What if Half Your Employees Were Thinking of Leaving?

According to a recent Gallup poll 51% of employed respondents reported that they are watching the job market or actively looking for a job. The study was conducted by the Gallup Workforce Panel and these numbers were some of the highest recorded. Gallup believes a key reason is that employees are not getting their needs met at work, including such factors as upward mobility and career development. According to another recent Gallup poll 93% of U.S. adults who changed roles reported that they had to leave their current employer to do so. Only 7% said they changed roles within their same organization.

Job Hopping

Most millennials expect to work in five to seven jobs during their career. Gallup asked participants in its recent poll to identify the reasons why they were considering switching employers in order to identify key factors workers found lacking in their current employment. The study found that of workers who had switched jobs within the preceding quarter cited “career development” as the fifth ranked factor; increased income ranked only third. The number one reason – workers wanted the opportunity to “do what they did best”.

While only 33% of employees who had worked for a company less than a year reported they were engaged, the study showed that this group did receive the most management attention and encouragement to develop their skills within the company. By contrast, those who worked for an employer for ten years or more reported that few had talked to them about development and progress in years. Interestingly however, those who had worked for a company for ten years or more reported much more satisfaction in the key areas of “knowing what is expected of them at work” and “the opportunity to do the best they do every day”.

According to the Gallup poll these two factors are unusually critical in employee retention. Moreover, these factors reveal a significant disconnect between companies and their employees. The finding seems to suggest that senior workers know what they are supposed to do and do their best every day. By contrast, more junior workers do not feel there are upward opportunities for growth and development. These feelings appear to lead to, or exacerbate, the phenomenon of significantly increased job hopping.

Costs

There are varying estimates on what it costs an employer to lose a valued employee, but it is generally considered to be 150% or more of the employee’s annual salary in total costs. Unplanned attrition costs include the loss of institutional knowledge, the loss of customers, the cost to replace the position, and training time. Further, many employers find that the job market has shifted and that the replacement position demands a higher base salary. Beyond the hard costs, there can be significant detriment in terms of team dynamics, frustration, and drop in morale when key employees leave.

Action Steps

  • Gallup suggests that employee engagement and retention efforts should be focused on those with less than ten years of tenure.
  • Employers can take steps to open opportunities, focus on development and nurture growth during the first ten years. These actions should have an impact on retention. Moreover, this focus on working on the employee’s strengths should be maintained for all employees to support retention.
  • Gallup further suggests that employers should cultivate employees’ strengths and skills early in their career. This suggests training, tutoring on the fundamentals of the role, and developing career paths for future growth.

If one goal of your organization is to invest and develop people, then more investing appears to be the order of the day.

Clear Expectations of the Role

The other interesting, if not alarming, finding of the study was that new employees really did not understand the expectations of their work. Simply handing an employee a job description or a list of duties falls flat, in the opinion of most, in terms of connection to the job. How does the employee’s role fit into the whole? What is the point of the position? What is the higher purpose of the work? These findings seem to call for a greater focus on mission, vision and the higher purpose served by all employees working together.

Significance

This is the first study we have seen that sheds light on the deeper factors that lead to unwanted turnover. These factors resonate with our consulting practice, particularly for millennials. The study should cause employers to pause and consider what can be done to enhance the underlying elements of worker satisfaction that are important to all employees. People look for a sense of belonging, and if they are going to stay with an organization, the road signs on that path need to be clear and emphasized. If these survey figures are accurate, and half your workforce is either actively or passively looking at other opportunities, more focus on these “soft” areas of employment should be on the front burner for 2016.

By Paul Finkle, CMC, SPHR – President & CEO/Principal

Bay Area Human Resources Services

HR Options for Startups

The right team is mission critical for startup companies. As soon as startups surpass the founders and first couple of employees, they need HR strategic planning, plus functional support in hiring talent, compliance, payroll, and benefits administration. According to the Society for Human Resources Management, the national average is one HR person for every 70 employees. So what does the startup with 15 people do? There are relatively few effective options to cover the critical HR function in startups, the most common of which include: engaging an HR consultant; hiring/ delegating from within; recruiting HR leaders; or outsourcing.

Engaging an HR Consultant

While there are many competent independent HR consultants, most startups are not in a good position to differentiate a good one from someone who is ill equipped, inexperienced or incompetent. Other challenges include HR people who are “consultants” until the right full time position comes along. Thorough interviewing and vetting is critical, particularly in the areas of planning, technology experience and resources.

Hiring or Delegating from Within

Often the HR function does not even find its way onto early organization charts. Startups seem quick to hand off responsibility for what is viewed as the “less glamorous” back office administration to a staff person, or have the financial / accounting function cover the base. The result is that the person may not have the level of expertise necessary to develop the framework for a quality human resources function.

HR strategy involves a combination of business acumen, entrepreneurial insight and workforce planning and development expertise. Startup companies need day to day back office tasks handled and they need subject matter experts to connect a staffing plan to business strategy in order to scale.

