Recruiting & Turnover – Part II

Last week we discussed some theories of the causes of turnover. We referred to research done by Peter Hom and Rodger Griffeth. Many of you have asked for more information about them, so here it is: Peter Hom is in the Department of Management at Arizona State University and Rodger Griffeth is at Georgia State University. They wrote a rather academic, but excellent book, called “Employee Turnover” in 1995. It was published by the South-Western College Publishing and has an ISBN number of 0-538-80873-X. If you would like a detailed and very analytic discussion of the literature and research on turnover and retention, this book may be for you. Last week, we also promised to discuss retention tools, or those practices and ideas that could reduce turnover. There are four main practices that every company can use to stem turnover. The first is PAY. Although many have downplayed the importance of compensation, the research continues to show that people who feel well and fairly paid are less likely to leave than those who feel inadequately or unfairly paid. Companies such as Apple Computer in its heyday were well known for paying generously in both cash and in stock options. Many hundreds of employees stayed happily at Apple (and in fact did not want to leave even when times were very tough there) partly because of their perception of very fair pay. IBM retained people easily for decades (perhaps even retained too many) by offering one of the most generous pay and benefit packages in the world. The second is BENEFITS. Personally, I believe that this is one of the most powerful of retention tools, and some research shows that the broader and more extensive the perceived benefit package is, the higher the acceptance rate is for job offers. Those companies with generous time off policies, sabbaticals, dependent care leave policies, leaves-of-absences with benefit retention, and so one are those with low turnover rates. The next is FAIRNESS. Fairness continues to show up in a number of studies as a key determinate of satisfaction and hence the desire to stay. While not being fairly paid may not immediately precipitate a job search, it opens the crack that eventually splits the person from the company. The fourth is ROLE CONFLICT. Increasingly people are torn between family, children, aging parents, and their jobs. Those companies that have instituted policies and procedures for employees to allow flexibility and control over their working time have less turnover. This flexibility can be created by flexible work hours, telecommuting, part-time or job sharing policies, and other similar practices. While many of these practices seem to be just common sense, very few companies have robust practices in these areas. I see many startup companies with stringent human resources policies that are quite restrictive, poor pay but generous stock option packages that are increasingly felt to be unlikely sources of wealth, and unfair and unclear compensation practices where “hot shots” get paid well but others perceive that they are not. Practices such as these are sure to increase turnover and create a dissatisfied workforce ready to churn and change at a whim. Good HR practices and policies are powerful retention tools. See you next week.