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Retaining talent during a recession Email|Link|Comments (14) January 20, 2009 02:13 PM By Aaron Green Many companies are reacting to this recession by laying off staff and instituting hiring freezes, as well as delaying raises and promotions under the belief that these actions will reduce costs -- and they do in fact reduce costs, in the short term. However, over the long term these measures often end up costing more than the initial savings. Here's why:

If you allow morale to drop, your competition can recruit your best people away, while low performers stay on, reducing productivity. Decreased staff levels can result in overburdened employees who feel burnt out and frustrated; this situation negatively affects customer relationships. Hiring freezes mean lost opportunities to hire available superstars who can improve your organization. Replacing downsized employees may take a long time to achieve, and the qualities certain talented employees bring to your company may take years to be fully replaced. Employees grow increasingly unhappy; and once they have the opportunity (i.e. when the economy improves), they quit just when you need them the most. Your employment brand as a good company to work for is damaged, limiting your ability to hire and retain in the future.

Unfortunately circumstances sometimes necessitate cost cuts and there is just no way around it. As opposed to making company-wide staffing cuts and freezes, following are some suggestions that might fit your situation:

Make cuts and freezes based solely on employee performance and future opportunities. While this approach is logical and appears obvious, too many organizations take the misguided approach of spreading the pain around the organization, "to be fair" (i.e. 10% layoff for each division, one person cut per manager, company wide hiring freeze, etc.). Think about the company that instituted a company-wide hiring freeze so that all managers felt treated the same: if one division is shrinking and one is growing, it does not make sense to treat these divisions the same; yet this is the approach many companies take.

Look at overall budget dollars and how they relate to revenues rather than focusing on employee cuts alone. Ask employees what they value most in these hard economic times. You may be surprised to learn that some wouldn't mind taking a pay cut in exchange for the opportunity to telecommute or accrue additional time off.

Take advantage of the difficult job market to hire superstars you might not have been able to afford before. Switch some people from employee to contractor status as a temporary measure, retaining your relationships and knowledge base as well as helping to maintain morale. Reallocate incentive pay to focus on rewarding your highest performing and highest potential employees. Offer employees short-term incentives for cost-saving ideas.

During strong economic times many companies focus on employee morale and retention, yet when this recession arrived those plans were forgotten. It is important to remember that employees are as nervous about the economic climate as you are. More than ever it is important to continue focusing on employee retention and morale including: Communication: Staff can become anxious based on the nonstop flow of negative information in the news. Frequently communicate honestly about what is happening at the company. More importantly, communicate what each staff member can specifically do to keep the company successful and to take advantage of opportunities. "Fix" Incentive Plans: Incentive plans were put in place to reward and motivate. These plans can have a negative effect on morale and retention if talented employees have no chance at earning incentive dollars because of marketplace changes. Obviously it costs money to "fix" incentive plans, but this action may make sense for certain talented employees. If you underpay someone for too long, you risk losing them whether we are in a good economy or a bad economy. Broken incentive plans are a major problem right now and many highly talented employees are looking for new jobs for this reason alone. Fix the situation before it becomes a problem. Give Back To Employees Where You Can: If you don't have extra money to spread around, look for opportunities to give back to employees wherever possible, employees will certainly appreciate the gesture. For instance, if business is down, maybe you can cut back an employees hours; consider flextime, maybe staff cuts provide an opportunity for increased responsibilities (not just more work); or consider providing training that will be valued by the employee.

Remind Employees That They Are Valued: It never hurts to remind your employees that you value them and care about their development. There is a need for top talent in all economic circumstances, and the pressure to attract and retain top talent is going up, not down. This negative economic cycle will pass and we will again be struggling to find qualified staff. Macro demographic trends illustrate that we produce too few employees for available positions. Consider the above suggestions so that your company will thrive when times are better while your competition is busy recovering http://hr.blr.com/HR-news/Benefits-Leave/Employee-Benefits/Benefits-and-Retention-Strategies-in-aRecession/ September 29, 2008 Benefits and Retention Strategies in a Recession Chris Senior Editor Ceplenski

