Retention deficit syndrome, part 2

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The talent war has been waged for years now. Turnover rates understate the problem: Talented people leave; head hunters try not to recruit the mediocre. Recruiters will stop at nothing to steal the best and the brightest. (see "Beware Recruiters," below). As the number of electronics jobs increases, the number of qualified people to fill them gets smaller. Whatever a company pays a talented employee in annual salary and benefits, that's about what it will cost to replace him, experts estimate. That includes what the company loses in productivity, customer satisfaction and intellectual capital. It doesn't include the fact that other employees often follow the departed.

Worker loyalty is a key to retention, and loyalty is directly tied to culture, Stieber says. "If you're in the ballpark on compensation, then what people look for is a strong, vibrant culture with clear values, clear goals, strong leadership and opportunities for growth. That last one is highly correlated to retention." He says managers need all the tools, training and coaching they can get to manage more effectively and keep fewer employees from leaving. The trouble is-especially in electronics-employees too often get promoted to management because of their technical prowess, not their people skills. "But you can develop these managerial behaviors in people," says Stieber.

Some electronics companies do get it. Many experts point to Intel Corp. and Cisco Systems Inc. as two companies that understand what it takes to keep good talent. Not only good pay and stock options, but challenging work, opportunities to learn and caring management. In researching this article, Electronic Business turned up a few others including Great Plains and PMC-Sierra Inc. Here are some strategies and tactics that are helping them with retention.

Coaches and teams

Great Plains executives believe a big reason their retention is high is the importance they place on relationships with each employee. From that relationship comes an alliance between employee and supervisor to find the opportunities the worker needs to remain stimulated, says Bonnie Robertson, vice president of organizational development. "We spend a lot of time [talking] with leaders, coaches and others about their communication skills and how to build trusting relationships with team members."

"Companies say talent is important, but it isn't usually one of the top three priorities of anyone in a senior management role." -Bruce Roberson, a principal in the Dallas office of McKinsey & Co.

In Great Plains lingo, employees are called team members, managers are coaches and CEO Douglas J. Burgum likes to be called the head coach. The company's retention philosophy emanates from the head coach. "One message our CEO gives all employees is, feel free to quit your job but don't quit the company. This is a key to our philosophy," says Pam McGee, the company's organizational development manager.

Anyone with a direct report is a coach; the company has 230 of them. "The No. 1 quality we expect of coaches is to build relationships within the team and to other teams. Second is their ability to align resources," says McGee. Aligning resources isn't just assigning tasks. It means matching employees' talent and passion with the team's objectives, McGee and Robertson say.

New coaches go through a required training program designed to inculcate the expected leadership skills and attitudes. After that, there are optional activities. For example, an ongoing series of in-person and online sessions to cover individual coaching topics. Subjects like handling conflict and understanding emotional intelligence. Many of these are mini-courses delivered on the corporate intranet.

Robertson's team of organizational development experts works with coaches individually or in groups. Much of the training focuses on handling change and transition. Managers are measured on their coaching abilities and the results figure in promotions. Great Plains does not tie coaching skills directly to financial compensation. Bonuses, however, are tied to team results and if a coach is not doing well, the team results will show it, Robertson says.

Great Plains is rare. "If you ask companies what they are doing about retention, almost no one says they're trying to make first-line managers stellar," says Linda Ford, a senior partner at Optima Consulting Inc., Cupertino, CA, a culture and leadership consulting firm. "That ought to be the first thing they say. It's the long-term solution."

Want to know? Just ask

In mid-2001, PMC-Sierra, Burnaby, British Columbia, will conduct an in-depth employee opinion survey, which it has done twice before at 18-month intervals. It asks its 1,750 employees at 25 locations what makes them happy at work, what they like and don't like, and how well the company does on those criteria. PMC-Sierra, a fabless semiconductor maker that develops communication chips, wants to be the best in its class at retention. It believes in attaching metrics to such goals. "We monitor and track our retention targets quarterly," says Teri McNaughton, director of HR.

PMC-Sierra's retention is far higher than most: In 1997, when it conducted the first survey, annual turnover was 4%. In the first quarter of 2000, when it conducted the second survey, turnover was 2%, which is where PMC-Sierra would like to keep it.

In the survey, employees rank the importance of six categories. The results have been consistent on the first two surveys. Their order: good management, both corporate and first line; communication; opportunities for continuous learning and training; opportunities for career development; work-life balance; and finally compensation. Note which category comes last. "Compensation is important to the extent that people expect it," says McNaughton. "We need to be globally competitive in our practices."

PMC-Sierra benchmarks itself against other electronics companies that use the survey. It ranks above the 80th percentile in all six categories, says McNaughton. The retention philosophy starts with top executives. "Our CEO (Bob Bailey) and our chief operating officer (Founder Greg Aasen) both have a strong focus on the importance of retaining staff, being good mentors and coaches," says McNaughton. "Because they hold these values and communicate them, other people take them seriously."

McNaughton says the top-ranked category-management-is the one that keeps her awake at night. "The biggest issue for me is to forecast the number and types of leaders we'll need, then grow and develop them." (Consultants say it is rare for companies to forecast leadership needs.) McNaughton says no one on the two anonymous surveys has complained about bad management. She attributes that to the effort PMC-Sierra puts into creating an open environment in which workers feel comfortable talking to supervisors. Managers get training and coaching. Their performance evaluation is based in part on workers meeting mutually agreed upon objectives. Managers have objectives around team building and in some cases retention.

	"Bureau of Labor statistics show there will be 154 million Americans to fill 160 million jobs in 2008. Most of the shortfall will be in technology." -John Stieber, a consultant with Hagberg Consulting Group

Sharon Jordan-Evans, a principal in Jordan Evans Group, a leadership consulting firm in Woodland Hills, CA, says too many companies wait until the exit interview to ask employees what would keep them. Unlike PMC-Sierra, most do not conduct surveys of their staffs-or if they do, they don't use the results-and the first-line manager never asks the worker what would make him stay or leave. "Asking these questions is a key to any retention strategy and almost no one is doing it," says Jordan-Evans, co-author of a book on retention, Love `Em or Lose `Em (Berrett-Koehler Publishers Inc., 1999).

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