Some names have been changed to protect the identity of the organizations and authors.
by Tracy Gilmore, Simone Salmon, Yang Song, and Jane DoeThe Problem
Secure Housing Affiliates (SHA) is the largest public housing sub-contractor in the country and they are responsible for maintaining high levels of performance. Thus, losing SHA’s greatest asset – human capital – results in a multitude of negative repercussions for the organization.
Within recent years, SHA has experienced a high turnover rate, specifically in the Finance Department. Since October 2011, the department has lost many high performing staff; specifically 11 analysts in both 2012 and 2013, and 3 analyst to date in 2014. The following causes were identified: low pay, poor leadership, increased workload, lack of growth and opportunity, and a lack of recognition.
According to the Bureau of Labor Statistics (2014), the average salary for a Budget Analyst is $69,280/year, while the average salary for an Analyst at Secure Housing Affiliates is only $40,580/year[i]. This is less than the salary of the lowest 10% of Budget Analysts earning about $45,720/year.
Further, senior management has proven to be unsupportive, over-demanding, and unappreciative of staff efforts. Staff is spoken to in condescending tones and there are frequent instances of preferential treatment. Lack of staff results in additional work tasks for existing employees as they are forced to take on additional responsibilities, increasing stress levels. In addition, Analysts feel they are not recognized for their contributions, extra work is unacknowledged, difficult work tasks are down-valued and high work ethics are overlooked. As a result, employees are not being utilized to their full potential; they have low morale and reduced productivity – all of which increases costs to Secure Housing Affiliates.
As Analysts witness their colleagues leave, they begin to question their own value, their satisfaction with their position, their pay grade, and their overall desire to stay. Eventually, some lose motivation to remain on the job and will eventually seek out new opportunities that grant more job satisfaction. This decline in morale and staff retention will lead to a decrease in productivity. A smaller staff simply cannot produce the quantity and quality of work expected from a full team. Analysts are left with few options: they will either become overworked and/or they will leave work unfinished and unattended until the vacancy is filled. Further, once someone is hired, there is a learning curve, which results in reduced productivity from the new hire while they learn the ins and outs of their position. Lastly, there are a number of costs associated with high turnover. There are direct costs, which include separation costs, replacement costs, and training, as well as indirect costs which include loss of productivity, unproductive time for both staff and managers, and a general disruption of the team dynamic. In numerical terms, as calculated based on an article by Scott Allen, for a Budget Analyst who earns less than $50,000 per year, the average cost of replacing that same employee amounts to roughly $75,000[iii]. Therefore, it is more cost effective to retain employees than to replace them, which can be achieved through a combination of policy options.
Policy Options
1) Stay Interviews & Re-evaluation of Responsibilities and Pay Grade
When employees feel as though they are overworked and not fairly compensated for the work they are performing, they will often seek out new opportunities. In order to reduce turnover, the best course of action is to be preventative. This can be done through the use of stay interviews, a formal review of responsibilities and/or evaluation of pay grade. As outlined in a Forbes Magazine article, stay interviews, or simple sit-down informal meetings or questionnaires can be conducted to obtain valuable feedback on how an employee feels about his/her job and what improvements or needs he/she would like to see addressed in order to keep him/her satisfied at the organization [iv]. In particular, the Analyst job description needs to be reassessed redefined to include responsibilities that are manageable, yet still challenging, to ensure that staff members do not feel they are constantly being asked to perform the work of two employees.
Additionally, with salary statistics showing that, on average, Analysts elsewhere are paid upwards of $30,000 per year more than a SHA’s Analysts, the pay structure should also be adjusted. If employees are compensated fairly for the amount of work they are being asked to perform, they would be more content to remain in their positions, as they would feel more valued and feel that the pay matches the expectations. Further, by raising salaries to more closely match average salary levels, Secure Housing Affiliates reduces the chances that Analysts will be able to find a similar position elsewhere for more pay, therein increasing the odds of employee retention.
2) Management Leadership Training
Based on research conducted by employee-retention expert Leigh Branham, problems related to management leadership and its effectiveness account for approximately half the reasons why employees leave their current jobs[v]. To address these causes, preeminent human resources scholars, Lee Bolman and Terrence Deal, discuss the importance of effective leadership training in their best-selling book, Reframing Organizations: Artistry, Choice, and Leadership [v]. Substantiating Bolman and Deal’s argument for leadership training, John Zenger and his colleagues analyzed substantial feedback from approximately 30,000 managers of hundreds of companies throughout the world and that leadership training does improve management and can increase a company’s pre-tax profit [vi].
We believe that ongoing Management Leadership Training is necessary for increasing employee retention. Leadership training can benefit the entire organization by helping managers develop positive workplace habits. Trained managers will become more supportive and appreciative of staff efforts. Open communication between Management and employees will produce a more harmonious environment, where everyone works together to solve problems. Managers will gain deeper insight into others’ positions, resulting in fewer workplace confrontations.
