The Retention Riddle

Who Is responsible?

Somehow keeping people in the organization from leaving has become associated with the quality of the recruiting process and the recruiters.

If there is anything we DO understand about people it is why they tend to leave their employers.  The reasons are always complex and involve several variables, none of which have much to do with the staffing organization. People are driven to leave companies less by salaries and benefits than by intangible forces.  Survey after survey has pointed out that the working environment, economics, restrictions and rules, and poor leadership are major reasons people leave.  Very few leave because they can’t do the work or because they are a poor cultural fit. And the most significant reason is not getting along with their immediate manager. Hiring managers make the final hiring decision which puts retention soundly in their hands. Retention has very little to do with the recruiter and everything to do with the systems and leadership of the organization.

Yet, some staffing organizations have, amazingly, in my opinion, taken on the responsibility for retention, measure and report turnover, and link it to measuring quality of hire and that of recruiters.

Let’s take a deeper look at retaining people.    One way to keep people has been to offer employees excellent pension programs, good salaries, stock options, and lifetime benefits.  This approach to retention – the golden handcuff method – worked well during much of the 20th century but economic forces, competition, and the need to satisfy stockholders have made this a rare situation. While stock options remain a heavily used retention tool, they do not motivate or engage employees, and once vested many employees leave.

What is most important is to understand that not all turnover is bad and that a certain amount, in the right roles, is desirable. New philosophies of work and ways of organizing offer opportunities to fine-tune the workforce for optimum retention and effectiveness.

Here are five ways you can build a better model of desirable and undesirable turnover and keep those who are critical to your success. Recruiting plays a part, but only a minor one, in retention. It is the manager that is central to low turnover and to creating highly engaged employees. Retention is simply keeping those whom you wish to keep and letting go those whom you do not wish to keep.

Endeavor #1:Place responsibility where it belongs.

Managers’ and the organization’s policies together own retention.  There have to be measures that report and hold managers accountable for the people they lose. Managers that develop relationships with their staff, who act fairly and consistently and demand performance, have the right kind of turnover. Hierarchal organizations with rules and policies that restrict creativity and internal movement also drive turnover. Organizations with few rules and that encourage creativity and internal movement see far less turnover.

Endeavor #2: Define the roles where retention is critical.

Not every role should be a focus for retention. The grid below, which I have shown in previous articles, helps to clarify which roles will be most important to the organization’s success over the next decade. To spend a large amount of money or effort on programs to retain the lower quadrants of this model is wasteful. Roles, where retention is important, are those that are hard to automate and that provide the networks, creativity, and flexibility to meet future demands.

Endeavor #3: Reduce the hierarchy

Give professionals the opportunity to do what they do best. Do not limit them with lots of rules and policies that inhibit creativity and discourage risk-taking and experimentation. As we move into this increasingly uncertain future, we will need all the creative thinking we can get. Survival will not be attributed to those who follow the rules and do things by the book. Rather it will be to those who can adapt and thrive with ambiguity. Create self-managing teams and projects and allow for flexible staffing as needs change.

Endeavor #4: Allow for massive internal movement

Let the gig workforce do whatever routine or administrative tasks that need to be done and free the permanent workforce to move within the organization to wherever they feel they can contribute. Encourage gig workers to join as employees if they feel they can contribute and want a more defined work life. Offer internal development opportunities to enable people to make internal and cross-functional moves and gain the appropriate skills. Giving people challenges and encouraging them to try for something that seems unattainable, engages, motivates, and retains.  Set goals and create projects that stress and challenge while offering support and coaching.

Endeavor #5: Change the compensation systems

People know what they should be paid and have an innate sense of what they are worth.  Move away from rewarding for degrees, experience, and level. None of these equate to competitive success and are vestiges of hierarchical thinking. Organizations with good retention recognize the characteristics that will lead to competitive success. This means rewarding people for teamwork, networking, collaboration, creative thinking, and contributing to products and services that are successful. Focus on rewarding for accomplishments and on team rewards.


Recruiters may have a slight role in the retention process by ensuring that candidates they present to management are the best they can find.  But, the decision on whether or not a person is hired rests entirely with management. So too does retention.  If you are being seduced to take on the retention “problem” in your company, resist.  You will in the end be blamed and have no one to complain to but yourself.


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Related Links

Who Owns Retention?

Employee Retention: A series of articles