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Figuring out how to retain star employees will be one of the biggest challenges companies face in the next few years. Here's how three companies in industries that typically experience major turnover - health care, hospitality and insurance - have come up with creative solutions to keep employees and dramatically reduce costs.
It's a matter of dollars and sense: Employee turnover costs big money, and harms organizations in a variety of subtler ways. Turnover depletes the brain trust, aids the competition, stunts growth and dampens morale. It's one of the biggest business problems of the coming decade, but smart companies are fighting it with sophisticated arsenals, and finding success.
"There's a growing awareness of the need for employee retention,' says Christi Gibson, executive director of the National Association for Employee Recognition in Naperville, IL. "For a long time we had a throwaway culture in business, but now things are changing.' Baby boomers are retiring and taking with them a valuable knowledge base. The economy is growing. Managers know they need to retain employees and they're working hard to do so.
Here are three stories, of three very different organizations with one thing in common: Each has managed to build a culture of loyalty and recognition in an industry where high turnover is the norm.
Retaining Nurses
Employee retention is a life-threatening issue in healthcare, as a market-wide shortage of workers grips the sector, especially in the crucial area of nursing. Hospitals and related organizations are struggling to attract and keep registered nurses in particular, as the number of qualified nursing professionals continues to fall far short of the needs of the industry.
"The projection for our industry is that by 2010, there will be two million registered nurse vacancies in the U.S.,' says Katie Chamblee, vice president of human resources for St. Vincent's Health System, a group of four affiliated hospitals based in Birmingham, AL. "It's a scary statistic.'
To retain nurses now, and to guard against the intensifying nationwide nursing shortage, Chamblee's organization began to address retention with an electronic survey of its 2,500 employees in 2004. "We wanted to decrease turnover,' she says. "If we don't have the right environment, our nurses might leave at any time. They know they can get a job anywhere.'
The results indicated that change was in order. "I'd been here for 15 years, and I'd thought we were doing a pretty good job,' Chamblee says. "But we were doing it all wrong. Generally, the employees felt like we weren't treating them as adults. They felt we were treating them like children.' The employees disliked St. Vincent's punitive attendance policy and felt their supervisors favored some workers, Chamblee says. "It was really bad news.'
The situation was so severe that Chamblee felt a cultural shift was needed. Those changes came about in the spring of 2004, with the official launch of "Recognition and Positive Redirection.' The company had a full day of training for every one of its 500 managers, followed up with periodic refresher courses. The training helped managers learn how to use coaching rather than verbal and written warnings for discipline. "If employees don't respond to coaching, they are sent to take a paid decision-making leave, a day at home to create a written plan of how to address the problem,' Chamblee says. "But since the program has been launched, St. Vincent's has seen very few decision-making leaves, and only two employees have resigned under those circumstances.'
St. Vincent's backs up its positive approach to management with a points-based recognition system called the Diamond Program. Behaviors that are rewarded under the Diamond Program are determined by department heads and include volunteering for extra shifts and perfect attendance, among other things. "We devised a tool kit, called the Leadership Toolbox,' Chamblee says. Each manager has one of the metal tool boxes, containing thank-you notes, stickers, ribbon and "diamonds.' The diamonds are reward points that employees accumulate and redeem online, for gifts including electronics, jewelry, toys and clothing.
The results of all the hard work and creative thinking: higher employee retention, and a healthier bottom line. In two years, the company reduced turnover by 4%, Chamblee says. "Turnover costs were averaging $6 million a year, and now they're closer to $4 million. That's pretty significant.'
Warm Hospitality
Retaining quality employees is especially difficult in the hospitality industry, where traditionally high levels of job mobility remain the rule at most organizations. But even so, companies with innovative retention programs reduce turnover and induce top performers to stay. Houston, TX-based Benchmark Hospitality, which operates 32 resorts, conference centers and hotels, recently implemented a program to recognize and retain employees based on a philosophy of ongoing recognition, and results have been excellent.
