Engaging High

Performers
To Retain “KEY
TALENT”
Presentation to
Inconnectiva
December 4, 2007

Aneeta Madhok
The Context
Global Integration
No protected environment
Multiple geographies/
currencies/businesses
Diverse operations
Regulatory frameworks
Investor expectations
Listing requirements
Stringent disclosure
requirements
Management styles and culture
changes

TECHNOLOGY
•Adoption of technology
developed in other
countries
•Investment in bringing
technology to India
MANPOWER
•Attraction of global managers
•Managers mindsets
•Retention of talented employees
•Management of diversity of
cultures
•Compensation management for
global careers
MARKETS
•Creation of brand equity
abroad
•Channel management
•Competition from global
brands
•Competiton from local
brands in other countries
Our Research
Reveals RISK MGMT
Challenges •Credit/currency/financial risk
•Market risk
Faced By Ceo’s •Operational risk
GOVERNANCE &
Challenges for ETHICS
Indian Companies •Conformance with legal
requirements on foreign soil
Going Global •Holding up to international
scrutiny
•Due diligence of operations abroad
•Constitution of Boards with
Independent Directors
QUALITY MGMT
•World class business practices MGMT OF CHANGE
•Product and process quality •Mindsets of existing managers
assurance •Bringing in flexibility
•Six sigma standards •Changing old leadership styles
•Conformance with local •Aligning with world class
quality standards
© Aneeta Madhok, 2006
Survey responses
of 45 CEO’s
indicate the
following
rankings:
1. Markets
2. Manpower
3. Technology
4. Quality Management Systems
5. Governance and Ethics
6. Risk Management
7. Management of Change and
Organization culture
© Aneeta Madhok, 2006
 Our Research Reveals
Challenges Faced By HR Managers
Compensating
Talent
Knowledge
Retention
Workers

Going Recruiting in
Global Today’s
Context

Building HR Beyond Creating High

Interpersonal Performing
Relatioships Tomorrow Culture

Managing Training for

Mindsets Growth

Human
HR Systems
Capital
Implementation
Practices
© Aneeta Madhok, 2006
 Our Survey Results
HR Challenges Survey – India, May 2006
Rank Order of Importance (n=57)
Rank in % of top % of bottom
HR Challenge order of response response (#10)
importance (#1) rank rank
1 Creating A High Performing Culture 1 47 3
2 Talent Retention 2 28 0
3 Recruiting in Today's Context 3 22 0
4 Managing Mindsets 4 6 8
5 Training for Growth 5 6 0
6 Compensating Knowledge Workers 6 3 8
7 Building Interpersonal Relationships 7 6 14
8 Going Global 8 6 22
9 HR Systems Implementation 9 6 28
10 Human Capital Practices 10 0 17
© Aneeta Madhok, 2006
 What The Experts are Saying
about Retention
In a research study of 539 CEO‘s worldwide,
availability and retention of talented workers
and managers was rated as the sixth highest
imperative for business today.

TURNOVER IS INCREASINGLY BECOMING

A SOURCE OF SLEEPLESS NIGHTS FOR
HR MANAGERS AND CEO‘S

Problems created by turnover

 What The Experts are Saying
about Retention

2007 CEO Survey Question:

What can be planned for, that is most critical to
your firm‘s success?

78% of respondents cited ‗retention of

key workers‘ is the #1 factor
 What The Experts are Saying
about Retention

"It's about building a

pool of managerial
talent stronger than
one's competitors.
It's about winning in
the market. It's about
performance."
 Turnover Analysis
Avoidable Unavoidable
(could prevent) (could not prevent)

Try to Prevent: Do not Prevent: No attempt to Prevent:

