In this issue:

Thoughts on Selling Senior Management on Employee Engagement and Retention Initiatives

by Leigh Branham

At a recent presentation to a group of Human Resource managers and professionals, I was asked, "Do you have some ideas you can share with us on how to sell senior management on the idea of investing more dollars into employee retention and people development?"

At the time, I didn't have the time to respond in the kind of detail that the question deserved, so I returned home and put down the following thoughts, which I hope the readers of the Keeping the People Report will find useful.

1. Do enough homework to show them how the new initiatives will create a net increase in revenues or reduction in costs.

There is a strong and growing body of research among authors such as Mark Huselid, Jeffrey Pfeiffer, David Ulrich, Jack Fitz-enz, John Kotter, and many others showing that investing in people improves the performance of the business. In a customer-service economy where front-line service makes all the difference and employees treat people as they are treated, CEOs and their senior teams should no longer need convincing. Unfortunately, some do.

Do your homework and be prepared to make the business case. Do you and your senior leaders know the true cost of turnover in your organization? If not, feel free to use the cost-of-turnover auto-calculator on my web site (click on "tools")-www.keepingthepeople.com. If you can reduce employee turnover by just 5%, do you know how much money you will save your company? The SAS Institute saves $67 million per year in avoided turnover costs.

Do your senior leaders know that investing in employee training actually increases the likelihood of keeping employees instead of making it more likely they will leave? Do they know that companies in the top quarter in yearly training expenditures per employee average 24% higher profit margins?

Get familiar enough with the research that you can make the business case to your senior leaders about the ROI of employee engagement and retention.

2. Be prepared to recommend and track a limited number of key "people metrics" that will serve as leading indicators of business performance as well as indicators of your progress toward fulfilling your organization's potential as an employer of choice.

In my "Weasels in the Woodpile" presentation I show a slide with several. track-able measures, such as new hire retention rate, ratio of jobs filled internally vs. from outside, and employee referral rate--all "dashboard indicators" that can predict positive business performance. When several such indicators all start to trend in a positive direction, it means that employees are becoming more engaged, are more committed, and are serving customers better.

There are dozens of "people metrics" that you could select from books such as Fitz-enz' The ROI of Human Capital or Ulrich's, The HR Scorecard. The point is, select the ones you believe are right for your organization and make the case for measuring them to your senior leaders. Here's the case in brief: "they not only predict employee engagement, they predict business success."

3. Gain your CEO's approval to make all managers of people accountable for "people metrics" so that managers are not allowed to view employee engagement and retention as "HR's responsibility."

Many managers will not take any initiatives seriously unless they are held accountable for results tied to employee engagement and retention. Otherwise, they will dismiss "the soft stuff" as HR's responsibility in spite of the fact that tons of research proves that people leave and stay for reasons tied directly to the relationship they have with their direct supervisors.

At a minimum, a significant portion of manager's salary and bonus-say 30%--should be tied to their voluntary turnover rates and/or employee engagement survey scores. Managers with results in the lower 20% should be called in for "what's wrong" meetings with their superiors.

4. Focus on the initiatives with the greatest leverage for increasing engagement and retention of targeted employees who contribute the most to your business success.

Senior leaders know that, at any given phase of the business cycle, some employees are naturally more linked to the success of the business strategy that others. In a start-up fast-food restaurant chain, the senior executive team is all-important, but when the company begins to expand nationally and open new restaurant locations, the restaurant managers become more critical to the company's success.

The 80/20 rule applies here. Which 20% of your employees are in position to create 80% of the value for the company? Show your senior team that you know who they are and how to keep them happy and engaged. Step one in this effort--get to know these 20% one person at a time and understand their needs

5. Begin with a pilot group or team with several high-value, high-flight-risk employees and a manager who is highly motivated to get involved.

If your CEO needs proof that your initiatives will work before endorsing it organization-wide, then ask for the opportunity to demonstrate that they will work. Identify a manager in your organization who has a high percentage of highly-valued employees who may also be at risk of leaving and would be difficult to replace. Look for a manager who cares about people and will champion the initiative.

Next, implement your new engagement/retention initiative in this manager's area. Track and measure the results, then ask your CEO to watch for increases in productivity, customer satisfaction and costs saved or avoided. Assuming those gains are positive (and they should be in most cases), that will gain you the approval you need to expand the initiatives into all areas.

6. Create an engagement and retention plan for "B players" as well.

Just because you begin by focusing on targeted high-value employees, that doesn't mean you should overlook your "B" players-the solid citizens who keep you in business by showing up every day and doing their jobs well. Many of them value having a life outside of work more than they value climbing the organizational ladder, especially members of generations X and Y. Look for ways to provide more flex-time, telecommuting, vacation time, paid time off, and other time-focused benefits that many "B" players say they actually value more than getting a pay raise.

7. Build more time into your own work week to do more "value-creating" activities for the business and fewer "cost-reduction" and "risk-management" activities.

Years ago, I heard a CEO say, "All I want my HR manager to do is file and smile, come when I call, and keep me out of trouble." Today's CEO's, if they are smart, know they need much more than that from HR. They need a "chief talent officer" whose mission is to help them create value for the organization by building the most awesome workforce possible. One major problem is that the sheer weight of administrative work and the threat of litigation consumes way too much of your time that would be better spent creating real value for the organization. Another threat is that you may be too focused on measuring costs such as time-to-fill and cost-per-hire that you've taken your eye off the more value-creating measures, such as quality-of-hire.

8. Make it your personal mission to change the traditional mindset that many managers have about attracting, selecting, engaging, and retaining talent.

If most of the managers and senior leaders in your organization believe that: a.) providing good pay and benefits is enough to keep good people, or b). HR is responsible for hiring, recognizing, and keeping the workforce, or c). that high turnover is just an acceptable cost of doing business, you've got your work cut out for you.

If these beliefs are prevalent among managers in your organization, you must work to change them. Until you do, you will never get to first base. The best place to start is at the top. Feed your CEO a steady stream of information showing how other companies, like Jet Blue Airlines, Whole Foods Markets, and Smuckers have built unprecedented business success mainly by shaping culture, jobs, and management practices to engage talented people.

9. Continually seek to increase your "personal power and influence" skills until you are seen as a definite "player" on the senior team and as indispensable to linking the organization's business strategy with a solid plan for building and managing the best possible talent pool.

Finally, we come down to one of the more difficult issues to face-that you may be lacking the personal power and credibility to sit at the table with senior managers and persuade them to accept your recommendations. HR professionals have traditionally been viewed as the least powerful among senior staff, partly because they were good soldiers who took pride in responding in the spirit of good service to the needs of their superiors.

Now we live in a time when CEOs want more from senior HR staff whether they realize it or not. They need people who see HR as a potential profit-center, not as a cost-center or as overhead, and can speak truth to power to make their case in a compelling way. Now is the time for all HR people to speak up and claim their rightful power in the new talent-driven organization of the 21st century.

Copyright, Keeping the People, Inc. 2004. Keeping the People Report is written and edited by Leigh Branham.