Douglas Brown on Unlocking Employee Retention: The Power of Managerial Influence and Personalized Engagement
I had an insightful conversation with Douglas Brown regarding the critical roles that managers and HR play in employee retention. Here's a summary of our discussion:
1. The Crucial Role of Managers in Retention:
While financial factors might make an employee consider leaving, many non-financial aspects come into play when making the final decision.
Managers influence factors like recognition, respect, communication, autonomy, and flexibility. They have a significant role in creating a rewarding work experience.
2. The Three Pillars of Retention:
Ownership and Senior Leadership: They must lead by example and provide resources and commitment to create a conducive work environment.
HR: Responsible for recruitment, ensuring that job roles match descriptions, and facilitating necessary training for employees.
3. Understanding Employee Desires:
Managers, HR, and leaders aren't mind-readers. Periodic conversations are essential to understand employees' career goals, strengths, passions, and interests.
4. The Benefits of Regular Conversations:
Having regular dialogues helps managers support and act on employee needs. With time, these interactions help employees see growth opportunities, making them less likely to entertain offers from recruiters.
5. Company-wide Programs vs. Individual Needs:
While company-wide programs like wellness, EAP, and recognition are valuable, they might not cater to individual employee needs. Tailored recognition, for instance, can have a more profound impact on an employee's sense of belonging and value.
6. The Business Case for Retention:
Retaining employees is cost-effective. According to SHRM, replacing an employee can cost between 50% to 200% of their annual salary. Integrated programs that cater to both financial and non-financial needs can offer a higher return on investment (ROI).
7. Churn Rate as a Measure of Success:
A low churn rate reflects a competent organization and leadership. With voluntary turnover rates doubling in recent years, maintaining a low churn rate can indicate a successful managerial strategy and a positive organizational culture.
In conclusion, managers and HR have pivotal roles in ensuring employee satisfaction and retention. Regular conversations, tailored programs, and understanding individual needs are essential. Furthermore, a low churn rate is a strong indicator of an organization's health and managerial effectiveness.
Clinton Henry: So Douglas, I'm so excited to have you on the show today. Based on your experience, what role does the manager play in employee retention?
Douglas Brown: Well, let me say thanks, Clinton, for being able to join you here today. I'm looking forward to our discussion. The manager really plays a crucial role and a critical role. And the keys to retention, there's two sides of that equation. Often people will make a move depending on a greater opportunity that maybe suits their needs and goals. And that could be financial aspects or it could be non-financial, the work that they want to do kind of thing. So though the manager doesn't really have an impact directly on the financial ramifications of what the employee is earning or making, they have really a profound influence and impact on some of the non-financial things that affect an employee's decision to stay or to leave.
And these include things like recognition, being treated with respect and dignity, communication, autonomy and flexibility. There's probably about 15 to 20 main drivers that the manager controls that really kind of create a rewarding work experience for the employee or maybe create some negative emotions and disappointments and frustrations for the employee. So that's why the manager has such a critical role to play.
Clinton Henry: So we talk about the manager and their role. Obviously, HR also plays some sort of role. What's the role of HR to help improve employee retention?
Douglas Brown: Yeah. HR does play a role. Actually I'd say there's three critical roles here and different disciplines. First, you have ownership and senior leadership that has to really set the stage. They have to be the ones that lead by example. They have to be the ones that provide the resources and the support and the commitment to improving retention numbers and building a culture that is attractive to the employee. If that's not there, it becomes increasingly difficult. But hopefully if the owners and the senior leaders want to build a strong company and a strong workplace culture, then that focus is there. But that's their role and their side of the equation.
Then you have the HR department and HR is certainly heavily involved in recruitment and acquiring new talent. I think part of their role is to make sure that when they do that, that the expectations and the job description are accurate and really align with what the employee is seeking. Oftentimes we hear of or see situations where employees will get into a job and they'll say, this isn't really what I signed up for or I'm doing roles and responsibilities that really aren't aligned with my strengths and my skills. And sometimes I realize that happens when, it could be a company acquisition and there's change within the organization and employees are asked to do something a little differently or these kind of things. But that's a key that they want. They've signed up for a role and they want to make sure that they're doing the role.
And one other thing I'll mention is that HR also has a role to play because I think training and development are so important to not only employees but to the managers. And often that's kind of coordinated and arranged through HR. So when you're trying to develop managerial skills and abilities and competencies around the people skills and the soft skills, Clinton, then I think HR can also be involved in that.
