Ray Seghers

Several years ago I had a large client with a very young employee population. Almost all of them were well under 25. As might be expected with this population turnover was very high, exceeding 100% in some areas. Management wanted to change this situation but they were unclear on how to proceed so they turned to HR for guidance. HR already had an idea about what was going on so they suggested conducting a rather conventional employee survey focusing on benefits and compensation.

Although they were primarily interested in the two product lines where turnover was the greatest, they decided to survey all five product lines at the selected locations. This would provide us with an informal control group to help us better understand the survey results of the target groups.

As the company expected, there were major differences in the survey scores across the product lines. As the outsider, I asked the obvious question: Why are some of these lines so positive and others so negative?

I was very impressed that management had a very good understanding of these product lines and listed a number of factors for each group explaining their strengths and weaknesses. What I thought was interesting was not the specific factors per se but the fact that management had such a detailed understanding of the situation that employees were in and had the flexibility to offer different packages to different product lines.
Wow! Knowledge and the ability to do something about it. Quite a rarity.

But there was a catch. HR and the management team disregarded their knowledge of their employees and proposed doing the same old thing. No “outside-the-box” thinking here. Yes, they understood the nature of the situation that these employees were in but they didn’t really understand what these employees needed. The knowledge paradox. They figured that offering all of their employees a 401(k) plan would do the retention trick. But they failed to realize that few, if any, of these employees would ever vest in the plan.

But even more importantly, they failed to realize that very young workers are not motivated by retirement plans in the first place. Maybe they should be, but the fact is, they aren’t. This “reward” had little value in the eyes of the employees and would have no impact on retention whatsoever. I mentioned to the HR team that the company would get a bigger impact on retention by giving these employees raises at the proper time – at the critical retention leverage point.

So, when is the critical retention leverage point for each product line? For one line they said that if they could keep employees for 8 months then they were likely to keep them around for a while. For another line the critical time was 3 months. Again, management was able to differentiate the needs of the different groups. We had a tremendous leverage point.
I then asked when they did performance reviews and raises for new employees. Without skipping a beat, they said 6 months. Was this on a stone tablet somewhere? What is the magic of 6 months?

Well, getting a raise at 6 months might be very helpful for the 8 month line but not for the 3 month line. Most of these employees never lasted long enough to get to the review period. Shouldn’t the review period and comp plan be tied to the characteristics and needs of the group? The company had the flexibility to do this and the cost was going to be less than the cost of the revolving door that they had now.

They had the knowledge and the ability to do something about it but they didn’t link this to their retention strategy. They just kept doing what they had always done. The good news is that now they understand the power of what they could do and they had the additional feedback from their employees to help guide them to even greater success. We got them to see the box and to peer over the edge.

As managers, I’m sure that we believe that we understand our employees and that we can design organizational structures and programs to build and maintain a dedicated work force. However, we should really re-examine this belief, especially as we bring new employees on board. We must recognize that there are age differences and cultural differences. Each employee is in a different part of the career cycle. Learn what they need – what you need to do to keep them. Keeping employees longer will improve organizational performance and reduce your hassles.