" Turnover is an issue that we struggle with in the hospitality business,' says Sam Haigh, president and chief operating officer at Benchmark, who oversees about 6,500 employees at locations ranging from the luxurious Turtle Bay Resort on Oahu, to the exclusive Lansdowne Resort outside Washington, DC. "Our goal is to keep turnover as low as possible, especially for the high performers.'
The key to successful employee retention, Haigh says, is ongoing recognition, something many calendar-based programs don't achieve. "Once you're employee of the month it's hard to be recognized again, especially that year. So we broke out of that paradigm, and instead provide top employees ongoing benefits and recognition.'
The program, started in June of 2005, is called the Best of the Best, also known by employees by the friendly acronym, BOB. "The Best of the Best is a company-wide program to provide ongoing recognition and reward and express appreciation for people who consistently perform at the top level,' Haigh explains, noting that over any four-year period, 8% to 10% of the company will participate in the program.
BOB inductees are chosen at Benchmark's individual properties and may be any employees except for top executives, such as controllers or general managers. New BOB members are usually inducted at Benchmark's well-attended "Town Hall' company meetings, Haigh says, in public ceremonies that include gifts of $100, and ads taken out in inductees' hometown papers that detail their induction into BOB and their achievements at Benchmark.
Once an employee becomes BOB, the employee stays BOB, and Haigh says that's the most important thing. Ongoing benefits for BOB members include exclusive annual celebrations, two extra days of paid time off each year, $50 sales bonds distributed twice yearly, and enrollment in an executive bonus program worth up to $300 per year. The key, says Haigh, is that recognition is continually reinforced. "BOB employees get letters from me and the chairman on their birthdays, and they're discussed in the company newsletters,' he says.
Benchmark backs up BOB with an instant recognition program that's the finishing touch of a truly comprehensive retention program. "The instant recognition program is for the purpose of catching someone doing something right and giving them a reward,' Haigh explains. Available to BOB and non-BOB employees, the instant recognition program is administered at the property level, and incentives include gift cards, merchandise and cash.
Is it working? Haigh says it is. "We don't have enough data to track retention because the programs are just a year old at this point, but for those that have been inducted into BOB, we've had very low turnover. In fact, I'd be surprised if anyone who's entered the program has left the company.'
Persistence Pays Off
When it comes to effective employee retention, the second time's the charm for Westfield, a 2,500-employee insurance, banking and related financial services group of businesses based in Westfield Center, OH. The company has reduced turnover significantly and improved job satisfaction, but it hasn't come easy.
Westfield's turnaround story starts back in 1999. "We took a survey of our employees, and we were surprised when the results indicated that they were not feeling appreciated,' says Debbie Vorndran, human resources employee programs specialist. Company leadership decided to implement a recognition program to address flagging morale, but the program had some issues. It was too labor intensive, with Vorndran managing things using an unwieldy 354-page spreadsheet. Program goals were ill-defined, as were employee behaviors that merited reward. Lengthy approval processes delayed rewards. Says Vorndran, "It got to the point where the program lost its meaning.'
By 2003, Westfield was ready to scrap the old program. "Our CEO said to blow the program up and start over,' relates Vorndran, who reached out to Salt Lake City-based O.C. Tanner for help creating a new recognition program. Working together, it took about 90 days to implement Westfield Excellence, the company's new, automated, Web-based system.
Westfield Excellence is based around the company's five core values: customer focus, integrity and trust, perseverance, interpersonal savvy and self-development. "To eliminate subjectivity, our team defined the behaviors associated with each value,' Vorndran says. Using clearly defined goals and behaviors as a template, Westfield implemented a recognition program with five levels of rewards: thank you, bronze, silver, gold and platinum. The awards are redeemed online, at an O.C. Tanner Web site, for merchandise ranging from electronics to sporting goods.
By creating an automated program around clearly defined goals, Vorndran and Westfield corrected the issues that had troubled the previous recognition programs. "I used to spend hours each day administering the old recognition program," says Vorndran. "Now on an average day, I spend 20 minutes on it.' In 1999, the company's turnover rate was over 17%, but by 2005 the turnover rate was cut to just over 10%. "The program's had a positive impact, definitely.'
Reprinted with permission of Successful Promotions, copyright 2006
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