High-Value Employees Low-Value Employees Regardless of Value
• High performance • Low performance • Retirement
• Valued intellectual • Little intellectual • Dual career
capital capital • New career
• High promotion • Low promotion • Health
potential potential • Child care or
• High training • Low training pregnancy
investment investment • Return to school
• High experience • Low experience • Leave country
• Difficult to find • Easy to find • Take a break
replacement replacement
 What is Employee Retention?
Keeping the right employees
the most appropriate amount Loyal
of time AND moving them up
Excited Productivity
the retention curve
Empowered Morale
Customer
Engaged Satisfaction
Motivated Customer
Retention
Retention
 A Model That Helps
Understand Retention
Organizational Direction & Immediate Supervision
Information Means Motivation
Data Methods & Processes Incentives
Organization Providing Information Equipment & Supplies Pay & Benefits
Provides Providing Directions Working Conditions Advancement
Providing Feedback Work Organization Empowerment
Employee Knowledge Capability Willingness
Brings Training Individual Capacity Motives
What Motivates Your Employees?
Total compensation External Equity
Promotion opportunity Internal Equity
Job Content Health benefits
Bonus Stock & stock options
Work/life balance Technology & tools
Responsibility/ Challenge Company/industry growth
Flexible work environment Brand recognition
Independence/ Job security
Empowerment Location
Manager quality Travel
Coworker quality Retirement contributions
Skills development Vacation
Recognition Product offerings
 7 Hidden Reasons
Employees Leave
# 1: The Job or workplace was not as expected
# 2: Mismatch between Job and Person
# 3: Too little coaching and feedback
# 4: Too few growth and advancement opportunities
# 5: Feeling devalued and unrecognised
# 6: Stress from overwork and work-life imbalance
# 7: Loss of trust and confidence in senior leaders
 Survey
Findings

Source: Hindustan
Times, Mumbai,
02.07.07, pg 21
 Is Retention Your
Competitive Advantage?
―Relationship with Immediate Manager‖ is considered
the single most important job attribute by high-value
talent.
 Retention Drivers
Organizational Direction
Immediate Supervision
Providing Directions
Providing Feedback
Equipment & Supplies
Working Conditions
Work Organization
Pay administration
Pay and Benefits
Advancement
Training
Motivational efforts
Company A vs. Company B

Company
A

Company
B
 Exercise One
You work for Company B and your retention rate is
much shorter than Company A.
If you were given Rs. five lakhs budget and asked to
apply that money to one or more Retention Drivers
which driver(s) would you invest in to get
employees to stay longer?

Discuss your thinking with members of the table and

try to reach a consensus.

You have 8 minutes to decide.

 Exercise Two
You still work for Company B. Based on the retention
predictor assigned to your table define what specific
actions you would recommend your company take to
address the gap in the retention rate.
Discuss your thinking with members of the table and try to
reach a consensus.
Assume the following:
Your organization is not currently doing anything with regard
to this issue.
The study results are valid.

You have 15 minutes to decide.

 Nature‘s Way

The story of
the wise old
man
 Lessons from the Wise Man
It is important to
differentiate high
performers from average
and poor performers
Average performers are
those who meet
expectations and are
valuable. This message
is important
Poor performers need to
be brought in line through
Total Rewards strategy
 A Macro-Strategy for Retention

C Category B Category A Category

Needs improvement Average performers High performers
Number of Employees

Performance Level
(low) (High)
 High Performers (A)
Maverick personalities
Driven by Achievement
Don‘t always go by the rule
book
Usually on the periphery of
the system
They make a quantum
difference
Drive high-performing
organisations
 Average Performers (B)
Valuable people who meet
organisational goals and
expectations
They are the backbone
They need to be recognised
and valued
Mentoring and coaching
inputs work well with
average performers to
motivate and anchor in the
mainstream of the
organisation
 Poor Performers (C)
Message of development
and improvement in
performance levels needs
to be given
Need to invest in
turnaround
Incentive plans help in
bringing their
performance to
acceptable levels
Need intensive and
special performance
counselling
Some Facts About Pay Differentials
According to Mercer‘s survey:
Highest-performing employees
(12 percent of the workforce) are
expected to receive base pay
raises of 5.7 percent in 2007.
Average performers (52 percent
of the workforce) are expected to
receive base pay raises of 3.5
percent in 2007.
Weakest performers (3 percent
of the workforce) are expected to
receive base pay increases of
1.7 percent in 2007 As cited in:
2008 Pay Projections: Increased Ties to Performance
By Stephen Miller, August 2007
www.shrm.org
 Some Facts About Incentives
Manage Profess Officer/
ment ional clerical
Highest
Rated 27% 20% 15%
Middle
Rated 20% 14% 11%
Lowest
Rated 10% 7% 6%

