Managing Talent Retention

Focus Groups - The Often Overlooked Final Step

Focus groups are a wonderful resource for obtaining additional information about the cause of specific retention issues in your organization.  They allow you to gather feedback directly from those that may be affected by such issues and can be very helpful in either identifying which issues should be researched further or validating the issues identified by other data collection methods. 

They also have an additional purpose that is often overlooked by organizations, and that is to validate the solutions that are chosen based upon the information that they provided. 

Once all of the data is collected from the focus groups, and the causes of turnover have been identified, organizations set about developing appropriate solutions to address those causes.  While selecting the right solution an organization may consider long term vs. short-term costs, impact and time needed to implement a solution and perhaps even a forecast of the expected ROI of that solution.  However once the solution is chosen, a key final step prior to implementation is to present both the combined data results and proposed solutions to the focus group for their input.  This last step ensures that the solution matches the needs identified by the group, and that the needs identified at the time of the focus group are still relevant by the time the solution is developed.

Nominal Group Technique - Combining Data from Multiple Focus Groups

A third format for conducting focus groups is the nominal group technique.  This approach allows unbiased input to be collected efficiently and accurately, and input is solicited from participants in a carefully structured format. 

This approach begins with a specific retention issue being presented to the group, for example, “Today, we’d like to hear from you – why you believe top sales performers, those consistently within the top 10% on closed sales, are leaving the company at a higher rate than the rest of the sales department.”  Participants in the focus group then make a list of the specific reasons they believe this is happening and then share their lists with the group in a round robin format while all of the ideas are recorded and posted around the room. 

Next the lists are consolidated and integrated and the participants are asked to identify which ten items they consider to be the most important causes of the retention issue, in order of importance.  After the lists are completed each participant reveals his or her number one item, and ten points are recorded next to that item on the list for each person that has selected it as number one.  Next, the number two reason is identified, and nine points are allotted for each person that selected that item as the number two reason.  This continues as each participant reveals their entire top ten list and points are assigned to each cause based upon the rankings the receive. 

Finally, all of the numbers next to each item are totaled and the item with the most points becomes the number one cause of the retention issue.  Generally the top 15 causes are captured and reported as the weighted average cause of the retention issue from that group. 

One of the major advantages of using the Nominal Group Technique is that it allows you to combine information from numerous focus groups to obtain an overall list of the top reasons for the identified retention issue.  Simply combine the final scores for each item identified by the individual focus groups to create a list of the top 15 issues affecting your retention of top talent.

Obtaining Valuable Retention Data - The Ishikawa Diagram

Previously I’ve discussed the basics of conducting an interview focus group to gather information about retention and issues that may be affecting retention within your company.  While this method provides a lot of great input from participants, it can leave the company with a large list of ideas and possible issues to pursue, and can make it difficult to determine which issues are the most important and should take precedence. 

If obtaining a census from your focus group participants is your goal, you may want to consider using an Ishikawa diagram to brainstorm ideas related to the root cause of a problem.  After all ideas about the root causes have been identified, the group narrows the list of causes down to a few through voting.  The Ishikawa diagram, also known a fishbone diagram was named after Kaoru Ishikawa, who used the diagram to help teams identify cause and effect. 

Conducting a focus group using this process begins by carefully articulating the problem that needs to be solved.  After that participants brainstorm as many ideas as possible, categorizing them into specific “cause categories” that affect the specific retention issue, such as People, Materials, Environment, etc.  After all ideas are exhausted the group then votes on the causes they believe are most instrumental to resolving the identified problem, and thus, the top priorities are identified, leaving the company with a specific list of solutions to consider. 

Obtaining Valuable Retention Data - The Group Interview

There are several strategies that companies can use to obtain information about what is causing employees to leave the company.  Of these strategies focus groups are a great way for companies to solicit qualitative data on a specific topic or area of concern, and allow the facilitator to probe for more detail then what can be provided through a questionnaire. 

While there are several different ways to conduct a focus group, one of the methods used most often is a carefully crafted set of interview questions to ask the group.  Group interviews are a great method for gathering feedback directly from those that may be affected by such issues and can be very helpful in either identifying which issues should be researched further or validating the issues identified by other data collection methods. 

In Social Research Methods: Quantitative and Qualitative Approaches, Lawrence Newman identifies varies categories of questions that can be include in this type of focus group:

• Behavior-based questions that uncover the current behaviors of an individual
• Attitudes, Opinions, and Beliefs questions that reveal what someone thinks about a particular topic.
• Personal Characteristics that help to identify a particular group and potentially segment their responses.
• Participant Expections.
• Self-classification or Self-perceptions that participants have about themselves.
• Knowledge that participants currently posses or are lacking. 

Identify the series of questions to ask the focus groups and organize these into an Interview Guide, with specific questions grouped around common themes and ideas so that topics are not scattered and unfocused.  Ideally, broader conceptual questions, such as questions about specific behaviors, habits, and beliefs, should be asked at the start of the group interview, followed by more specific questions about challenges faced in the participant’s current role. Questions to get input on possible solutions should be asked at the end of the focus group. 

Coaching as a Talent Management Solution - Does it really pay off?

