Any organization which has to adopt the new strategy of market driven approach to retention, has to first accept the new reality: the market and not the organization, will ultimately determines the movement of employees. Read more at: http://3rdeyeadvisory.com/know-how/market-driven-approach-to-retention.php #3EA

1. Market Driven Approach to Retention
By Garima Saxena, 3rd Eye Advisory Ltd
Any organization which has to adopt the new strategy of market driven
approach to retention, has to first accept the new reality: the market and not
the organization, will ultimately determines the movement of employees. An
organization can be as pleasant and rewarding a place to work in as possible, but
the organization can't counter the pull of the market. The organization can never
shield its employees from attractive opportunities and aggressive recruiters. The
old goal of HR management was to minimize overall employee turnover. This
needs to be replaced by a new goal: to influence who leaves and when. If in the past
employee retention was similar to tending a dam that keeps a reservoir in place, it
is more like managing a river today. The objective is not to prevent water from
flowing out but to control its direction and its speed.

2. The most popular retention mechanism is compensation. While most of the
companies try to retain their most treasured employees with "golden handcuffs",
the problem with pay based incentives is that they're easy for outsiders to match.
The recruiters are smart enough to buy out golden hand cuffs with providing
signing incentives known as "golden hellos." Retention incentives end up
becoming just another element of compensation, contributing more to wage
inflation than to long-term retention. But compensation can help shape who leaves
and when. Some companies now pay special "hot skills" premiums to employees
whose expertise is crucial and in short supply. The payments are an effective way
to keep talent in place for critical periods.
Moreover, organizations also opt for Job Tailoring as an effective tool for retention.
This mechanism shouldn't be limited to particular categories of employees, but the
organizations can also tailor them to the needs of individuals. This provides
employees with a variety of tools to help them assess their own interests, values,
and skills, and it encourages managers to tailor rewards, benefits, and assignments
to individual requirements. A part-time arrangement might satisfy one employee's
desiretopursue interests in sportsorliterature,while tuition reimbursementmight
be the key to keeping other employee happy.
Retention is also determined by loyalty to the organisation. Loyalty to an
organization may be disappearing, but loyalty to colleagues is not. The
organizations which encourage the growth of social ties among key employees,
significantly reduce turnover among employees whose skills are in high demand.
Carl Glaeser, general manager of Ingage Solutions, a Phoenix-based division of AG
Communication Systems, has held the turnover of software engineers to 7%,
mainly by developing programs that create a social community in the workplace.
Cricket leagues, investment clubs, and dance squads create social ties and bind
employees to their current jobs. The employee has the impression that leaving the
company would mean leaving the social network of company-sponsored activities.

3. Measures to create community within an organization have one big potential
shortcoming: they make the ordeal of any eventual restructuring all the more
extreme. Creating strong social ties is hence unsuitable for employees who are
likely to become less important to a company in the near future. But the
organization can achieve a similar bonding effect, minus the long-term
complications, with teams. By creating closely knit teams to carry out particular
projects, organizations can increase the likelihood that the teams will remain intact
for the length of the initiatives. People who would hardly think twice about leaving
a company find it very difficult to walk out on their teammates. Our research
suggests that working in a team increases employee's commitment to their work by
30%.
Our HR experts helped an organization in banking domain by
developing "Building Management Capacity" program, which integrates
recruiting, retention, and training efforts and is geared toward an increasingly
mobile workforce.The program is anchored by a sophisticated planning model that
projects talent requirements and attrition rates. The model enables managers to
develop extremely targeted retention programs and create cost-effective exigency
plansforfillingpotentialgapsinskills.Themodelalsoprovidesatoolforconstantly
measuring the impact of human resources decisions, a capability crucial to
handling people in this rapidly shifting labor market. The organization did what
most companies avoid: making a truly honest assessment of how long the
organization would like employees to stay on board.

4. The implementation of program revealed that different groups of employees
warrant very different retention efforts. There will always be some people a
company will want to keep indefinitely. Another set of people will be important to
retain for shorter, well defined periods and finally there will be people for whom
investments in retention don't make sense. Once you know which employees the
organization need to retain and for how long, the organization can use a number of
mechanisms to encourage them to stay. The key is to resist the temptation to use
the mechanisms across the board. The organization should tailor programs to
retention requirements for various employees and to the level of demand for them
in the marketplace.
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