Whether or not we choose to define current economic conditions by using the term "recession", the impact of current economic conditions is being felt in the workplace. In a breakout session at the 21st Annual Benefits Forum & Expo held in National Harbor, Maryland, HR and benefits professionals were given some valuable tips for retaining and engaging their workers during tough economic times. In the face of slow growth, that some organizations would take measures such as a reduction-in-force (RIF) is understandable, explains George Lane, Principal at Mercer, and an RIF will have a near-term impact on the bottom-line. However, you must be careful not to lose valuable people that "you'll need when you start up again," he explains. According to Mercer's 2008 Report on Human Capital Management for Slow Growth Times, employers should: 1. Be looking for new ways to generate sustainable reductions in benefit costs using innovative strategies that do not adversely affect perceived value 2. Implement creative, highly-targeted strategies to recruit and retain the optimal workforce for long-term success, and 3. Communicate often and honestly to employees to bolster flagging engagement and productivity Lane asserts that you should be doing these three things all of the time, but a recession underscores the importance of such actions. Maia Lucier, Director of Compensation & Benefits for Dimension Data, a global specialist IT services and solutions provider, explained how her company has added no and low-cost ways to beef up its

benefits in creative ways while continuing to strive to attract and retain talent against the backdrop of a troubled economy. Lucier noted the importance of frequent and effective communication to employees when it comes to their benefits, noting that the extent to which employees value and understand their benefits package impacts job satisfaction and loyalty to the organization. With this in mind, Dimension Data has leveraged its relationship with a financial advisor from its 401(k) plan, asking him to participate in new monthly "Think Financial Wellness" conference calls for employees. These 30-minute conference calls were created to address economic uncertainties for employees and consist of the following:

10 minute recap of recent economic developments (in plain English) 10 minute interpretation of "what does this mean for me" including retirement and personal financial planning implications 10 minutes of Q&A

Dimension Data is also providing health expense communications for employees, such as an "around the office" feature in its monthly newsletter. This feature provides a profile of an employee and might explain, for example, how he/she saved money by using mail order drugs. Showing how a specific employee utilized a benefit program that saved him/her money is much more effective than just explaining the benefit, Lucier has found. The company has also created "What you should know as a Dimension Data employee" webcasts which communicate to employees by promoting learning and development opportunities, showing them how they can utilize their benefits to the fullest extent, and communicating Dimension Data's 401(k) investment review process and due diligence (something more employees ask questions about during tough times). Lucier also avidly supports the use of total compensation statements--she says that by providing detailed information regarding the value of their benefits, you may be able to hold onto valuable employees who would otherwise be tempted to take a job elsewhere for a small base salary increase. Finally, in terms of communication, Dimension Data has a "Leading Talent" program for its line managers. Dimension Data wants their managers to have the ability to manage the relationship between the employee and the company. In this program, managers are taught how they can help attract, engage, develop and retain talent for high performance. They are also educated about company benefits so that they can communicate benefits value to employees.

Another component beyond having low-cost benefits and effective and frequent communication of these benefits to employees is to conduct disciplined reviews of benefits costs--not just during a recession, but even during good economic times. Lane concluded the session with a valuable takeaway--it's important to communicate with and engage employees actively and frequently at all times, not just during a recession. "People will be more linked to the organization if they're engaged when a recession hits," he says. http://www.strategichrinc.com/articles/rentention-recession.htm Are You You Better Be! Worrying about Retention During the Recession?

Robin Throckmorton, MA, SPHR Is retention an issue for your company? Recently when Ive asked this question of folks, their immediate response is a loud NO quickly followed by employees are lucky to have a job right now. We dont have to worry about retaining them. They arent going anywhere. In a sarcastic tone, I quickly retort with something like, if you were to lose a good employee right now, what would that turnover cost you? After they try to calculate it and get crazy numbers that are so far off base, Ill share the simple rule of thumb of 50 150% of the employees annual salary. Can you afford that expense to hit the bottomline right now just to lose one employee? If that isnt enough to make you think about retention right now, lets talk a little more about the impact of losing even more employees when the economy picks up and the labor market is short skilled workers. Perhaps at that point, youll be ready to listen to some inexpensive solutions. What you do right now for your employees while times are tough will have a direct impact on what they will do when the economy does pick up. In a recent survey released in February 2009 by Salary.com, 65% of employees admitted to passively or actively looking for a new job already. Employers are blind to what is happening and believe that they are in power. In this survey, Salary.com found that 80% of the employers believe their employees would not begin a job search in the next 3 months; at the same time, 60% of the employees said they plan to intensify their job search in the next 3 months. What generally happens in these circumstances is the top employees that you cant afford to lose can find jobs now and even the good / average performers will find jobs at least when the economy picks up. If this happens, you will be left with those that cant find employment elsewhere. If they havent left yet, you may still have time to show them that you care about them and have a great place to work if you begin investing in retention now. Just in case that isnt enoughrecruiters are finding out that replacing employees isnt as easy as you might think it would be when unemployment levels are at 7 9%. Companies that are actually recruiting now are reporting receiving as many as 1500 or more resumes in response to an ad on the national job boards. After spending countless hours screening these resumes, we continue to hear the same message where are all the good candidates? We have high unemployment but we are still in a labor / skills shortage; plus employers expectations are very high given the crunch on keeping expenses down. Filling a position is not an easy task now; nor will it be when the economy picks up. Your best recruitment tool is going to be retention. Spend your money keeping your employees and training them to do the jobs you