As cited in:
2008 Pay Projections: Increased Ties to Performance
By Stephen Miller, August 2007
www.shrm.org
Essentials of an Incentive System
Clear link between individual
goals and incentives
Methods of differentiating
performance differentials
Final review by impartial arbiter
Grievance process to address
employee concerns
Annual publication of ratings and
pay decisions
Employee surveys to measure
satisfaction with the system

US General Accounting Office Guidelines

 Pay-for-performance Doesn‘t
Always Pay Off
―Pay-for-performance may
have a natural life cycle
that managers are
unaware of‖
– Michael Beers, HBS
Professor
―Pay-for-performance can
cast a pull over self-
esteem, teamwork and
creativity‖
– Teresa Amabile
 Keeping Our Best: 4 Steps
1. Identify Your High-Value Employees

2. Assess Turnover/Disengagement Risk

3. Conduct Exploratory Interviews

4. Develop Key Employee Profiles and

Customized Retention Plans
Step 1: Identify Your High
Value Employees
Identifying High Performers
SOME CRITERIA
Believes in the organisational values,
vision and mission
Understands organisation‘s business
and goals
Consistently produces high results
(SMART)
Is Customer Focused
High levels of competencies defined
in organisational system
Is respected and trusted by others in
the system
A self starter, learner
Adds value, goes beyond call of duty
Creative thinker and problem solver
Identifying “Key Talent”
Capability shortfall for the business sector
Talent drainpipes (eg. oil sector)
Positions of critical or strategic importance
Inner circle – trusted relationships
Historical problem areas
Future leadership
Key Employee Compensation Review
Submit the names of Name
your high-value Position
employees to Base Pay Bonus
compensation.
Compensation returns
an analysis with issues
and recommendations. Recognition Stock Options

What are
the signals
flashing?
 Step 2: Assess Turnover/
Disengagement Risk
Has the employee expressed
frustration?
Do the employee‘s
skills/interests match the the
position? Do they align with
the business strategy?
Has there been a change in
the employee‘s personal life?
 Step 3: Conduct Exploratory
Interviews
What?
Informal meetings, separate
from performance reviews.
Why?
To emphasize each
employee‘s value.
To understand his/her top
motivators, job satisfaction and
any termination risk—so that
you can proactively address
any issues and focus on what
really matters.
 Sample Interview Questions
Job Satisfaction
 What makes you want to come to work each day?
Job Content
 Which particular projects/clients/assignments are appealing to you?
Recognition
 How can I make your day?
Manager Relationship
 How can I be a more effective manager for you?
Retention
 What is the number one reason you choose to continue working for
us?
 Step 4: Complete a Key
Employee Profile
For each high value
employee, describe:
The employee‘s critical
skills, knowledge, impact if
he/she quit.
The employee‘s top
motivators, issues, desires.
Planned actions to address
issues and ensure the
employee is engaged.
 Keeping Our Best
Step #1 Step #2 Step #3 Step #4

Identify Assess Their Conduct Document actions

your High- Turnover Exploratory to address issues
Value Risk Interviews and ensure
Employees retention

• Who is most • Which • Does the • What needs to

productive? employees are employee know be done to
• Who possesses at the highest how valued address issues
Key risk of leaving? they are? and ensure the
or can easily
Questions employee is
develop critical • How serious is • What‘s most
competencies? important to satisfied and
the risk?
the employee engaged?
• Who has • How much
significant (motivators,
value is at
potential to issues,
stake?
increase desires)?
responsibility?
Recommended Reading

Harvard Business Review

• ―Job Sculpting: The Art of Retaining
Your Best People‖, Sept 1999 by
Timothy Butler and James Waldroop
 Contact at:
Aneeta Madhok, PhD. CMC
Dean
Center for Human Resources