Clinton Henry: So you mentioned that there are two main reasons why people leave. [Inaudible] comp and then they're not finding what they desire within the role. How do you know what employees are seeking in their career? Is there an approach to kind of get that feedback? And if that's something that they tell you directly or is that something that you sort of infer?
Douglas Brown: Yeah. It's a great question, Clinton and I'll answer it this way. First of all, I don't think managers or HR or senior leaders, none of these people are mind readers. So it's hard. And the other side of that is all employees are unique and they're different and they have individual needs and goals and they can't be always satisfied or met with corporate programs and corporate benefits and these kind of things. So to better understand employees, I always promote that organizations should take the time to have a good conversation, not just one, but several conversations with their employees to try and define, what a rewarding experience looks like for them. And what kind of work would they like to do. What are their strengths. What are their passions and what are their needs and interests and goals?
And I think once you have a better understanding of those unique needs and individual needs, then you're in a stronger position to act on them and to support them. And it's not a 24 hour, seven day a week job, but at the same time these periodic conversations or on a regular basis, if it's once a month, once every two months, at least, you have some dialogue going where you can better understand those needs and work to support them.
Clinton Henry: So those career conversations, which I think are very important, I have seen a lot of organizations not leverage those. What do you see when organizations do implement those sort of checkpoints that are outside of your one on ones with your reports to talk about kind of what their desires are and what they're interested in doing for now but also in the future.
Douglas Brown: So just let me make sure I understand your question properly. You're wanting to know the benefits of those one on one conversations.
Clinton Henry: Well, no. So I know in your work you will come in and you will help organizations retain their people, right. And I imagine one of those things that you talk about is having structure like this, right. And having these sort of conversations. And this is something that I think people hear, oh, that's actually a really good idea. Is that something you see an immediate benefit or is there kind of a long tail where it's like, oh, you kind of see that [Inaudible] down the road.
Douglas Brown: Yeah. No, I think it takes time. I wouldn't say it's immediate because I think those actions and support that I mentioned of the employee kind of manifest itself over time. But I think that time is not an extended period of time. I think just to show interest in an employee and understand what they're looking for in their career and maybe offer some support, whether it's getting them the training that they need or introducing them to a manager of a different department where that's their long term or medium term goal or it could be encouraging them to build new skills and get involved in training. Like those things are little steps along the way, so to speak, that can can make a big difference.
And the real key is that the employee begins to see, Hey, I think I have a future here. I think that there's opportunities. As I work to grow, I've got my manager's support, I'm communicating well with my manager. He understands kind of what I'm looking for and he's helping me kind of work with my strengths and my passions and these kind of things. And then I think, as I mentioned to you earlier, I believe that when they get that call from the recruiter, they're may be much less likely to say, please tell me more and say, no thanks, I'm quite happy in my current role. So that's what we're looking for.
Clinton Henry: So a lot of organizations, they'll say, oh, [Inaudible] we have a company wide program that focuses on employee engagement or retention. Can you talk about why that doesn't always address the employee needs and lead to retention improvements?
Douglas Brown: Yeah. And again, a great question. There are some good company wide programs. I mean, don't get me wrong here. Employers have several benefit packages. They might have an employee recognition program. They might have an EAP program designed to kind of support and offer assistance. They might have health and wellness programs. And they're all good programs. But I'll just try and give you one example here that, I think every employee wants to feel appreciated and valued for their effort and their contributions. So when you look at recognition, it becomes a key element in making them feel proud about their work and accepted and that they're contributing and all those things. But how you recognize an employee?
An employee has often very unique needs. And some people don't like the public spotlight. So if you just say, hey, we're going to recognize Tom or Mary with an award on the public stage and these kind of things, this person might have anxiety around that. They might feel uncomfortable about that. And in the end, that type of recognition really doesn't have any meaning to them. But if you understood that, the employee might like just a personal thanks from the manager or perhaps a dinner out or a bottle of wine maybe or something that they might be more meaningful for them is what I'm trying to say.
