Successful Retention Strategies (Part 4 of 4): Organizational Design

Organizational Design and Development

It’s finally here – the end of 2022. What a wild and crazy ride it has been. As business leaders, we have had a lot to contend with and still do.  Our work is far from over.  More layoffs have been announced beyond the FAANG companies and broader tech sector, inflation persists at uncomfortably high levels, and the labor market remains the tightest in recorded history. Finding top talent is still more challenging than ever.  Quit rates remain high, and ghosting by candidates continues. November’s labor statistics reflected continued increases in employee compensation over the 5% mark on average squeezing company budgets and frustrating employer hiring decisions. What is the secret to reducing the harmful impact of all of these challenges, you ask? RETENTION STRATEGIES. The previous articles in this series addressed the role that  Onboarding, Recruitment, and Total Rewards play in retention.  This article will explore Organizational Design and Development strategies, specifically internal mobility, that will help reflect the vision of the future and the career path for the long-term success of your people.  With concerns of a potential recession in 2023 looming large, we will also touch on retention when restructuring your company includes a reduction in force (RIF). Defining the job Not every business can build robust tiered structures for all roles, functions, and departments. For example, many small companies often have departments of just one person.  For the medium and larger business, it may seem easier for them to structure tiers for employees and chart a career path. Still, they often run into pay compression and bottlenecks leading to too much bulk in the middle, a reverse hourglass that is thin at the top and bottom but nice and plump in the center.  It is easy to see that this is a complicated issue with different challenges facing companies of various sizes.  But there are still commonalities that businesses of all sizes can implement, which will aid in retaining top talent. The best place to start, regardless of the company size, is defining the job.  What do you want them to do?  I know some leaders are disappointed in the obviousness of this but bear with me.  This is about more than building an effective and compliant job description.  That is part of it, but defining a job begins with understanding your company’s strategic plan.  It starts with asking, “how does this role fit?” and “how will it help achieve my business strategy?”  These questions get right to the heart of necessity.  Sometimes, a role is created not because it advances the business strategy but because it is convenient for someone, a way to shift responsibility onto someone else. While that could be helpful to business strategy, it may not be. However, defining the role in terms of business strategy rather than convenience is critical to ensuring strategic alignment. It’s also important to remember that you are hiring human beings.  People.  Again, some may roll their eyes and think, “um… yeah…” but keep in mind that as business leaders at organizations of many different sizes, it is easy to get caught up in the daily grind, the strategic struggle, and even the business viability worry and forget that we employ people.  They have hopes, dreams, and desires.  Employees support their families, contribute to their communities, and most genuinely care about the company’s success.  When hiring people, some may be very content doing the same job the same way and producing the same result.  Many more are happy to do this job now but want to know what comes next. This is a KEY driver for the great resignation.  The old saying, “people don’t quit businesses, they quit managers,” is typically a true statement.  But people with internal mobility will often find ways to leave the managers they want to quit and remain with the company. So, you have to have options internally to retain top talent. Here is where we inevitably receive pushback from many small business leaders.  Addressing the elephant in the room, yes, only some small businesses will be able to create the same level of mobility as medium and large companies.  Every small business, however, will be able to generate SOME mobility.  And for mid-sized and larger companies, internal mobility is KING at retaining top talent.  Many books have been written demonstrating that investment in the training and development of people, creating lateral and vertical growth as well as realigning responsibilities to expand a role’s sphere of influence and strategic importance leads to employee retention and outperformance of competition no matter the industry or market in which they exist. This could only be accomplished if you first define the role in terms of your business strategy. Up, Left-Right, Hold, Down When talking with leaders about career advancement, nearly 100% latch onto the word “advancement” and take only two of the Webster’s Dictionary definitions of the word literally— “promotion or elevation to a higher rank or position” and “progression to a higher stage of development.” In addition, nearly all forget there is a third definition -“an improved feature: IMPROVEMENT.”  Improving someone in your organization is perhaps the greatest advancement any business leader can aspire to achieve with their employees.  And this is something that can be done at organizations of every size. Some people want vertical advancement.  Ask them, and they will speak in terms of moving up from an individual contributor to a supervisor, manager, director, VP, and into the C-suite of a company.  Small family-owned businesses may have the greatest challenge here, with limited structure and family owners filling the highest positions. Larger companies may have more layers, but every business has bottlenecks at the top.  While there are limits, there is still opportunity.  Evaluating your business growth and regularly reviewing your strategic plan may reveal the point where a new level/layer of management is appropriate or necessary.  Even in small businesses, upward mobility happens.  However, if employees are frustrated by a lack of upward mobility, share with them alternative mobility