Block 5, Academic City

Dubai, UAE
centerforhr@spjain.org
aneeta.madhok@gmail.com
 Problems Created by Turnover
Interferes with continuity and quality of
services and loss of revenue
Lost human and financial investments in
education, training, and expertise
Weakens professional organizational culture
and morale
Places additional burden on remaining staff

next
Problems Created by Turnover
High turnover breeds more turnover
3 to 6 month lag time for new employees to
develop
Delays in replacing staff send negative
messages to the clients, other employees
and public at large

next
Problems Created by Turnover
Turnover costs companies more profit
dollars than anyone thinks.
Turnover is not the problem—it‘s a
symptom caused by something else.
Turnover can be reduced using Low Cost,
High Leverage interventions that create
High Value for the organization.

Back to main presentation

 Lets Be Realistic!
Employee retention can contribute to
organizational effectiveness
Turnover is not only costly but may be beneficial
Focus of retention strategies
– Number of employees retained and
– Who is retained
Turnover is inevitable
Approach to retention management
– Gather and analyze employees‘ reasons for
leaving
 Turnover Analysis
Discharge Downsizing

• Discipline • Permanent layoff

• Poor performance • Temporary layoff
• Site or plant closing,
relocation
• Redundancy due to
merger or acquisition
 Causes of Voluntary Turnover
Desirability of Leaving
Low job satisfaction
Shocks to employee +
Personal (nonjob) reasons

Ease of Leaving
Favorable labor market conditions + Intention + Quit
Versatile competencies to Quit
Low cost of leaving

Alternatives
Internal: New job possibilities +
External: Job offers
 Causes of Turnover:
Discharge and Downsizing
Discharge turnover
– Mismatch between job requirements and competencies
• Employee fails to follow rules and procedures
• Unacceptable job performance
Downsizing turnover
– Mismatch in staffing levels which leads to an overstaffing
situation
– Factors related to overstaffing
• Lack of forecasting and planning
• Inaccuracies in forecasting and planning
• Unanticipated changes in labor demand and/or supply
 Measurement of Turnover
Turnover rate
– Number of employees leaving ÷average number of
employees x 100

Data and decisions

– Identify time period of interest
– Determine type of employees that count
– Determine method to calculate average number of
employees over the time period
 Measurement of Turnover:
Breakouts and Benchmarks
Breakouts
– Analysis of turnover data aided by deciding on
categories of data
• Type of turnover
• Type of employee
• Job category
• Geographic location
Benchmarks
– Internal - Trend analysis
– External - Compare internal data with external
data
 Measurement of Turnover:
Reasons for Leaving
Important to ascertain, record, and track reasons
why employees leave
Tools
– Exit interviews
• Formal, planned interviews with departing employees
– Post-exit surveys
• Surveys sent to employees soon after their last day
– Employee satisfaction surveys
• Surveys of current employees to discover sources of
dissatisfaction which may become reasons for leaving
• Results can provide information to pre-empt turnover
• Require substantial resources
 Conducting Exit Interviews
Interviewer should be a neutral person
trained in how to conduct exit interviews
Training issues
– How to put employee at ease and
explain purpose
– How to follow structured interview
format and take notes
– How to end interview on positive note
Structured interview format should contain
questions about unavoidable and
avoidable reasons for leaving
Interviewer should prepare by reviewing
interview format and interviewee‘s
personnel file
Interview should be conducted in private,
before employee‘s last day
Interviewee should be told interview is
confidential
 Challenges of Employee
Engagement & Retention
Doing more with less.

A perfect storm of social, economic &

organizational changes.

Lack of trust in the workplace.

No more one-size-fits-all.
 Measurement of Turnover:
Costs and Benefits
Costs and benefits can be estimated for each of the
three turnover types
Types of costs
– Financial
– Non-financial
Some costs and benefits can be estimated
financially
Non-financial costs and benefits may outweigh
financial ones in importance and impact
 Decision Process
for Retention Initiatives
Do We Think Turnover Is a Problem?

