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Key Elements of a Winning Employee Retention Strategy

A comprehensive people strategy is NOT comprehensive if it does not include a proven retention strategy for holding onto the employees you’ve worked hard to recruit into your organization.

That may sound logical, but many if not most small firms overlook this critical component in their human resources program. In a recent Watson Wyatt survey, over 50% of the responding companies said they did not have a formal strategy for retaining employees once they have been successfully recruited.

Why? I think the answer lies in a misperception about what actually drives retention.

Most business owners and managers think retention keys off of compensation issues – wage and salary levels, incentives and golden handcuffs – when in reality the drivers go much deeper into the human psyche to the actions and attitudes that make employees feel successful, secure and appreciated. As a result, a sound retention strategy should focus on and tactically address four key elements – performance, communication, loyalty and competitive advantage.

Performance
The benefit of having measurable objectives for individuals, teams and for the company as a whole is fairly obvious to most managers, but this perception usually stops short of relating performance metrics to employee retention. Study after study confirms that people have a deep desire to feel they are succeeding, and that their talents and capabilities are being used in a way that makes a difference to the organization. When people sense their actions ARE fulfilling this desire, they begin to develop a sense of belonging and a feeling that your company is their company.

Human beings are often the happiest when they are in the process of achieving a goal. Clear, achievable objectives that gauge personal, team and company performances provide the feedback employees need to confirm that they are making valuable contributions and accomplishing goals.

Communication
The second element in a retention strategy is communication, specifically a communications process that is structured to inform, emphasize and reaffirm to employees that their workplace contributions are having an impact. Since we are dealing very directly with how employees feel about their performance, the company, and their work environment, the question becomes, “How do you KNOW how they feel about these matters?” Properly done, communication with your staff will provide you with the insights you need in order to know how your employees feel about working in your organization. Do you communicate in an ongoing fashion with your employees? Do you have regular meetings with your people? Is it two-way communication, and do you have a non-threatening channel for them to offer comments and suggestions? Do you conduct employee surveys to gather opinions on company issues and activities? Are your managers and supervisors good listeners? An effective and sensitive communications plan can provide you with insight on what is driving employee morale and how your workers feel about your company.

Loyalty
The third element in a successful employee retention strategy is employee loyalty. True loyalty is not an enforced requirement, but an earned response to the trust, respect and commitment shown to the individuals in your organization. When you demonstrate loyalty to your employees, they will reciprocate with commitment and loyalty to your company. Remember that people do not begin their employment with you as loyal employees, but will develop loyalty over time as they are trusted, respected and appreciated by you. So, how are you going to demonstrate your commitment to them? How loyal are you to your employees? Are you more concerned about their success or their contributions to your company’s success? In actuality, these two considerations are not mutually exclusive, but are both essential and should work together.

Competitive Advantage
The fourth and final element in your strategy to retain employees has to do with your competitive advantage. While that may seem odd at first, think about it…people want to work for a winner. What sets your company apart from your competition? How are you, and as a result, your employees, making a difference in your industry, in your community, and for your customers and clients? Take the time to identify and inform your clients and your employees about your unique competitive advantage. If your product is similar to others in the market place, your service can be what distinguishes you (and probably should in any case). People want to be with a winner…and that includes employees.

Together these four elements can provide you with a retention strategy capable of producing amazing results. You may even have some of them already in place, such as performance metrics and a communications process. The key is to make sure you have integrated all four elements into a strategy for retaining employees that is grounded in a genuine commitment to serving your clients and employees over time.

Originally published March 2005 by Entreprenuer.com