How much does it cost to lose essential workers?
Retention of human capital in companies
What motivates them to change, and how can we retain them?
Around these questions revolves the reflection of the present post. The hidden costs after the departure, the motivational theories that explain the phenomenon. The existence of the Psychological Contract as a key comprehensive piece.
Loyalty Actions and how to productivity cope with staff turnover are the final issues with which it is possible to organize a specific way of managing retention in the company.
Visual Job Hire focus on the capacity and imperative need of our company to become intelligent. A flexible organization that effectively learns and manages its knowledge.
We talked about an institution that lends itself to change and a consequent leap in people management. Where we mainly turn to the worker’s “being” rather than the skills and knowledge. We refer on that occasion to the promotion of “champions” in the organization, and the question that follows is inevitable.
What if they decide to join a more exciting employer?
The Fluctuation or Rotation of the personnel constitutes a traditional indicator in the Management of Human Resources. Of course, once again, the data is in the hands of the management technicians. The real managers of people, managers, and supervisors remain unaware of dealing with this issue.
How much does it cost us to lose essential workers? What motivates them to change, and how can we retain them? These are crucial questions that we need to answer if we are going to turn the human factor of the company into a powerful competitive lever.
The cost of losing our people
Managing the retention of people who make the best contributions to the company, or encourage the participation of others given their experience and relationships. This is a task that requires sensitivity to the cost of losing them.
The consequences of the separation of a qualified employee go far beyond the costs, certainly high, of hiring and information of his successor. The separation can cause the failure of a project.
Disturb the solid relationships established with colleagues of work and clients and translate into the disappearance of a mass of accumulated knowledge after long experience, which constitutes a serious setback for a company.
Collateral Damage to the organization
We warn you about the “collateral damage” of the fluctuation that we usually do not consider as much as we do suffer its consequences.
Whoever is leaving carries knowledge, relationships, alliances, colleagues. It is practical and intuitive know-how that to be transmitted requires a close interaction between the parties. The company runs out of capacity to take advantage of past experiences and ends up, after much effort, “reinventing the wheel”.
The effectiveness of the management system deteriorates with the departure of critical workers.
Recall that interpersonal relationships are conditional on people rather than the functions of the position they occupy. It is these links that keep the engine running as it is essential in work processes that people know each other and maintain relationships based on mutual trust.
The Relation Capital – cost to lose essential workers.
This “relational capital” is an essential brake on the simple substitution of one worker for another.
Visual Job Hire finds that, in addition to the recruitment costs. The same vacancy costs are added since the work will have to be redistributed among the other collaborators and colleagues. Affecting the fulfillment of already established goals and the performance styles themselves.
Similarly, the period of integration of new workers will not only cause costs associated with the orientation and training programs. The company must anticipate that the productivity of the newcomer will be weak for a considerable period.
A study carried outreaches the following conclusion: It takes up to 6 months for a new employee to acquire correct productivity in their work. You need 18 months to integrate the culture of the company and 24 to fully understand the strategy.
Reasons to leave the company.
Indeed, this is an intimate question, which points to that fiber that makes us human, motivated beings, owners of self-esteem, with a story; we ask ourselves about the motives of behavior that usually involves a difficult decision.
The decision to change employment, which we have already seen can be costly for the company, can occur in two ways: when it responds to the desire to end an unsatisfactory employment relationship, in other words, the worker feels that there are reasons that They push him to change. The other alternative is when it is motivated by factors that attract you to a new employer.
The first case is more unhappy without a doubt, but in both, the company has failed to consider the motivations of its most valuable staff.
Motivation – cost to lose essential workers!
We will review some of the most popular and validated theories of human motivation, those that can best help understand the internal forces that move the person who decides to leave the company.
Vroom Expectations Theory
This theory holds that highly motivated people are those who perceive specific goals and incentives as valuable to them and, at the same time, understand that the probability of reaching them is high.
The points that I prefer to highlight from this conception are:
Every human effort expects a particular success or reward.
The subject is confident that if the expected performance arrives, inevitable consequences will follow.
People expect those who do the best jobs to achieve the best results.
This approach to motivation has several essential consequences when trying to understand the fluctuation:
What motivates a worker? The proper management by objectives, so they must respond to real estimates, too challenging but achievable demands.
