Source: theHRDIRECTOR
Date: January 2007 

New research shows that nearly a quarter of UK employees are planning to leave their job. Does this mean there is a specific problem in the UK when it comes to building employee loyalty, or are the latest findings simply a reflection of what happens in a buoyant economy?

The new findings, from the global employee research consultancy ISR, include views from over 260,000 employees in major economies such as Germany and France and make for sobering reading. The UK figure is
higher than in any of the eight European countries studied (see figure 1). There’s little doubt that the availability of jobs in an economy and the flexibility of the labour market will affect the numbers of people looking for opportunities beyond their current employer. However, the ISR research suggests that the high numbers of those planning to move on may indicate a deeper problem about the business culture in the UK.

Another significant finding from the ISR research is that almost half of UK employees don’t think their company is doing enough to retain their most talented people. This comes at a time when human resource departments are being relabeled ‘Talent Management’. Likewise ‘staff’ are no longer ‘employees’, but ‘talent’. Whatever the terminology, companies are aggressively competing for the best, yet how successful
are they when it comes to retention?

“the battle is shifting from recruitment to retention”

For TNT, with 128,000 employees in 200 countries worldwide, the key to retention is the ‘psychological contract’ between TNT and their employees. Frank Keepers, group director of Talent Management at TNT explains: For TNT all these elements help to build their reputation as an employer of choice. ‘‘The battle for great people is shifting from recruitment to retention. Our approach means that not only will people want to stay but they will become our ambassadors with customers and future colleagues.”

A growing number of companies are realising that measuring employee attrition on its own is not enough. This metric provides no indication of the motivation levels of employees who stay. Additionally, this only offers a picture of past performance rather than a forecast of the future. For these reasons, a single retention metric is being superseded by a broader measure of employee engagement. Engagement defines the extent to which employees are committed to their company’s success, believe in its values and are willing to put in extra effort. Intention to stay and a willingness to recommend their company as a good place to work
are also features of an engaged employee.Engagement is important to business because of the link to improved business performance. Studies have consistently shown that an engaged workforce can have a positive impact on financial metrics such as operating income and net growth rate.

In fact, the latest research from ISR has shown a 19.2% increase in operating income over a 12 month period for those companies with high levels of employee engagement. Conversely, companies with low levels of engagement experienced a decline of 32.7%. This study was based on 625,000 employees in over 50 companies worldwide. Previous work based on 10 global economies found a similar link between financial metrics and levels of engagement. In the latest piece of research, ISR finds that 26% of UK employees say they do not have the opportunity for personal development with their company, and over a third say their company is not developing people to their full potential. This is significant as separate ISR research shows that opportunities for personal development and growth are among the most important factors that contribute to engagement levels for the most talented group of people. The business benefits of having a highly engaged team of top talent are self-evident, but organisations must provide new and creative learning opportunities for their people.

“tracking retention rates through a monthly scorecard”

Reuters is an example of a company that takes retention very seriously. As well as tracking retention rates through a monthly scorecard, they also break down the results by business unit, location and by population group. At Reuters, retention is seen as an intrinsic part of employee engagement, so development and learning are very much part of the business culture. Each employee has a development plan and Reuters have developed ‘learning maps’ for each job family. The result is a high level of transparency around job roles and also around the requirements of advertised job openings. For some employee groups such as high  performers or those with specialist knowledge, retention will take a different shape. Indeed Reuters has put in place a programme to target ‘talent at risk’ groups. This scheme ensures that individuals are made aware that they are seen as important to the company and a number of steps are taken to reduce the likelihood that they will move on. In some cases, employees will have the chance to work on the most innovative projects which will broaden their knowledge, test their abilities and result in the employee remaining with the company.

Proof that this is working for Reuters can be seen in a retention rate of 98% for their highest performing people. Mark Sandham, global head of Human Resource Operations, Reuters, believes that organisations need to be clear about what they mean by retention. For his organisation, retention means maintaining positive relationships, not just with current employees but also with people who have left the organisation, which is why Reuters Alumni was set up. This group of former Reuters people meet on a regular basis to maintain contact with their network of Reuters contacts and to exchange ideas. The aim is that the expertise and knowledge of former Reuters employees can continue to benefit the business, even when employees move on.