on your team leaves or stays. In fact, the bigger your organization the less impact any one departure will have on your HR team. Consider the following scenarios:

• What if your best salesperson leaves? It will likely hurt your bottom-line and your Head of Sales’ targets and bonus. What is the impact on HR? None.

• What if your most senior engineer leaves? It will likely affect your product roadmap and your Head of Engineering’s tar- gets and bonus. Impact on HR? None.

As a leader, you know handing over responsibility to someone to achieve a result without understanding capability and aligning incentives is a recipe for failure. Therefore, if you’re expecting your HR department to solve your high turnover problems, when they have neither the capability nor the incentive to deliver measurable results, you will be waiting a long, long time for results. Strangely, this is an open secret that so many leaders, especially at large corporates, don’t seem to know. I’m sure part of the issue is a principal-agent problem. As soon as the topic of employee engagement comes up, so often CEOs and CFOs immediately leave the conversation to their HR folks. They assume their HR person knows best, has complete understanding of best practice, including the latest and greatest methods and tools available, and is totally willing to spend time on the topic where they have no personal upside if engagement and retention increase, but all the downside risk of making a bad call.

As it stands, managers have the biggest influence on their team member’s engagement and are personally positioned to benefit most from the productivity of their team members. Therefore, for real impact, the responsibility for engagement and retention must be with the direct manager and not with HR departments.

In my early 20s, I worked at a tech company in a product management role, where I drove the development of the next-generation product while ensuring support for the existing install base. I found myself laterally managing a diverse group of professionals: software, hardware, manufacturing, and tech support engineers, to name a few. Most of them were significantly more experienced and senior than I was. “Laterally” managing essentially means that your team members don’t have to follow your directives, as you’re not their boss and have no authority over them. To get things done, you need a solid set of influencing skills and a healthy dose of patience.

Over the decades, I’ve learned from working in various positions and with clients of all sizes and stages, from startups to multinational corporations, that, whether you laterally manage, inherit an existing team, personally hire each team member, or select a co-founder who you’ve known for years, challenges are bound to emerge, especially when the fit is not right. No matter how much authority you have, or think you have. The reality is that no one has full authority, only the power to influence. And there is no one-size-fits-all way to influence.

When we zoom out, the struggle for you as a team head comes down to the wonderfully positive and intensely negative impact team members can have on you, your goals, reputation, and results. Unlike in school when you alone primarily determine your grades. If you’ve worked with people on Earth, you’ve likely experienced at least one of the following disastrous working relationships:

Lack of Solid Capability: an individual simply lacks the skills necessary to deliver what’s required. In our “fake it till you make it” culture, it can be tough to gauge an individual’s true competence up front when so many present themselves as subject-matter experts. Unfortunately, an inability to perform the job is a definite dealbreaker.

Lack of Long-term Engagement: when an individual is not satisfied in their current role. You might sense their dissatisfaction, or they might directly express their desire for higher pay, greater responsibility or a different role. As a leader, you’re either unaware of what you can do to ensure the person stays, or you’re not in a position to accommodate the individual’s requests. This feels like a no-win situation because you want and need engagement but simply don’t know what to do or don’t have the means to do what it takes to get it.

Lack of Smooth Collaboration: individuals who just prove “difficult” for you and your team to collaborate with. It can be endlessly frustrating when team members consistently fail to meet your standards for timeliness and quality, don’t manage to keep you in the loop, struggle to grasp priorities, or don’t communicate in a straightforward way. We all just want to avoid these types of people and (non-)working relationships.

While the pain of managing people can be intense, nothing stings quite like a surprise resignation.

Many clients turn to my company, OpenElevator, when they feel blindsided by yet another unforeseen resignation. They experience anxiety over the repercussions: increased workload for the remaining team, the potential risk to their goals, and damage to their reputation. They’re frustrated, wondering who else is planning to leave and how they might get ahead of it. Engaging a recruiter yet again feels like playing the hiring lottery and more of the same.

Leaders experiencing a surprise resignation viscerally understand that finding someone capable of doing the job is just one part of the equation; knowing whether that person stays committed in the long-term and will mesh well with the team is an entirely different challenge. They know that unless capability, engagement and collaboration are all present there will be issues down the road. Up to this point they have relied on their instincts during the hiring process but have come to realize that it’s exactly those instincts that have landed them in this situation.

When it comes to the complexities of talent management, it often feels like a ‘chicken or egg’ problem: should you focus on retaining your current team members or on the hiring process? Most leaders instinctively first try to focus on retaining their current team for long-term engagement before diving into hiring new talent. It just makes sense since resources have already been invested on recruiting and training the current team. In my experience, no matter how formally or informally defined, every organization has a retention strategy. Unfortunately, their strategies are based on the following:

Legacy: Companies, including startups, implement retention strategies based on what they have always done or based on their experience at a previous employer. How could ABC Corp., with thousands of employees, not already have the best retention plan? How could the great Wizard not be wise!

Trends: In a rush to be like the cool kids, especially those in Silicon Valley, organizations adopt fads: colorful coffee areas, sushi Fridays, bring your dog to work. Search “retention strategies” online and you too can have the “26 Most Effective Employee Retention Strategies In 20YY” at your fingertips! Good luck with that.

Guesswork: Too often, companies rely on gut feelings when it comes to retention. If I had a dime for every time I’ve heard, “Oh, I know what my people want.” It’s like navigating a maze without a map, blindfolded! Meanwhile no one even packs for a vacation without checking the weather app. Then doesn’t it just make sense that companies base important decisions regarding employee retention on information rather than guess?

Considering that our retention strategies are based on legacy, trends and guesswork, is it really a surprise that retention rates are not improving?

Now that we’ve looked at the misplaced ownership of employee retention on corporate culture, top management and HR and the flawed basis of our existing retention strategies, let’s look at the state of hiring in the upcoming post. No matter which side of the hiring process you’ve been on, I’m sure this will resonate with you.

If you’d like to discuss how you can retain your best people, click the button below to setup a call.

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