Feature Article - March/April 2012


Reducing Turnover & Keeping Top Performers

By Rick Dandes

As the global economy recovers from what many economists believe was the worst recession in decades, companies will experience an employee engagement crunch of epic proportions, particularly as it relates to high-performing knowledge workers. So, how a company's internal culture and reward and incentive programs can work to attract, engage and retain top talent—its human assets—can differentiate it from competitors and be key to gaining a competitive advantage in a fierce marketplace, according to several HR and incentive industry experts.

"While most organizations claim people to be a strategic asset," said Brad Callahan, manager, business solutions, Marketing Innovators, of Rosemont, Ill., "many fall short on talent management fundamentals, from recruitment to retention to retirement."

It's ironic, he continued, that organizations spend enormous amounts of time and money to ensure that the right people are in the right seats on the bus, but fail to adequately support them by investing in a holistic human capital infrastructure grounded in growth, recognition and trust.

"We all know top performers usually have options," Callahan said, "regardless of the economy. So whatever their financial state, organizations must provide their workforce with the necessary support to stay committed and focused."


According to The Hay Group, a global management-consulting firm, the cost of turnover can be up to 150 percent of a new employee's salary, and that can have tremendous impact on a company's bottom line. [On a wider scale, the Gallup Organization has cited a 2011 disengagement number of about $300 billion annually that costs the U.S. economy.]

Besides the obvious financial impact, frequent turnover often affects company culture, added Derek Irvine, vice president, global strategy, Globoforce, Southborough, Mass. "A high level of turnover creates unrest and a sense of unsettlement among employees," he said. "And with frequent turnover, there is no true feeling of company values or community among co-workers or management. The sentiment of teamwork and 'all for one' is lost. This leads to non-productive working relationships that can have significant impact on productivity and profitability."

Other problems associated with poor retention include lackluster performance, impaired productivity and poor quality of work.

In a knowledge-based economy, said Mike Ryan, senior vice president, Madison Performance, New York City, "when you lose good people today, you're losing so much of your company. Chances are that your best employees have been an important part of your corporate culture. They've been good role models, good coaches, and they might even have been intermediaries when teams had disagreements."

So, when you lose them, you are losing somebody who knows the ins and outs of navigating your company; somebody who really understands the needs and expectations of customers; and somebody who understands the competitive industry set.

Companies need to be sensitive to how cultures may have shifted recently, from being highly cooperative places to work, where information and best practices flow freely, to competitive environments where employees are afraid of losing their jobs and are less likely to help somebody else get ahead.

Your best people, your strongest performers, aren't as concerned about their standing in the company, and therefore they tend to be more cooperative with their interaction with other people. "Lose them," Ryan said, "and you lose that spirit inside of your culture."

Employees want to be part of the solution rather than being shielded or safeguarded from bad news. They want to participate in the problem-solving process.

Patty Saari, vice president, client services-business loyalty, Aimia, of Montreal, Canada, agreed that losing a top performer affects the internal culture significantly.

When you see or hear of individuals making a choice to leave an organization, other employees might start questioning the viability of the company or the viability of management within the organization, and their ability to lead.

"The cultural impact of all this is really difficult to quantify," Saari admitted, "but in this economy in particular, I am seeing employee hiring practices and retention practices utilized, scrutinized and revamped to make sure that high potentials, in particular, are really safeguarded."

Another thing to consider is this: When you lose a top performer, that employee is not going to start their career all over, meaning they are not going from one business model to one that is entirely different. They are probably going to a competitor. Imagine, then, the great advantage that can be to your competitor in the marketplace.