need them to do. You are likely to spend more money recruiting from the outside and not find the right skills, knowledge, and commitment than what you could spend on retaining and training the employees you already have. Finally, studies also show that not only is your bottomline impacted by the turnover costs but also a decrease in productivity and customer satisfaction. The more dissatisfied employees become and the less focused they are on doing a good job for you, the less productive they are on the job and more likely they are to impact customer satisfaction. According to Karen Campbell the vice president of human resources and director of the People Management Resources Division at SMC Business Council Good retention practices go hand-in-hand with customer satisfaction and employee productivity.'' Convinced? I hope so So, where do you begin in trying to retain your current workforce? You need to start with your employees. You need to find out what your employees feel are the characteristics of a great company. You can do this through exit interviews (if you are having any turnover) performance reviews, employee opinion surveys, and casual conversations. Think about what you hope to gain by asking them. What are some reasonable questions and steps that you could take to improve the workplace? Dont ask questions about things you cant change or you set yourself up for failure. But, also make sure you are asking questions that will give you actionable results. Once youve gathered the feedback, determine the actions you can take and create a plan. If you are short staffed, involve your employees in implementing the plan. Most importantly, communicate the plan to employees of what you are going to do based on their feedback as well as what you arent going to be able to do now or later and why. As long as you are communicating AND with sincerity, youll be surprised at the employees responses. Some of the best retention plans simply include asking employees, involving employees, communicating, and taking action. Dont try to copy the retention programs that others do. Figure out what will work in your company and that might even start with a culture change. Often the solutions are simple and not too expensive so dont hold back because you are afraid of what employees may ask for. Some of the response and solutions weve seen have included:

Training and encouraging managers to give more regular feedback A more formal reward and recognition program A little more fun in the workplace (i.e. boss flipping burgers on a Friday) Show employees how they fit into the goals of the company Flexibility in the hours (i.e. set core hours) Employee development and training Improve company communications (even when it is bad news) Alternative benefits (i.e. concierge services, dinners to go) Competitive compensation (i.e. yes, even during these times of cutback) Mentoring and coaching solutions Skill development (i.e. job enrichment) Respect

Now I ask, is retention an issue for your company? I hope it is a priority!

http://www.cipd.co.uk/hr-resources/survey-reports/war-on-talent-talent-management-under-threatuncertain-times.aspx

The war on talent? Talent management under threat in uncertain times

Resource summary
Are organisations responding to todays difficult economic conditions by cutting back or even abandoning their talent management strategies? Has the war for talent turned into a war on talent? That was the question behind this November 2008 survey of approximately 700 CIPD members. The findings make surprising reading. Just 26% reported a change in their organisations approach to talent management. In fact many businesses continue to see talent management as a key survival strategy to differentiate them from competitors and position them to benefit from the eventual upturn.

Many organisations are also responding to the downturn by adopting positive talent management practices: 55% are developing more in-house talent, 45% are focusing on essential development, 43% are continuing to recruit key talent and 35% are increasing their focus on employee retention. However only 51% felt that managers are equipped to tackle the challenges of managing talent in a downturn. The research argues that now is not the time to cut development activity or to renege on carefully conceived talent management plans. However more cost-effective solutions may need to be found and return on investment will certainly come under greater scrutiny. Part 2 of this research is now available. It includes case study snapshots highlighting the creative and innovative approaches that ten organisations are taking to talent management in the recession.