Good Boss, Satisfied Worker

By Julie Middleton • The New Zealand Herald

October 12 2002 -- It doesn't matter how blue-chip the company or how generous the perks: most of the time, when a top-level staffer voluntarily leaves a company, it's their immediate boss they're divorcing.

That's borne out by studies, several of them in New Zealand -- but in offices all over the country, the message hasn't sunk in, says Bill Rehm, a consultant and former KPMG associate director of HR.

"Part of the problem is that managers only think about retention when they get a resignation notice," says Auckland-based, American-born Rehm.

Most managers lamenting the loss of good people point "to a variety of external factors, failing to take responsibility for the situation." Bosses have been so focused on the "war for talent" -- the phrase describing the battle to get people in the door -- that they haven't noticed that it's all over, says Rehm.

Attraction is no longer the issue -- keeping people is. It's a war on talent. But bosses have no idea what to do: "As retention is a relatively new business problem, managers never had a need to learn, nor a time or place to learn how to retain talented people," says Rehm.

Various studies have given rise to the rule of thumb that the cost of employee turnover is between one-and-a-half to three times that employee's pay. And that's without calculating the possible negative downstream costs, which could extend as far as customer perception of the company.

But according to Rehm, quoting an Australasian study, "less than 30 per cent of HR professionals calculate the cost of turnover." And they tend to look for a one-shot answer. "Someone, such as a senior line manager, raises the red flag on employee turnover, recognising its potentially devastating impact," says Rehm. "Then someone, usually from HR, pulls an initiative together that fails to respect the individual manager's key role in the retention equation. Instead, an attempt is made to find the silver bullet through some strategic plan or organisational system. The result is ... limited results or no results at all."

But bosses can't avoid being in the front-line. And here's the proof: the Gallup organisation did a long-term study involving 80,000 managers, more than a million employees and more than 400 companies, which found that a staffer's relationship with his or her direct boss was more important to retention than pay and perks.

In the book that followed, First, Break All The Rules: what the world's greatest managers do differently (Simon and Shuster), researchers Marcus Buckingham and Curt Coffman say that people may be lured to a company primarily by pay and benefits.

But it's the relationship with the immediate manager which determines how long their feet stay under the desk. According to the book, great managers don't necessarily treat their employees as they would like to be treated. But they do recognise that everyone is different, with different motivations, and different strengths, and work to those.

Research by Rehm and United States-based associate Lynn Ware, of California-based Integral Talent Systems, has found that companies which retain staff well also have good organisational systems. But drilling down, they found that 72 specific practices by bosses were linked to staff staying put, and they claim that retention-skilled managers are three times more likely to retain their employees.

These behaviours can be spelled out under a model Ware and Rehm call TALENT -- one in which they have so much faith that it's been copyrighted. And this is what it looks like:

Targeted recruitment and hiring: The manager's ability to hire people who will stay with the company, not just do a job. Management practices for hiring for cultural fit and giving realistic job previews, rather than rose-tinted ones, are linked to employees staying longer.

Achievement: What is the manager doing to ensure the employee is succeeding at work? Does the boss ensure that the right tools and training are available to reach goals? Does work take employee strengths into account?

Learning and professional growth: How familiar is the manager with the learning desires of the employee? Is there a plan in place to ensure the staffer is learning and growing in areas of interest, as well as to cater for the company's future needs?

Ensuring recognition: "One of the most frequently cited reasons given by employees who voluntarily leave," says Rehm, "is that the employees' perceived contribution to the enterprise failed to be recognised by management."

Nurturing careers: To what degree does the boss help to connect a staffer to people in the company who can influence careers? Does the boss help staff to take a look at the next steps in their career? Are jobs assigned that will promote someone's career? Answer yes, and an employee is likely to stay longer.

Team collaboration: A manager who hires competent people who work well together will be more likely to keep them all. According to Rehm, the glue that sticks people to an organisation is strengthened by staff who feel they are part of an equally contributing team and with whose members they work well.

It seems a super-boss is required -- can managers really learn for good the sorts of skills that keep staff longer? Absolutely, says Rehm, and tells this story.

He and former Woolworths HR head Aston Moss banded together last year to look at turnover in the 9500-employee retailer. At the time, the company suffered 60 per cent turnover overall; almost one in every two employees left within six months, says Moss. Less than one person in 10 stayed for five or more years.

A survey found that team collaboration, following by ensuring recognition and learning, were rated the most important things to employees. These were closely followed by achievement, targeted hiring, and nurturing of careers.

The training of managers started with feedback from their team members on how they were perceived. They were trained to gauge whether people were at low, medium or high risk of leaving, and taught how to work with the high-risk ones to find solutions to keep them, says Moss.

Managers, he says, need to align with their team, understand what drives each team member and the team itself, and stay in touch, without getting in each other's pockets. They need to know what personal and professional issues may impact on performance, says Moss, and how to handle someone's career aspirations. Most importantly, the skills learned were absorbed into day-to-day running of the company.

The project's results? Over a four-month period, the retention rate improved three per cent, apart from one month.

Moss estimates that there were millions of dollars of benefit in tackling turnover by focusing on managers' roles.