Best Employee Management Feature 2008

With the economy in the doldrums, it is easy for staff to fall into the same trap as they reassess their career situation. But, as Louise Druce finds out, it’s not always money that will make them stay.

They say money talks and not many people would refuse that kind of conversation when times are hard. But if you want to keep demotivated staff buoyed up in an effort not to lose them during the economic downturn, you’ll need to dig deeper than the company coffers.

That’s not to say that cash isn’t important. If people feel their firm has a disproportionate and unfair pay structure, it might tempt them elsewhere if the price is right for the same role. However, research suggests career development and progression is a more attractive reason to stay put, especially amongst the so-called generation Y.

“If the other elements of job satisfaction aren’t there, often you’ll lose someone anyway. This doesn’t change a lot, even in an economic downturn,” says Chris Philips, marketing director EMEA of talent management software provider Taleo.

“Most organisations have at least a 10% turnover naturally and there is still a lot of movement and churn, and plenty of opportunities for good people to move. In fact, you could argue that in a tougher economic environment your retention strategies become more important because it becomes more challenging.”

In fact, he suggests that throwing money at people could have the opposite effect on the business. “You need to pay market rates but organisations that don’t have good retention strategies in place are often forced to fall back on pay rises as a way of retaining people,” he explains. “It’s almost an admission of failure if you’re ending up having to pay over the odds.”

Alistair Leathwood, managing director of research and recruitment firm FreshMinds, also believes the majority of people are happy riding out the credit crunch and not afraid to move as it doesn’t seem to have impacted the employment market significantly so far. “The tendency is for employers to ease back on the speed of promotion, make appraisals that little bit harder, make senior roles less available and they won’t make big launches etc. That’s when people might leave and companies will lose out,” he says.

The knock-on effect

A lack of motivation doesn’t just impact productivity and retention. Philips points out that in the instantly accessible web world we’re now part of, disgruntled employees have more online outlets to vent their frustrations, such as blogs and social networking sites. A bad reputation soon seeps out from behind closed doors, possibly damaging brand and even recruitment if employees look you up, warts and all.

The good news is it’s never too late and doesn’t have to be costly to get things back on the right foot. And one way could be to turn the tables and allow employees access to the technology they might be using negatively to manage their career positively.

For example, social networking can help with mentoring and coaching. Both managers and staff can also use Web 2.0 tools to look up and promote career opportunities within the company and see which skills fit with these, helping to identify what training and development might be needed, also aiding succession planning.

In addition, Web 2.0 tools can be used to make the annual appraisal more effective through the ability to log regular feedback on systems, rather than trying to recall achievements made over the last 12 months that now seem a distant memory.

“It’s about making sure people have visibility to opportunities internally and making sure you are being pro-active in telling people about opportunities,” says Philips. “There is a now a shift from what is sometimes seen as paternalistic, formally sanctioned corporate career paths to employees controlling their own careers and not being dictated to.

“There will always be an annual checkpoint where you look at things like compensation etc. But if you’re only doing a performance review once a year, that’s not very effective performance management. The fundamental part is making sure you’re setting clear, measurable goals so there is a line of sight between personal goals and organisational goals, and people can see how they’re getting on against the bigger picture. People want to know how they’re progressing.”

Getting fruity

Leathwood says job satisfaction also boils down to transparency and consistency, so employees can see their strengths and weaknesses, and are clear about why people are being promoted or rewarded, which can then be flagged up by offering training in new skills and setting challenges that allow recognition as well as growing the business.

He also believes perks can help make lulls in the business more bearable. This could be something as simple as offering fresh fruit, gym memberships or days out to vouchers or health and dental insurance. “If you said to an employee ‘sorry you’re not getting a pay rise but here’s some fruit’, you’re not going to get very far,” he adds. “But while it doesn’t beat a good performance and pay structure, if you give people extra entitlements it keeps it fun and interesting.

“If people do leave, you want them to say your company was a great place to work and have them speaking well of you. Your best ambassadors can be your ex-employees.”

Embedding in the operational fabric

This, in part, is also reliant on fostering a positive work culture and supporting how the line manager is interacting with staff on a day-to-day basis. HR experts Berkshire Consultancy recently worked with the HR director of the Department for Children, Schools and Families (DCSF) to design and implement a transformation strategy. Part of this involved introducing an employee engagement survey as a tool to gather information about attitudes and perceptions.

Examples of impact to date include more widespread realisation of the need for individual recognition, moving away from hierarchical thinking, positive attitudes around diversity, and improved perceptions of the board and directors’ behaviour.

“The management style and culture of the organisation has a much larger effect in which understanding, support, creation of opportunities, development programmes and the right processes fall in line with this culture,” says Sue Young, a consultant at Berkshire.

But by rethinking retention strategies, it means HR no longer has to be solely responsible for setting the agenda when it comes to appraisals and feedback – a process that too many managers and employees treat as more of a throwaway, ‘jumping through hoops’ process just to get some sort of compensation, according to Philips.

“It’s not very good for improving business performance,” he adds. “You need to have tools and techniques managers want to use so HR has more of an enabling role rather than a policing role. It lets people do their jobs better.

“Ultimately, if you want retention and talent management strategies to work, they have got to be embedded right across the business.”