And the other thing that I'll mention here, Clinton, is that they could have a recognition program in place and it could be a good one. But if the individual managers aren't taking time on a regular basis to kind of observe what the employee is doing and what they're achieving and some of the strengths and contributions they made so that they're able to say thank you and appreciate and those kind of things. If they're not taking action in that area, the company recognition program really doesn't make a lot of difference. So just a couple of thoughts there that might answer your question.
Clinton Henry: That's very helpful. So a lot of times, you're a manager or a leader and you're like, I want to improve our retention, right. It's always more expensive to hire and replace than it is to retain, right. Is there an ROI kind of calculation or something that you use to kind of show the benefit of this at the executive level?
Douglas Brown: Yeah, there is. And I think every organization, Clinton, has to kind of take a look at these and understand the business case behind these investments. The challenge is that employee turnover numbers are increasing for one. The second thing is that the costs are increasing significantly. And when you examine the cost on I think SHRM, I was just reading some data recently. SHRM, the Human Resource organization, has suggested that it's 50% to 200% of a person's annual salary to replace that employee. So if you have, let's say, a 200 employee company and you lose, I don't know, 10%, maybe 15%. So you're looking at 20 to 30 employees per year. And if they're making, let's say, $50,000 per year, which isn't a tremendous amount and you had 50% of that, even a bottom line number of $25,000 as a replacement cost, those costs add up quickly and they add up to a very significant amount.
So I think when you explore reducing retention numbers, you can certainly achieve some very good returns on your investment. If you're able to reduce the turnover rates by even 10% to 15% to 20%. And the other thing I'll mention on that, to get more attractive ROI's it really depends on the type of programs that they implement. Many business organizations focus their retention strategy on financial remuneration, so compensation benefits, incentives, stock options, it could be different things. And they often overlook the non-financial aspects. But when you get integrated programs that include the financial as well as the non financial, so you're building a positive culture. You get the managers involved, you understand what the employee is seeking in a rewarding work experience and you're acting on that. You're giving them career development opportunities. All these things are also quite important in their decision. So if you have more advanced programs, what I'm trying to say here is that the ROI can be significantly higher because you're going to be able to retain more people.
Clinton Henry: One of the things that how I judge organizations as a whole and leaders individually, one of the key factors is their churn rate, right. How many people are leaving their organization voluntarily every year? And as a country over the past 50 years, our voluntary turnover, which is when people leave on their own accord has doubled. The rate of voluntary turnover has doubled. So if you in an environment where people are leaving more often can maintain a lower churn rate and actually enable your employees to feel autonomy and purpose within the organization, it's not only reflective of a successful organization, but also reflective of a competent and successful manager and leader.
Douglas Brown: It's true. It's very true. And not only that, you're going to start to reduce your cost of turnover but you'll also have more success in recruiting. And this goes to the fact that, I'm sure you've heard of Net Promoter Score and how important the brand is. When people leave, if they're extremely dissatisfied, they're often talking to their friends, their colleagues, their associates and things like that. And you get a negative image, so to speak, of the company if that's happening often. And with people across the company, it becomes a little bit more difficult to recruit. So that's something else that is a factor at play here as well.
Clinton Henry: Yeah, really valuable stuff, Douglas. Thank you so much. I think people who are interested in improving their organization and improving their reputation and their own brand as leaders should really look seriously at programs like yours to help them get to the next level. Because not only have we seen it that it will save the organization money but it will improve the impression of other people around you, around the organization, you get stronger, more solid teams that work better together. And then every leader's goal is to basically find their backfill so they can move up in the organization. If people constantly leaving your team, that's impossible to do.
Douglas Brown: You're absolutely right. And it certainly can be valuable for any organization to really take interest and focus on managing their retention and keeping their talent. And I always encourage companies. If they are seeing some turnover numbers, try to determine what level and what you can accept for turnover. And once it gets to that level, if it's 5% or 10% or whatever you feel is manageable, if you're getting up to 12%, 15%, it's time to really have a look at this and really focus on it.
And another thing that might interest your audience is the very factors that impact and influence employee retention also have a key influence on things like performance, things like productivity, things like job satisfaction and whether they're submitting ideas and efficiencies and new innovations. There's many other areas that those same drivers that create that rewarding work experience also get the employee to be motivated and engaged and vested in their work, so to speak. So the benefits go well beyond just retention.
Clinton Henry: Perfectly said, Douglas. Thank you so much for the time today. I'm incredibly appreciative that you spent it with us, with me and the audience. We really do appreciate it.