Recruiting from Outside

Recruiting a human resources professional from outside the company brings a new perspective to the organization, but management must understand the skills required. For example, if the definition of the function spans new hire paper work to policy development, staffing planning and senior level employment agreements, it is unlikely all those skills can be found in one person. If this option is selected, one approach is to hire the administrative skills and use outside HR consultants for senior level advice.

If the startup knows increased headcount and high growth is in the near future, an early hire of an HR professional with experience may be most valuable when it comes to staffing, compensation, training, technical and administrative efficiency. Introducing elements of professional expertise combined with industry knowledge from other businesses can prove to be a tremendous asset to your leadership team.

When recruiting HR leadership from outside, small and growing companies should consider retaining a recruiter that specializes in HR staffing.

Outsourcing

Many startup choose to outsource the human resources function. This option usually includes ready built technology and systems that are proven. Outsourcing HR functions such as payroll, compliance, and benefits administration creates a distinct advantage for small businesses. Outsourcing frees in-house team members to focus on their highest and best use related to the core business rather than processing payroll, hunting down I-9 forms, or conducting benefits enrollment.

For startups, there are two basic outsourcing choices: administrative service organizations (ASO) or a professional employer organization (PEO). An ASO offers choice of benefits providers and often a higher level of HR services. A PEO is a co-employer arrangement where smaller organizations are aggregated for insurance purposes and are provided with standard policies and systems. The administrative costs for both systems are roughly equal. Some outsourcing options (such as SharedHR) offer onsite services and senior level business and HR consulting.

According to Erica Volini, Global Market Offering Leader for Deloitte Consulting, evaluating outsourced options should be based on three factors. She states: “It’s about evaluating your organization’s HR (needs) capabilities; determining how outsourcing can ‘fill in the gaps’; and building those capabilities through provider partnerships.”

Significance

The right HR choice for your startup depends your growth trajectory, your industry (volume of HR transactions), and your ability to evaluate and manage HR talent. The less time, technical expertise or desire to manage the HR function, the more an outsourced option should be considered.

By Saul Macias, MBA, PHR – VP of Professional Services/Principal

Bay Area Human Resources Services

Why Employees Sue – A Plaintiff Lawyer’s Perspective

Recently, Branigan Robertson sat down with the HR informational website, HR Morning, to discuss reasons why employees sue their employers. Robertson is a plaintiff attorney practicing employment law in Irvine, California. He shared the major reasons why disgruntled workers pick up the telephone and call him. It is an interesting perspective and the reasons slightly differ than those typically provided by defense attorneys. Here are the top four reasons he reported:

  1. “Toxic” Managers in the workplace. Brutish supervisors that make their employees feel like dirt has been a top reason for lawsuits by both defense and plaintiff attorneys. They say that employees may not know the law in detail, but employees know when they believe they have been deeply wronged in the workplace. Workers don’t call him because they think the law was broken, Robertson says. In fact, they don’t even know the law. They pick up the phone when they feel victimized in some way, which usually happens when they’ve been treated less than humanely. He states that just one insensitive manager can cause serious workplace issues.
  1. Lack of action against a rogue manager. Sometimes a manger may have terrible management skills but the company ignores this because he or she is valuable in other ways. For example, the toxic manager may be a top business producer. Robertson says he sees this a lot: An otherwise great company has one bad manager who harasses a subordinate or terminates an employee because she got cancer. He commented that often the company knew the manager was a problem but kept him on — and allowed him to continue managing people.  Plaintiff attorneys love to take on these types of cases where a supervisor has a history of bad conduct, yet is allowed to continue to behave inappropriately. Juries are not kind to employers in such cases, Robertson says.
  1. Greed that is flaunted. Most employees realize that a company needs to make a profit. But when an owner isn’t shy about exhibiting wealth — such as parking his Ferrari among his workers’ Dodge Neons and Toyota Corollas and wearing $10,000 suits in the office — only to cry poverty when a person requests a $0.25 per-hour raise, that worker will sue if he or she’s ever fired as HR Morning points out. Employers need to view the behavior of senior management from their employees’ perspective. Perception is reality.
  1. Rules that aren’t enforced uniformly. Employees almost always think the law is being broken when one person is punished for breaking the rules and another is not. This problem is magnified when one of the parties is a minority, in a different age bracket or a member of a protected class. This can be a fine line to walk when differential treatment is warranted and the confidential nature of HR matters must be considered.

Significance

From our perspective at SharedHR, lack of communication is a common culprit, and clear communication is a key element to explaining how rules are enforced and business decisions are made for the good of the whole. Encouraging open dialog in the workplace and providing several avenues employees can bring forward complaints significantly reduces the likelihood that an employee will feel the need to bring the issue to an attorney.

On the other hand, employee communication will not justify retaining a toxic manager. The subtle, yet real cost of retaining an abuser can be far greater than the perceived benefit. There are relatively few natural born good managers, most require training. After proper training and counseling, repeat offender managers need to be removed. While the threat of litigation is real, toxic managers turn off the best and brightest leading them to leave. With options plentiful in the current job market, unwanted attrition may be the greatest threat to business success.

By Malcolm Whyte, SPHR – Executive Vice President/Principal

Bay Area Human Resources Services