Successful Retention Strategies (Part 3 of 4): Total Rewards

Total Rewards

With 3/4 of 2022 behind us, and despite record inflation and fears of recession, we are still seeing the most robust labor market in recorded history.  Despite news of layoffs at FAANG companies, the broader tech sector, and retail giants such as Walmart and Target, candidates still have more choices and power in the labor market than ever. Even with historic wage growth of over 5% YoY, wages still significantly lag inflation leading to net wage growth of below -3%. Technology improvements and the continued failure of businesses to appropriately demonstrate caring and support for their people are still significant drivers of the current Great Resignation, which is rapidly becoming “Quiet Quitting” and “Ghosting” as employees – well, they stop showing up for their jobs rather than provide appropriate notice. We are still seeing that resignations are not impacting all businesses, industries, and sectors nor all career levels equally, yet all segments are impacted, nonetheless.  Even the Executive level (Vice President through C-Suite) continues to cash in on this wave, driving up base salaries, signing bonuses, and restructuring bonus packages to be more favorable to them and less so to the companies they serve. This is the third of a 4-part series addressing Onboarding, Recruiting, Total Rewards, and Organizational Design strategies that collectively affect and reflect the retention strategies of an organization. As shared in the previous two articles in this series, there continues to be an absence of a single silver bullet to stop the resignation trend.  There is still too little attention placed on the one focus area with the highest probability of making the most positive and significant impact on stabilizing the challenging labor and employment market.  That focus – RETENTION STRATEGIES.  In this article, we will shift our focus toward the role that Total Rewards play in employee retention. Total Rewards is a combination of both compensation and benefits.  The term benefit is not intended to be applied exclusively to medical, dental, and vision benefits.  Any benefits – vacation, sick pay, parental leave, tuition reimbursement, continuing education, Flexible Spending Accounts for Child Care, and more all fall into this category.  When we open our minds and eyes to the breadth of options in the benefits category of Total Rewards, it is easy to see that there is an entire untapped arsenal of options available to retain top talent. That is not to say that compensation is not important. Still, we want to call out that many companies have relied too heavily on direct compensation as a retention tool and too little on other forms of compensation.  Without getting too deep into the weeds, let’s look at some amazing ways Total Rewards can be leveraged to drive up retention and reduce unwanted attrition or turnover. Compensation In the years 2000 through 2019, the average annual wage increase in the US was 2.92% (Average Wage Index (AWI) (ssa.gov)), and the average inflation rate was 2.10% ($160,000,000 in 2000 → 2019 | Inflation Calculator (officialdata.org)).  