Book Excerpt January 8, 2010, 3:03PM EST

Book Excerpt: Rethinking Retention

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Figure: The Rethinking Retention Model

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Another study puts turnover's price tag across the United States at $25 billion annually—and that's just to train replacements. A third study indicates that turnover reduces U.S. corporate earnings and stock prices by 38% in just four high-turnover industries.

Turnover touches every aspect of organizations because people touch every aspect of our organizations. People answer phones, make sales calls, move products from assembly lines, and make hundreds of decisions every day that impact your customers. No amount of technology will replace the impact of the people you hire, train, and then lose or retain.

So employees are your business. And those who manage businesses both large and small face stiffer competition domestically and abroad. In most industries it's now harder to make a buck, making your effectiveness at retaining good workers even more critical. In fact, retaining good workers is the tipping point between success and failure for many organizations.

Introducing The Rethinking Retention Model

It's time to rethink retention. We all wish turnover solutions were as simple as tweaking co-pays for employees' health insurance, but unfortunately retention is more vexing and much more complex. Rather than pulling on one rope, it requires pulling many strings.

Here's a graphic representation of an organization-wide model for keeping your best workers longer. Follow this map and employee retention will improve and drive all other key metrics in your favor.

The Principles of the Rethinking Retention Model

There are three basic principles at the foundation of retention.

Point #1: Employees quit jobs because they can. Workplace demographics leave employees with too many job choices, even in down economies. Avoid the dead-end road of basing retention solutions on exit surveys and other reasons you believe employees leave. Instead, build a proactive solution you can control.

Point #2: Employees stay for things they get uniquely from you. Who are you as an employer? What does your organization offer that others do not? Identify it and build hiring, training, and all other processes on the things that are uniquely you.

Point #3: Supervisors build unique relationships that drive retention...or turnover. Supervisory relationships are unique levers that deeply impact employees' stay/leave decisions. Some employees stay for supervisors, some leave because of them, and some just avoid them.

The Strategies of the Rethinking Retention Model

Once you've grasped the principles, the following strategies will help you improve retention, productivity, and all other important metrics.

Point #4: Hold supervisors accountable for achieving retention goals. Supervisors won't achieve any other goal you assign them if they lose their best performers, so make them accountable and give them "skin in the game" for retention.

Point #5: Develop supervisors to build trust with their teams. Communication, recognition, and development all fall behind trust. Who values information and praise if you don't believe it?

Point #6: Narrow the front door to close the back door. New hires must align with who you are—your jobs, values, and standards—and give clear indications they intend to stay.

Point #7: Script employees' first 90 days. First impressions predict how long employees stay, so early activities must be scripted to present your company in ways that are both positive and truthful.

Point #8: Challenge policies to ensure they drive retention. Blow the dust off last decade's thinking and drive your rules toward retention.

Point #9: Calculate turnover's cost to galvanize retention as a business issue. Dollars speak louder than numbers and percents.

Point #10: Drive retention from the top, because executives have the greatest impact on achieving retention goals. Think about how your company manages sales, service, quality, and safety and then build those same methods for retention.

The core ingredient of the Rethinking Retention model is the shared responsibility of operations management and staff support. In most organizations, operations management drives sales, service, quality, and safety, with various staff departments providing tracking, training, and other services. With retention, however, HR tends to manage on its own.

Making people management work requires organizations to run on all cylinders, to involve all who can help. Each company has developed successful, shared-responsibility models for managing sales and other key initiatives, so why not replicate these ways with retention?

Driving retention processes from top to bottom is the key. Savvy organizations manage retention with the appropriate amount of accountability and other operations-driven tactics to be fully effective.

We looked at the types of tops-down processes our clients usually had in place before our engagements with them. While a few of these organizations provided coaching for supervisors who failed to keep good workers, no retention processes for accountability, recognition, consequences, or skill-specific training were in place. And most of the retention coaching was provided by HR instead of the supervisor's manager.

Organizations that manage retention in that way turn to HR to solve it. The result is usually programs such as career classes or benefits like vision care. So ask yourself: Does my company solve retention with processes driven from the top or with programs driven by HR?

Dick Finnegan is president of Finnegan Mackenzie, The Retention Firm. For more information on Dick Finnegan's work and the Retention Institute's online employee retention certification program, visit The Retention Institute.