How Might We Attack the Problem?

What Do We Need to Decide?

Should We Proceed?

How Should We Evaluate the Initiatives?

Why Prioritize Employee Retention
Even if Turnover is Low?
Data on the ―average‖ employee misrepresents the
picture for most valued employees:
High performers perceive strong market
opportunities.
In lean times, competition intensifies for high
performers.
Turnover of key employees causes remaining
employees to re-assess.
High performers generate disproportionate value.
 How Confident Are Your
Managers?
Consider your own retention attitudes and
actions.
How confident are you that…
– you know what motivates your employees?
– your employees are fully engaged?
– your feedback and coaching are effective?
– your employees are committed to you?
 Guidelines for Increasing
Job Satisfaction and Retention
Match rewards to employee preferences
Make rewards unique
Rewards must be meaningful
Link rewards to retention behaviors
Deliver on rewards that are promised
Reward permanency is important
Remember intrinsic rewards
Fairness and justice are key
Communicate continuously
The manager matters
 Ease of Leaving
TWO POINTS OF ATTACK
Provide organization-specific training
– Should organization invest in training to provide general
or organization-specific competencies?
– Combine training strategy with a selection strategy
focused on assessing and selecting general
competencies
Increase cost of leaving by providing
– Above-market pay and benefits
– Deferred compensation
– Retention bonuses
– Desirable location of company‘s facilities
 Alternatives
APPROACHES TO MAKE INTERNAL
ALTERNATIVES MORE DESIRABLE THAN
OUTSIDE ALTERNATIVES
Internal staffing
– Encourage employees to seek internal job opportunities
– Provide attractive internal options outside of traditional internal staffing
system
Responding to external job offers entails developing
appropriate policies
– Decide whether to provide counteroffers or not
– Determine types of employees to provide counteroffers
– Decide who will develop counteroffer and nature of approval process
 Organization Strategy Performance
Work-Unit Plans
Management
Process
(1) Performance Planning
Goals
Competencies

(4) Decisions (2) Performance Execution

Pay Resources
Training/career plans Coaching
Performance problems Feedback
Retention

(3) Performance Appraisal

Goal attainment
Competency ratings
Written comments
Feedback
 Retention Initiatives:
Downsizing
Weigh advantages and disadvantages
Staffing levels and quality
– View retention in two ways
• Balance a financial quick fix against unlikely return of
downsized employees if economic conditions improve
• Approach reductions in selective or targeted terms, rather than
across the board
– Determine who should be retained, if cuts are made
• Retain most senior employees
• Make performance-based decisions
• Retain ―high-value employees‖ and layoff ―low-value employees
 Retention Initiatives:
Downsizing
Alternatives to downsizing
– No layoff or guaranteed employment policy
– Layoff minimization programs
• Layoff Minimization Examples
Employees who remain
– Potential results of ignoring survivors
• Increased stress levels
• Critical appraisals of downsizing process
• Examples of ―survivor sickness‖
– Provide programs to meet needs of survivors
• Enhanced communication programs
• Morale-boosting events
• Promotion of EAPs
• Stress-related training
 Ethical Issues in Separation
Basic tenet of employee separation
– Fair and consistent treatment of employees
Laws and regulations governing separation process
– Public policy restrictions on employment-at-will
– Employment discrimination laws and regulations
– Affirmative action requirements
– Employment contract principles
– Labor contract provisions
– Civil service laws and regulations
– Negligent supervision and retention
– Advanced warning about plant closings
 Performance Appraisal Systems
Appraisal criteria should be job-related, specific, and communicated
in advance
Manager/rater should receive training in overall performance
appraisal process and how to avoid rating errors
Manager should be familiar with employee‘s job description
and actual performance
Agreement should exist among different raters in evaluating an
employee‘s performance
Evaluations should be in writing
Employee should be able to review evaluation and make comments
before it becomes final
Employee should receive timely feedback about the evaluation and
an explanation for any outcome decision
Provide upward review of employee‘s appraisal
Provide appeal system for employees dissatisfied with their
evaluations