This does not mean that wage increases were evenly distributed.  CEO pay alone from 1978 – 2018 grew 1,007.5% vs. 11.9% for the average worker over the same period (CEOs see pay grow 1,000% and now make 278 times the average worker (cnbc.com)).  However, overall average wage growth was close to where inflation existed, justifying in the eyes of employers the 2-3% annual wage increases most employees who performed well in their jobs were used to seeing.  But the pandemic upended all of this. There are many levers that compensation specialists have at their disposal beyond base compensation.  Cassandra Faurote, Owner, and CEO of Total Reward Solutions in Indianapolis, shared some revealing trends in total rewards.  Some of these have a minimal impact on the bottom line, and it was very eye-opening to see just how little it could take to obtain and retain top talent. According to Cassandra, “A new and very hot back-to-office perk is a Pet Stipend.  This is a monthly sum that can be used on dog walking, pet sitting, or some other form of daycare for pets.”  Many of us have pets and love them as much as any family member. After working from home with these pets for so long, it is important to make sure they are cared for.  Cassandra’s research revealed that “1,300 job listings [in 2022] describe offices where workers can bring their pets.”  And yes, the BEST Human Capital & Advisory Group is one of those. See our precious ”steakholder” Tyson’s profile on our website. The four-day workweek is another key trend.  While not appropriate for every role in the green industry, judicious use of this schedule for office-based roles, leadership, or any role not mission-critical for onsite during typical operating hours can lead to impressive results.  A Maru Public Opinion Poll conducted for The Business Journal in February 2022 revealed the following: 82% of workers would trade 8-hour days to 4 ten-hour days for the same pay. 88% of earners at $100,000+ per year wanted this. 76% of those making less than $25,000 per year also wanted this. The Midwest was 84% higher than all other regions in the country in their desire for the 4-day work week. 74% said they would leave their current jobs for a 4-day work week. 97% said they would be more productive. Cassandra also shared other key compensation drivers of retention that are too often overlooked by businesses, including free lunch (after all, who wouldn’t want a free lunch?), variable pay, performance management, and merit pay. Employees respond very well to variable pay.  This helps them connect the importance of what they do to the company’s results.  It provides them with greater control over their own earning potential. Through variable pay, employees can see what the company values most and put their best efforts into those activities that are most impactful to the company and their own financial goals.  Cassandra shared that, according to World at Work, a global association for human resources management professionals and