While it is widely accepted that coaching programs are effective in developing talent, coaching is also an effective solution for retaining talent. And, as organizations continue to evaluate the effectiveness of their people-related strategies and programs, more coaches find they must demonstrate the real impact coaching makes to an organization. The challenge for most coaches is how to credibly measure coaching’s impact in retaining talent.  

Using an ROI approach to capture business impact can help you determine if your coaching solution retains talent and produces a pay-off and return-on-investment for your organization.  In one recent case study a global company with relatively high turnover implemented a pilot coaching program with a select group of employees who were identified as “high risk” for leaving.  The company performed a full return-on-investment analysis upon completion of the program to determine whether it should be implemented on a wider scale.  The results of that study showed that none of the participants left the company during the year that the program was conducted and the study was completed, and the program resulted in a 251% ROI.  For every $1 the company invested in the program, $2.51 was returned after the costs of the program were captured.

Turnover Costs Company 11% of Gross Profits

Ruche Media Company (RMC)* is a global media company with 24 offices located around the world.  The corporate headquarters of this $260M organization is based in a major metropolitan city in North America. Most of the 1,100 employees are based at the corporate headquarters while the remaining workforce is located in sales offices located in major metropolitan cities throughout the world.

 

After reviewing where turnover was the greatest, RMC then calculated the turnover costs. It was agreed that turnover rates, as defined by Dr. Jack J. Phillips, would be utilized to calculate turnover costs. The table below contains a list of turnover cost ranges as a percent of annual wage or salary as captured from dozens of impact studies. The data are arranged by job category, ranging from non-skilled, entry-level positions to middle managers. The ranges listed represent the cost of turnover as a percent of annual wage/salary and are rounded off for ease of use and communication. The costs represented in these studies are fully loaded and include the exit cost of the previous employee, recruiting, selection, orientation, initial training, wages and salaries while in training, lost productivity, quality problems, customer dissatisfaction, loss of expertise/knowledge, supervisor’s time for turnover and temporary replacement costs. The data in this table reflects studies in industry and trade magazines as well as practitioner publications, academic research and independent studies conducted by professional organizations and associations.

 

In order to obtain an average cost of turnover that could be used per turnover, RMC calculated the cost of turnover for each individual who left the organization during a 12-month period by multiplying that individual’s wage/salary by the median percent of annual wage/salary for the job category appropriate for that individual. The cost of each turnover during that period was then totaled and divided by the total number of individuals during that period to arrive at an average turnover cost of $116,927.09 per employee. Using this average cost of turnover, the total cost of turnover company-wide was calculated at $28.3M; almost 11% of annual sales! 

 

*Company name has been changed

The Best Idea Will Fail Without Proper Talent and Execution

Talent management is fundamentally about ensuring that the right people are positioned in the right places and utilized to the fullest potential for optimal success of the organization. Top business leaders clearly understand their talent pools. They work hard to identify the key players who have critical relationships with customers and suppliers, and then work even harder to nurture and keep those key resources.

 

A number of business leaders have asserted that coming up with the best talent for their companies is the most important task they have to perform. Some, like former GE Chairman Jack Welch and Honeywell International’s Larry Bossidy, spent a significant amount of time searching for the best talent within their own employee pools, hoping to build leadership that way. Both Welch and Bossidy have frequently said that all the great strategies in the world will have little effect on a company unless the right people are chosen to execute those strategies.

 

Steve Miller, the most successful turnaround CEO, clearly connects talent and execution. This master of execution rescued Federal-Modul, Waste Management, RelianceGroup, Aetna, Bethlehem Steel, and Delphi, among others. One of his first tasks as a new CEO was to find the critical talent who could exercise the plans to save the company (Miller, 2008).

 

Effective leaders understand that key talent, those employees in jobs that are critical to the company, are essential to an organization’s success and put a premium on keeping the talent they need for growth.

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.

Note to CFOs: You CAN trust your HR professionals!

In case you missed it, CFO magazine recently posted a story titled: Note to CFO's: Don't Trust HR. The story covered the recent address to financial executives denouncing the corporate HR profession for being mostly unable to provide analytics that are useful in making workforce decisions that build economic value. You can read the story here: http://www.cfo.com/article.cfm/13270251

My experience in working with internal HR professionals all over the world, has been different than what was cited in the review.

First, I want to make clear that not every job within the HR function should be a strategic role that requires analytics. Some jobs within HR truly are transactional and serve the purpose of executing on a strategic HR plan. If every HR role was strategic, there would be no one left to do the tactical day-to-day work. Sure, we want people to think and to consider what they are doing, why they are doing it and look for efficiences, but that is true of every job in every functional department and is not what we are speaking of with regard to using analytics to make strategic workforce decisions.

Secondly, I have had the great pleasure of traveling to conferences all over the world, meeting with HR professionals from great and small (but still great) companies and find that HR professionals are bright, thoughtful and indeed using data and analytics such as ROI to measure the impact and return-on-investment of their human capital programs.

Measuring financial impact and ROI of human capital programs is not easy, but it can be done. HR Professionals all over the world are implementing the Phillips ROI Methodology in their organization and continue to sharpen their skills in this difficult, but doable methodology.

Check out the great work at the ROI Institute, take a look at our book, Managing Talent Retention: An ROI Approach and you'll see what I mean.

CFOs, you can trust HR.