HR Group, founded in Edmonton Alberta in 1993, is a partnership of highly experienced management consultants who specialize in organizational effectiveness and human resource management, and promote participative, lean, and cost-effective management practices. All partners are Certified Human Resource Practitioners with extensive senior level experience in both the private and public sectors.

How to Attract and Retain Employees in Boom Times – And for All Times

Reprinted from “Productive Workplaces” (February 2008), the HR Group newsletter.

The lead article in our very first newsletter in the spring of 1998 was entitled “How To Attract And Retain Employees In Boom Times – And For All Times.” Not much has changed except that the circumstances prompting that article have only gotten worse in the province of Alberta and many other parts of the country. That is why we think it appropriate to reiterate many of the suggestions that were made in that article and to add to them.  

First of all, let’s get straight to the overriding question of wages. No, you can’t and shouldn’t try and match other employers in other industries who are able to pay much higher wages than you can afford. Having said that, however, every effort should be made to pay as competitive a wage as possible even if that means making less profit. After all, refusing to pay more purely to retain your profit margin or to pay dividends to your shareholders can be like “cutting off your nose to spite your face”. You can retain the profit margin and lose the business. In the public sector you can avoid higher taxes, but then not be able to afford the appropriate employees to provide required services.

We hear a lot about the word “ownership” today in that all employers want staff who will take ownership of their jobs and their responsibilities in order to maintain excellent quality, service, and cost effectiveness. Yet so many of these employers utterly refuse to entertain the concept of truly providing their employees with ownership by sharing profits. They still provide a “turkey” at Christmas or provide some small bonus if it was a good year, but they will not make their employees shareholders in any real sense of the word. If reaping the rewards of one’s labour is what drives the entrepreneur, the president, or senior managers, then why shouldn’t the same principle apply to the employee or, more importantly in today’s workplace, the “team”. Of course the same principle applies. Calling an employee an “Associate” is really meaningless, unless the employee actually shares in the profits of the company, as do WestJet employees and those of an ever increasing number of companies who realize that this is the most effective means of attracting, retaining, and rewarding competent staff. The public sector, unfortunately, cannot share non-existent profits. It is all the more critical, therefore, that they pay a fully competitive wage if they hope to attract qualified staff.

Now that we’ve gotten the question of money out of the way, let us reiterate what is constantly being shown in poll after poll: Money is not the major issue in employee attraction and retention. This, of course, is assuming a competitive wage in the first place.

Employees, at all levels, are far more motivated by the organization’s overall “culture”. By this we mean, for example, the quality and style of management, the opportunities for learning and advancement, the ability to perform responsible and meaningful work, being held accountable, cross training and multi skilling, flexible human resource management policies such as hours of work and benefits, recognition of performance, and a “fun” place to work. Lets examine some of these components of an organization’s culture in more detail.

By far the leading cause of employee dissatisfaction is out-dated management style. This, of course, can cover a wide range of different issues. What we primarily mean is the traditional management style of control as well as the organizational structure, policies, and practices to support that control. We’ve known for over sixty years that a participative management style and workplace is far more productive; our newsletters as well as our work as consultants is based on what we refer to as a “productive workplace” that has a highly participative culture. It doesn’t really matter if the traditional control approach is a benevolent one or not. It may mitigate the damage to some extent, but the damage is still there. Employees simply do not respond productively to such a management style.

This traditional approach of control is invariably accompanied by a hierarchical organizational structure that supports the policies and practices of a control orientation. Such an organizational structure actively prevents or inhibits many aspects of a productive workplace that do attract and retain staff. Delegation of responsibility and meaningful work, cross training and multi skilling, flow of information and feedback, are all, for example, adversely impacted by a hierarchical organizational structure.

A hierarchical structure even inhibits an appropriate compensation plan. The more levels there are, the harder it is to ensure that there is enough money left for those actually doing the work. When you have management layers whose primary function is to purely control, coordinate, oversee, etc. then there is less money left to pay fair market value for those jobs that are actually responsible for getting the work done. These extraneous management layers are also a major impediment to any serious and meaningful profit sharing.

The traditional management style and its companion hierarchical organizational structure is ineffective and dysfunctional and is highly resented by today’s generation of workers at all levels. It is totally at odds with today’s principles of “lean enterprise” as well as the established principles of a participative workplace.

If the principles are well established then why are there still so many examples of the traditional approach? Many owners, CEOs, and senior managers perceive a loss of power, control, prestige and esteem as well as a threat to their own job security. Many organizations, therefore, recognize the need for change, but are reluctant and afraid to implement the principles and provide a truly participative work environment. They attempt to implement change, but continue to use processes, structures and human resource management practices that are bureaucratic and control oriented. Because the changes, therefore, are never truly successful, these organizations move from one attempt at the quick fix to the next and create the unfortunate “flavor of the month” syndrome which is costly, time consuming and counter productive to the desired increase in productivity and staff retention.

Consultants are frequently asked in today’s economy to evaluate an organization’s human resource management practices to see what can be changed to improve staff retention; the issue is invariably one of management style and workplace culture as opposed to some deficiency in pay or benefits.

Virtually all of the other causes of employee dissatisfaction are a direct product of management style. We have seen above that the traditional management style of control prevents or inhibits many of the principles of a productive workplace. A participative management style and work environment, on the other hand, will foster and support the following practices which all contribute to employee retention:

  • Delegation of responsibility to the level at which the work is actually done. This provides meaningful work, which when coupled with true accountability, leads to greater job satisfaction as well as better quality, service, and cost effectiveness. It is a well-known axiom that you cannot hold someone responsible unless you are prepared to delegate the responsibility to them. Too many organizations insist on trying to hold employees accountable, yet try to control their every action.
  • Ongoing feedback and full information. Most organizations still operate on an archaic need to know basis. As Ken Blanchard (1996, p.34) puts it, “People without information cannot act responsibly. People with information are compelled to act responsibly.” He also coined the phrase, “Feedback is the breakfast of champions.”
  • A flat organizational structure goes hand in hand with delegation of responsibility and full sharing of information. This creates teamwork and a shared sense of purpose and vision.
  • A learning environment is critical in attracting and retaining today’s workers. Formal training, mentoring, cross training and multi skilling, all contribute to a more interesting job and future career prospects. The attitude that says why train because some employees may just leave for a better paying job is a very shortsighted one. You will still be far better off in attracting and retaining staff.
  • Recognition, recognition, and recognition is a vital ingredient. Pizza for lunch every Friday or the occasional gift certificate just doesn’t cut it if the management style isn’t truly participative. Employees aren’t stupid and they readily recognize insincerity. Employees at all levels need on going feedback, not just for learning and improvement, but for a job well done. Praise is far more important than pizza.

There are other areas, of course, that are important to employee attraction and retention, but the overall creation of a truly participative and productive workplace is the critical element without which none of the other elements can really exist. Create such a workplace and employees will ask to work for your organization. Remember that it’s also fun to work in such an environment.

References

Blanchard, K., Carlos, J.P., & Randolph, A., 1996. Empowerment Takes More Than a Minute. San Francisco: Berrett-Koehler.