Successful Retention Strategies (Part 2 of 4): Recruiting

Recruiting

As the year continues to see upheaval and tremendous instability with rising inflation, tight supply chains, and persistent pandemic fears, the labor market also remains the tightest in recorded history.  The Great Resignation has left many businesses scrambling to fill open roles and struggling to figure out how to continue growth or achieve strategic plans with a seemingly revolving door of employees. There is no silver bullet to stop the trend, but there is one critical focus that has received too little attention leading up to and throughout this pandemic and the new challenges that stem from it.  This focus has the highest probability of making the most positive and significant impact on stabilizing this challenging labor and employment market.  What is it, you might ask? RETENTION STRATEGIES. This is the second of a 4-part series addressing Onboarding, Recruiting, Total Rewards, and Organizational Design strategies that collectively affect and reflect the retention strategies of an organization. The previous article focused on the Onboarding piece.  This was important to address because of the egregious errors we saw many companies make in their rush to bring in talent.  This article will focus on recruitment’s role in employee retention. While the apparent function of Recruitment is to add headcount to an organization or backfill open positions, little has been shared about Recruitment’s role in employee retention.  In fact, employee retention starts with Recruitment. We all know that it is rare, if ever, when we get a second chance to make a first impression. The Recruitment function of an organization is the first impression candidates, and prospective candidates may receive. Thus, it is critical to make it a positive one. Following are several steps that Talent Acquisition partners can and should take to lay the foundation for long-term employee retention, whether internal or external to an organization. Be Real Often, recruiters approach talent acquisition as a transaction, “selling” the company by focusing on all of the exciting and wonderful features, perceived or real, about a company. It comes naturally for many recruiters because they are often selected to be a Talent Acquisition professional based on prior or exhibited sales experience. And while salesmanship is not necessarily a bad trait, it boils down to “how” not “that” you use the skill set. Whether in retail, B2B relationships, or even in the most complex business interactions in the M&A arena, no one wants to be “sold” to today. What people want are solutions to problems. A big challenge is that people don’t want to bluntly disclose the very problems they need to solve. Uncovering these concerns requires a consultative approach. A true consultant will reflect care and compassion, listening to understand first before being understood. A high Emotional Quotient (EQ) combined with an analytical approach will allow the Talent Acquisition professional to best consult with the candidate and help them understand the alignment between them and the role to be filled. This soft approach opens the hearts and minds of candidates to what they can expect when joining a company and often is the first trigger towards high engagement— a key we will address in other articles in this series and a critical link to employee retention. Part of consulting is ensuring prospects and candidates understand the good and the bad about a company. No company is perfect, just like there are no perfect candidates. The exclusive pursuit of only the perfect will always disappoint, leading to disaster and an impossibly long recruitment cycle. Every company has challenges. The right candidate must understand these challenges and be excited to tackle them. They should not be daunted by the challenges but willing to embrace them. Of course, there must certainly be something in it for them, and the advantages should be presented to balance the discussion. In the end, there should be a win-win scenario where the advantages and disadvantages are shared, where both see that the right candidate will enhance the company’s advantages while solving their challenges. The right candidate’s advantages should be the right fit to solve these challenges, while a company’s advantages should be able to support the candidate’s growth and development. Like a jigsaw puzzle piece with curves on various sides with high and low points, the highs of one should fit the lows of others and vice versa. This is being real. Be Engaged Automation permeates so much of our lives, and the intent is to make things easier and faster, to do more with less.  Unfortunately, there are times and interactions where technology is just a poor substitute.  How many of us receive blind outreaches on LinkedIn, email, or even spam calls about products or services that have no alignment to us, what we do, want, or need?  Someone is throwing mud on a wall and hoping something will stick.  But how do you feel about such an approach when you receive one?  Do you think a candidate will feel something different just because you are the one deploying such an approach? Everyone, to one degree or another, wants to be noticed and be recognized for their accomplishments.  They want to be wanted and sometimes pursued.  When reaching out to the passive job market, craft personal messages that tell the prospective candidate you read their profile or resume. Connect the dots to show them what made you believe a conversation may be worth their time, and importantly— do your homework. When Talent Acquisition professionals are disengaged, they fail to pay attention to the little details that make the most significant differences.  They fail to catch experience, education, and geography.  There is a lack of analysis and understanding of career trajectory or directionality.  But the most critical miss of the disengaged Talent Acquisition professional is a failure to follow up.  They make promises they do not or cannot keep.  Candidates and prospective candidates view this as disingenuous.  The perception is that the Talent Acquisition professional— to put it lightly— is not very professional.   If by some miraculous chance the candidate is