Finally, leadership training will help foster an organizational culture of teamwork. Everyone benefits when employees and management work together in alignment with the company’s mission. When employees are valued and feel that they are a vital part to the organization’s future, the result is increased productivity, improved employee morale and more effective teamwork. By implementing this strategy, Secure Housing Affiliates wins, Management wins and the employees win.
3) Professional Development Training
The goal of professional development is to improve staff and organizational effectiveness. Professional development can be viewed as the activities and programs that help Analysts learn about job responsibilities, develop or enhance work-related competencies and skills essential to accomplish organizational objectives and grow personally and professionally to prepare themselves for advancement at Secure Housing Affiliates. To determine staff development activities, we suggest that the department create individual Staff Development Plans for every staff member. Staff Development Plans should be developed collaboratively between the staff member and his/her manager through a careful review of both the staff member’s and organizational needs.
Implementing development trainings communicates to Analysts that they are important to and valued by the organization, creating a positive environment that is conducive to loyalty. Thus, the benefits of investing in the development of the Analysts is two-fold: not only would professional development initiatives create a highly satisfying place to work, and thereby attract and retain excellent, high-performing staff, but also – by developing the careers of our staff – it would increase employees’ own skills-assets, improve their intellectual capital, and expand their expertise bank on which to draw for the benefits of the Finance Division. When considering the broader goals of the organization, we must remember that, by maximizing the potential growth of our Analysts, we maximize the performance of the finance department and the overall organization.
4) Create a Formal Employee Recognition Program
It is essential to recognize, reward and celebrate employees’ hard work and accomplishments. Numerous studies show that employee recognition programs contribute to increased employee engagement, productivity and customer service, among other markers of employee morale [viii], [ix].
The establishment of a formal Employee Recognition Program within the finance department at Secure Housing Affiliates would provide a structured mechanism to acknowledge the efforts of its staff, while also offering employee incentives and positive publicity to further boost employee morale and reduce staff turnover. The mechanism used to determine eligibility will be based on objective measurable parameters in order to avoid the potential for favoritism and preferential treatment.
Recognition could come in forms such as cash prizes or other incentive items (e.g., gift certificates, small prizes, etc.) for work deliverables like highest number of projects completed in a month and other quantifiable outputs, additional paid-time-off days for employees awarded with perfect attendance, or bonuses for employees who have been with the organization for a certain amount of time (e.g., six months, one year, three years). Additional options that would not be as costly may include publicity opportunities where employees would be featured on the Secure Housing Affiliates website and/or employee publications and bulletin boards to help raise employees’ profiles and boost morale. Finally, in an effort to build internal cohesiveness and celebrate accomplishments of staff, the organization could sponsor regular employee awards and recognition ceremonies that can be held on an annual, bi-annual or monthly basis, as determined by the Management [x].
Endnotes
[i]United States Department of Labor, Bureau of Labor statistics (2014). Occupational Outlook Handbook. http://www.bls.gov/ooh/business-and-financial/budget-analysts.html.
[ii] Allen, Scott. “The High Cost of Employee Turnover.” OPEN Forum. American Express, 7 Apr. 2010. Web. 29 Apr. 2014.< https://www.americanexpress.com/us/small-business/openforum/articles/the-high-cost-of-employee-turnover-scott-allen/>.
[iii]Connor, Cheryl . “In The War On Talent, Use ‘Stay Interviews’ To Retain Great Employees.” Forbes Magazine 15 Apr. 2014: n. pag. Web.<http://www.forbes.com/sites/cherylsnappconner/2014/04/15/in-the-war-on-talent-use-stay-interviews-to-retain-great-employees/>.
[iv] Branham, L. (2012). The 7 hidden reasons employees leave: How to recognize the subtle signs and act before it’s too late. AMACOM Div American Mgmt Ass.n
[v] Bolman, L. G., Deal, T. E. (2008). Reframing organizations: Artistry, choice, and leadership. John Wiley & Sons.
[vi] VZenger, J., Folkman, J., & Edinger, S. K. (2009). How extraordinary leaders double profits. Chief Learning Officer. http://zengerfolkman.com/wpcontent/uploads/2013/05/Double-Profits.pdf
[vii] ]Harter, J.K., Schmidt, F., Agrawal, S., Plowman, S. K. “Gallup Q12 Meta Analysis: The relationship between engagement at work and organizational outcomes” (February 2013).Accessed April 30, 2014, http://www.gallup.com/strategicconsulting/126806/Q12-Meta-Analysis.aspx. [viii] What Works® Market Brief: Turning Thank You into Performance (2012). Bersin & Associates. Accessed April 30, 2014: http://marketing.bersin.com/Recognition.html.
[iv] The Value and ROI in Employee Recognition: Linking Recognition to Improved Job Performance and Increased Business Value—The Current State and Future Needs. (2009). The Human Capital Institute. Accessed April 30, 2014, http://theirf.org/direct/user/file/pdf/Value-and-ROI-in-Employee-Recognition.pdf.