When an organization loses a key employee there is often a palpable sense of betrayal. How could she leave after everything the organization had done for her? Where’s the loyalty?
Employee retention is an ever-present concern for most organizations. The tangible costs (i.e. recruiter fees, delays/missed opportunities, higher salaries and benefits) as well as intangible risks (will the new employee work well with existing employees, how can you be certain the new hire has the skill-sets delineated within her resume) associated with replacing employees have increased exponentially over the years.
What actions can organizations take to keep employees from searching and eventually taking new jobs? After all, if another organization is willing to pay more, budget constraints often prohibit negotiating with the departing employee. Even if this constraint does not exist, rewarding the threat of leaving with a higher rate of pay sends a horrible message to other, loyal employees, right? Pointing higher pay at other organizations, however, is no longer a viable explanation for the vast majority of people who leave their current employer for a different position. More and more, employees are leaving for non-financial reasons. Gallup studies indicate that 78% of people who leave their job for a new position outside of an organization, do not leave for an increase in salary[i].
Management should place their focus on retention on those 78% of the workforce that leave for greener pastures based on non-financial reasons. There are various reasons why these employees decide to leave; those reasons are generally tied to dissatisfaction with the work environment, lack of appreciation from management for their career goals, and little, if any, exchange of actionable feedback. Simply put, employees want to be appreciated, told how they are performing and what sort of impact they are having on the organization. Typically, any feedback given to an employee is offered during a brief meeting during the employee’s annual evaluation/appraisal/assessment/review (collectively referred to herein as the “annual review”). Twenty-thirty minutes of feedback for an entire year of work. That is simply nonsensical.
Everywhere you turn, there’s another publication confirming the level of disdain both management and employees have for the annual review. To name a few, Wall Street Journal, New York Times, Washington Post, and Forbes have all published articles condemning this traditional approach and begging for a new way of doing things. Harvard Business Review reported that 58% of companies believe their performance evaluation mechanism simply does not work[ii].
By giving your employees feedback, you will help them develop themselves and pursue their career goals. In return, you will have happy, engaged, efficient and even more loyal employees. The encapsulated, once-every-12-months review is a thing of the past. Offer your employees an outlet to exchange on-going, open and honest perceptions and information. Help them become the success stories they really want to be. When employees receive open and honest feedback, they are empowered to take the steps to showcase and share their strengths; and develop solutions to address their weaknesses. The result will be higher rates of retention and avoidance of the on-going headache of replacing key employees for reasons that could (and should) have been avoided altogether. And, oh yeah, the organization will likely perform better as a whole.
[ii] Harvard Business Review. Reinventing Performance Management https://hbr.org/2015/04/reinventing-performance-management.