Successful Retention Strategies (Part 1 of 4): Onboarding

Onboarding

The current labor and employment market is the most volatile in recorded history.  Never have employee candidates had more choices and power in the market than they do today.  Add to this the pandemic, continued low wage growth for most people below the executive level, technological improvements, and failure of many businesses to appropriately demonstrate caring and support of their people. The result is the current crisis known as The Great Resignation. While the Great Resignation does not impact all businesses, industries, sectors, and career levels equally, all of these segments are nonetheless affected. Even at the executive level (Vice President through C-Suite), where people are arguably treated better than many front-line, entry-level people, and who are recipients of already higher pay and higher pay growth over the last 20 years and more, are cashing in on this wave driving up base salaries, signing bonuses, and restructuring of bonus packages more favorable to them. There is no silver bullet to stop the trend, but one critical focus has received too little attention leading up to and throughout this pandemic.  This focus has the highest probability of making the most positive and significant impact on stabilizing this challenging labor and employment market.  What is it, you might ask? EMPLOYEE RETENTION STRATEGIES. This is the first of a 4-part series that will address Onboarding, Recruiting, Total Rewards, and Organizational Design strategies that collectively affect and reflect the retention strategies of an organization.  Employee Relations and Communication strategies overlap and lend support to these (4) categories, making them more successful at retaining key talent.  Interesting to note that each of these areas (outside of Onboarding and Communication) is a dedicated Human Resources discipline.  Each discipline is far too deep a topic to cover fully and impacts significantly more than just employee retention.  Therefore, each area will be discussed from the standpoint of their impact on employee retention and not the totality of the discipline.   A Typical New Employee Onboarding Scenario Let’s take a look at a typical start to a new hire’s onboarding journey. It’s your first day on the job.  The day is filled with hope and promise.  The interviews were exhausting, lasting several days stretched over several months.  Many were conducted virtually due to the pandemic and precautionary guidelines (thankfully, they didn’t see your comfy fuzzy bunny slippers).  The final interview included an in-person onsite series of interviews and a facility tour.  You are nervous even though you are confident you made the right decision. As you walk into the office building for your first day, you notify the receptionist that you are here.  He looks at you quizzically, not knowing who you are nor whom you are supposed to see.  The receptionist asks you to have a seat, and he will track down who should greet you. “This is odd,” you think to yourself.  “The interview process seemed relaxed, organized, and well-executed.  Perhaps it’s nothing, and I’m just being critical.  Relax – think happy thoughts. Today is going to be a great day!” Twenty minutes go by, and no one has come to greet you yet and begin your onboarding.  You approach the receptionist and ask, “Sir, am I supposed to be meeting with HR first or my direct supervisor?” “I’m not sure,” he replies. “I contacted HR, but they did not answer.  I left a message with the HR Generalist, who typically handles new hire paperwork.  I am sure they will be here any moment.” And so, you go back to the seat in the receiving area where you had been sitting and continue to wait.  Anxiety starts to build into frustration.  “I did get the right start date, didn’t I?” you think to yourself.  You pull out your cell phone, access your personal emails, and search for the welcome email with your start date information.  “Yep, I got the right day and time.” After another 20 minutes, an employee comes in through the front doors.  On their way past the front desk, the Receptionist stops them saying, “Akeem!  So glad you are here.  I left a voice mail for you a bit ago about this person starting today.  Are you supposed to do their onboarding, or is the hiring manager?” Looking a little embarrassed, Akeem says. “I’ll handle it,” and he turns to greet you, arms full of coat, coffee, umbrella, and thick, overstuffed computer bag.  Fumbling with everything to free up a hand, Akeem offers you a proper handshake and greets you. “Hi, I’m Akeem, HR Generalist.  I hope you have not been waiting long.” Mentally you are quite miffed and barely contain the thought, “waiting long?  I have been waiting for nearly an hour now,” from coming out your mouth. “Not too long,” you reply instead.  “Very eager to get started for my first day.” This scenario often plays out in too many companies, from small independently owned businesses with under 20 employees to large publicly traded multi-national companies with over 60,000 employees globally.  It does not matter if there is no HR presence, an HR department of one, or a large 100+ person HR department with defined HR discipline coverage and degreed/certified professionals, this first-day scenario and the corresponding train-wreck of an onboarding experience that follows it can happen anywhere.  An experience such as this starts the time clock ticking towards resignation day. Not what any business wants when they spend so much money, time, effort, and energy to recruit the right person for the position. An effective new employee onboarding program is a critical step in retaining employees.  The only constant in business is change, and change is the greatest source of stress, worry, and concern for most people regardless of career level.  The onboarding process should be designed to reduce the new employee’s stress, anxiety, and concern by transparently and effectively communicating with them.  Effective communication is critical. Each company is uniquely different, so each employee onboarding program should be customized to your company.  Through the onboarding program, necessary compliance forms (such

What’s Going On with HR?

What’s Going On with HR?

