Every time someone leaves a company and has to be replaced, that organisation makes a loss in time, resources and incurs the cost of hiring a new employee. Even the departure of someone quite lowly in the hierarchy is costly.
Smart organisations interested in reducing these costs by minimising turnover, quickly find out that it's not so much about pay as about career development, and perhaps about the way the company 'talks' to the employee and even the public.
Increasingly these days, it's about ethics and values, and personal and communal goals aligning with corporate ones. If the employer shows itself to be a caring corporate citizen, employees are more likely to want to continue to work for it.
"The most common reason top executives cite when they leave an organisation is that they don't feel their career is being handled well where they are. Pay is usually No. 6 on the list," says Peter Wilson, executive director of the Australian Human Resources Institute.
"The whole process of renewal depends on how careers are handled, and that comes down to two things' development of the individual with the support of the organisation and making sure that the employee is comfortable with the values of the company. That is, the company has to walk the talk.
"If you pay broadly what other people do and you have these things, you will keep your people."
The tightening of the labour market in Australia is coinciding with the entry to the workplace of younger cohorts more mobile in their approach to job longevity compared with the baby boomers. They are also often highly motivated by a sense of personal values and loyalty to themselves rather than any organisation.
"With the baby boomers, if you moved around it looked bad on your CV," Wilson says. "Generation X and Y are very much upwardly mobile and there's an acceptance that if they don't feel treated right they will change jobs and it does not look bad on their CVs "Professional loyalty now means adherence to values."
Wilson says an example of this is the current media campaign by Westpac to point out its social responsibility values.
Westpac's head of corporate responsibility and sustainability, Graham Paterson, says the recent campaign which launched the "refreshing" of the Westpac brand "very much had our employees in mind. There were many components in it which directly involved employees. The main thing we hear from our employees is that they do value what we do in the space of corporate responsibility and sustainability”.
One of the bank's priorities is that its employees, many of whom deal directly with the public, have a positive attitude to the bank and are proud of what it stands for.
It not only helps retain people but helps to attract the right people in the first place," he says. It's important to remember our employees are also members of the community, may also be customers, and most of them are share¬holders."
A key part of the strategy was to identify and publicise "pick points" which the bank could point to as specific policies, or projects it had completed.
Westpac is running two ads. One concerns its position regarding lend¬ing on major projects, ensuring that environmental and social consequences are taken into account. The other points to its winning the Dow Jones Sustainability Index global sector leader award for the past five years, which includes rating the winner on how it treats its employees. .
"This is sharing the Dow Jones award not just with the public but with our employees, and not just setting out something aspirational but actually saying this is something we've done and communicating the facts," Paterson says.
Certainly it sounds like Westpac's been getting the right advice. According to Katherine Graham of the Resolution Centre, a human resources firm, a switched on com¬pany will intentionally create employee commitment by ensuring employees are proud to work where they work.
"Organisations do this through having good cultures, reputable products, ethical behaviour and standout branding," she says.
"Look at Bunnings their whole branding is based around individual human capital, along with their other benefits of product range and so on. This in itself is a retention strategy.
One Graham says a sound strategy should also make sure external employment threats are averted by providing competitive pay and conditions, that employee turnover is understood and addressed, that every employee is engaged at work, and that the job environment is aligned with the employees needs and values.
It is a complex program to retain individuals and sustain their motivation throughout organisation cycles.
“Where possible," Graham says, "organisations should ensure that all these messages are filtered to all employees and particularly those identified to have talent."
• Top executives put money concerns at about No.6 on their list of reasons for leaving a company.
• They are far more worried about how their career is handled or mishandled
• Employees need to feel proud of where they work. A good example is Bunning’s Warehouse
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