Reduce turnover, increase profits

Tom Moriarty explains what it takes to attract and keep qualified workers, and how employee retention rates affect companies' profitability.

By Tom Moriarty, P.E., CMRP

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If the people you work with and your direct reports were offered equivalent or slightly better compensation elsewhere, how many would stay with your team? How much of a difference in pay or benefits would it take for a good employee to jump ship? Better yet, how can you, as a leader, foster a situation that increases the stickiness of your team? By stickiness I mean, of course, making it more difficult for outside influences to tempt a person away, or making it a no-brainer for a Class A employee to choose your team over some other company’s team.

Organizations that develop employees, offer opportunities for people to contribute ideas and provide them with the skills to improve their own performance are much more likely to have an engaged workforce. Some organizations argue that it’s too expensive to train people who might then take their training elsewhere. That might be true to a degree, but if you’re known as a company that invests in employees, you’ll attract quality people and retain them longer. Besides, the only thing worse than training people who later leave is not training them and having them stay.

A Web search on the phrase “employee engagement” will turn up a number of links related to the Gallup Management Journal polls. These polls, updated annually, measure the relative percentages of employees in three categories: engaged, not engaged and actively disengaged. Engaged people come to work and proactively contribute to organizational goals. Not-engaged people show up and do what’s asked of them and not much more. Actively disengaged people harbor overt distrust of the organization and refuse to contribute to its objectives. Moreover, actively disengaged people might try to destabilize your systems and the accomplishments of others. The current Gallop poll survey of 1,000 people indicates the distribution is 29% engaged, 56% not-engaged and 15% actively disengaged.

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Related studies show that companies in the top quartile for employee engagement have 18% greater productivity — and 12% higher profitability — than bottom-quartile companies. If that level of performance existed across the board at your company, the results would be a 260% faster growth in earnings per share.

The organizational pulse


Any organization that’s concerned with attracting and retaining qualified workers should read a few recent Gallup Management Journal studies. They link the degree to which employees are engaged to profitability. This is noteworthy for corporate management in this era of mergers, acquisitions and spin-offs. Gallup recommends measuring six benchmarks for trending engagement:

  • Absenteeism
  • Average years of service
  • Quality performance
  • Safety performance
  • Productivity
  • Customer satisfaction

In addition to benchmarking, survey your team members about general climate and job satisfaction, as well as motivation and coaching. General climate and job satisfaction surveys provide an overview of the culture and general mood of the organization. Motivation and coaching surveys provide more targeted information on the organization’s supervision skills. Periodically using identical surveys can help you confirm that changes are being made. Examples of surveys can be found at www.alidade-mer.com/html/surveys.html.

Increase employee engagement


The consensus among several research groups is that certain general management factors drive employee engagement:

  • Trust/integrity — how well managers communicate with employees and lead the employees to value their relationships with managers.
  • The work itself — making it stimulating day-to-day; providing opportunities for employees to try new skills and contribute at higher levels.
  • The connection between employee performance and company performance — helping employees understand how their work contributes to the company's success.
  • Offering career growth paths and helping develop employees’ professional skills.
  • Building employee pride in the organization — paying attention to how much self-esteem the employee feels as a result of being associated with the company.

The first step is to figure out where you are by using benchmarks and surveys. You need to know how well you’re performing relative to your industry and to other business units within your larger organization. Next, establish objectives and goals for improving these measures. Third, develop a plan of action that outlines the initiatives, resources and people who are responsible for executing each initiative.

Objectives and goals include the improvement you want to see, by how much, and what’s to be used to measure progress. Include a glossary of common definitions so everyone is speaking the same language. Get objectives and goals reviewed and approved by the level of the organization that has control over the necessary resources. The plan of action puts the objectives and goals into operation. Improving employee engagement would mostly center on providing training for managers and supervisors. The specific training topics are based on the findings from the benchmarks and surveys.

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