Managing Talent Retention

Why Overall Company Turnover Isn't That Important

Overall company turnover is the number that most often appears on company’s dashboards or metric sheets, however this measurement rarely tells the whole story and can be the first misstep in leading a company to incorrectly identify the true causes of turnover within their organization.  To create a true picture of their situation, organizations must track retention and turnover data of all talent. Data should be tracked not only at the organizational level (e.g., location, department, etc.) but also at the individual level (e.g., age, race, etc.).

 

The following is a summary of how one company used this additional level of analysis to identify a specific area of concern in regards to their retention of newly hired employees:  

Ruche Media Company (RMC) is a global media company with 24 offices located around the world.  They monitored turnover by various categories and defined them as either voluntary or involuntary separations. Voluntary separations included: career, dissatisfaction with pay/benefits/policies, dissatisfaction with working conditions and personal reasons.

Involuntary separations included reduction in workforce, disciplinary action and termination for failure to meet performance expectations. No one terminated their employment as a result of a disability or because they retired during the period reviewed, so these categories were not considered in the analysis.

 

After creating a common definition of turnover, RMC analyzed the turnover rates by various demographics such as location, business group and years of service. Through this analysis, it was discovered that turnover was highest among employees who were employed for less than one year at RMC in the corporate office. In fact, RMC discovered that turnover in the corporate office was 30%; and, 12% of all new-hires departed prior to their one-year anniversary.

By using the additional level of data collection to determine that a large portion of the problem was centralized in one location this company was able to save time and money by implementing a program to address this specific area.  

The Stock Market Mystery – A Key Reason Why Retaining Top Talent is Still Important

When considering the value and importance of talent, executives need look no further than the stock market. Investors place a tremendous value on human capital in organizations. For example, consider Google, Inc.—a global technology leader focused on improving the ways people connect with information. Based in Mountain View, California, Google is a Fortune 500 company traded on the NASDAQ stock market. Google is a very profitable company with revenues of $16.6 billion in 2007, and a net income of $4.2 billion (Annual Report, 2008).

 

Google reported total assets on its balance sheet of $25 billion and included not only the current assets of cash, marketable securities, accounts receivable, and inventories, but property, plants, equipment, and even goodwill. However, the market value is much higher. At mid-year the market value was $105 billion. In essence, the tangible assets represent only 23.8 percent of the market value. Investors see something in Google that has a value much greater than the assets listed on the balance sheet.

 

This “hidden value,” as it is sometimes called, is the intangible assets, which now represent major portions of the value of organizations, particularly those in knowledge industries, such as Google. But what comprises the intangible assets?  What do investors feel adds an additional $80 billion to Google’s overall worth?  While we don’t have a way to pinpoint it exactly, human capital is certainly a big part of it.