“What’s going on with HR?” you ask. Well, frankly, a LOT. Human Resources is a diverse collection of disciplines. We all love a succinct answer. In short, Human Resources includes anything that impacts the people working in and around the business and may even impact the vendors, clients, customers, and consultants to the company. But even that does not quite capture all that Human Resources is and does. So, to ask, “What’s going on with HR?” you can quickly see how expansive of a question that is. Rather than share all that is going on with HR, let us look at some current events occupying a lot of time, effort, and energy within Human Resources. While the industry, unique operations, organizational headcount, and revenue volume all impact the priorities of the HR function within each business, some commonalities have a high probability of being experienced by the largest number of HR functions across all industries, operations, headcounts, and revenue volumes. Talent Acquisition This is currently the most pressing issue facing businesses today. The sourcing, screening, interviewing, hiring, and onboarding of top talent to either grow the business, stabilize the business, or backfill positions vacated through voluntary or involuntary terminations is taking up an unbalanced and overwhelming amount of HR’s work today. The pandemic is a primary driver of the issue and not just because of the dangers to the health and even lives of the employee population. Many employees are resigning their positions not to go on unemployment or even to move to a competitor but instead because of their perception of how they were treated in the early stages of the pandemic when layoffs and closures happened; because of their perception of how they are being treated today with the controversies around masking, testing, and vaccinations; and because they have discovered during the layoffs in the early stages just what is important to them or the need and benefits of a better work/life balance; and so are leaving to go into different industries, open their own businesses, or into jobs they perceive will provide better opportunity to support themselves and their loved ones. Because of this, finding top talent and convincing them to join your organization is more challenging than ever before. We are further seeing massive exits from the workforce. There have been significant drops in the labor participation rate. Many attributed this to the pandemic alone, and that is not the case. We have known since the early 2000’s that the baby boomer generation would eventually retire. Up until February 2020, it appeared they would continue working far longer than any other generation in the workforce, but the pandemic did have an effect in accelerating the exit of Baby Boomers from the workforce. They began to ask themselves, “Is this really what I want to deal with in the twilight of my life? Isn’t family more important? Shouldn’t I enjoy all that I have built, gained, and acquired throughout my life rather than add more stress or risk my life and those I love by working through this pandemic?” So while the pandemic has affected the decline of labor participation, it is primarily the exit of a generation already known to be leaving the workforce that is having the significant impact we are seeing today. And with those exits, who is left to fill the void? If the labor participation rate decreases, Talent Acquisition has a big problem on its hands. They cannot recruit people who do not exist.” Total Rewards This is the second most time-consuming issue for many HR professionals today. Closely tied to Talent Acquisition and Talent Retention necessary to stave off or stem the tide of this Great Resignation, astute HR professionals are examining pay equity and pay parity. They are researching the benefits that are offered, and not just medical/dental/vision benefits but also all wellness initiatives, continued professional education coverage, and perks which make their employees’ lives easier. Many businesses are discovering they do not have the right combination in their total rewards program to obtain and retain top talent. There are adjustments that must be made, and some of these are costly. What is the alternative? Doing the same thing the same way and expecting a different result – well – we all know what that is. The only constant in business today is Change. HR professionals should be reexamining their total reward programs to improve the mix and meet or exceed organizational and employee needs. Talent Retention This is tied closely with Talent Acquisition and Total Rewards. It is what many businesses hope is an outcome of the efforts in Talent Acquisition and Total Rewards, and that is a mistake. Retention should be an initiative all its own. While the right Talent Acquisition and Total Rewards initiatives and strategies will have a significant and beneficial impact on Talent Retention, there is so much more to it. To retain talent, businesses must understand that people do not join a company exclusively for the role into which they are hired, they enter a company for that role and the potential for personal as well as professional growth. They look for increased responsibility, contribution to organizational success, giving back to the community, and income growth to achieve their own financial goals. While companies profess to provide this growth to employees, too many have been quick to replace employees before and even during this pandemic, and it has left a sour taste in the mouths of many employees. Businesses that are successful at reducing or eliminating the impact of the Great Resignation are genuinely focused on defining how they treated and currently treat their employee population differently and better than their competition; they provide a strong and positive culture that exemplifies caring and support for their people; they develop an active social cause employees welcome giving back to, and they clearly articulate a career path and the learning and development programs that will help their employees meet personal and professional objectives. While this

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