Rewards for achievement must align the right expectations of the worker. Motivation requires excellent knowledge of the people, their culture, their real interests.
If the person does not feel a real challenge by the work to perform, or their most felt expectations are unknown or, worse, false expectations exist that the organization will not meet. Then surely the demotivation will appear and loss of commitment.
Stacey Adams Equity Theory
The previous theory tells us that we expect a reward according to the effort made. Stacey Adams tells us more: the reward has to be fair if we compare ourselves with another.
“Equity theory argues that the motivation, performance, and satisfaction of an employee depends on their subjective evaluation of the relationship between their reason for effort-reward and the reason for effort-reward of others in similar situations”.
It means that in addition to being interested in obtaining rewards for our performance. We also expect them to be equitable, which makes motivation much more complicated.
Also, the consequence is clear: if the worker perceives injustice within the management of the company, even not directly applied to it. This will be a sufficient reason to break the emotional bond with the organization and feel the “push” in search of a new employer.
How much does it cost to lose essential workers?
Theory of the Two Factors of Herzberg
A fair reward is what we get clean of the two previous conceptions. They are the voice of common sense, clear recognition of human nature, only that we forget it.
Both theories explain how people are motivated, which is why they are known as process theories. Content theories, describe what motivates explicitly the work.
While, Herzberg made an exciting discovery about it: he found aspects in our work life that make us feel good, cause us satisfaction, but they don’t motivate us. Others, on the other hand, have a robust motivational character. Some he called Extrinsic or Hygienic Factors, the other Intrinsic or Motivational Factors.
Therefore Hygienic Factors are external factors to the task. Their presence eliminates dissatisfaction but does not guarantee motivation that translates into effort and energy towards achieving results.
Other motivational factors refer to the work itself. They are those whose presence or absence determines the fact that individuals feel or are not motivated.
As you can see, it is Achieving things, Recognition, Professional Advancement, what motivates us the most and probably what attracts when we change employers.
The Bad Administration, the Incompetent Supervisors, also the non-self-realization constitutes the main unsatisfactory in the work, and the safest will push towards the change of company.
There is a lot of current empirical evidence about the content of the motivations of those who decide to change employers, which is very interesting and consistent with the Two Factors Theory.
Studies suggest that one of the first reasons that lead a worker to accept a new job offer is the desire for new challenges. To this argument are also added career prospects, which they were relatively limited to the previous employer but satisfactory to the new one.
And something shocking, contrary to being a purely pragmatic and profit-oriented initiative. The decision to change or not employment based on the worker’s emotional ties with the company. It is a predominantly emotional decision.
To summarize: a challenging job, with possibilities of success and achievement, fair rewards. Some level of certainty regarding how we are going to make a career is what mobilizes us.
On the other hand, a poorly defined administration and the presence of mediocre managers where effective leadership is lacking. Probably with the existence of internal conflicts, exhaustion. Disorientation will push out the most valuable of the organization generating a pernicious rotation in all possible orders
The psychological contract
The term appears in the business environment towards the sixties, precisely with the presentation of three studies on attitudes and behaviors in the workplace. The first was Behavior Organizational Understanding, followed by Men, Management, and Mental Health and Organizational Psychology.
Psychological Contract is, to specify:
“An addition to the economic agreement that covers wages, hours of work, and their conditions. Defines the conditions of the psychological commitment of the employee to the system”.
“A set of expectations, not written anywhere that operate at any time between any member and other members and leaders of the organization.”
“The individual belief about the terms and conditions of an agreed reciprocal exchange between one person and another party.”
Of course, this contract is a metaphor that science has invented to name how the worker internally defines the relationship with the company or institution.
It happens that the legally Labor Contract does not include all the aspects that will come to regulate the relationship between the worker and the organization. That is equally legitimate as long as it could break at any time.
The employment relationship:
More than schedules, work content, and pay; It is conditioned, as we have already analyzed when studying motivation. To the accumulation of expectations and requirements that regulate it.
The employment relationship, let’s point out. It is defined as a reciprocity process in which everyone evaluates what they are offering and what they are receiving in return.
The psychological contract is such to the extent that we collect what we expect from the company. But there is a detail; it is subjective, probably not known by the agents that represent the entity.
Such a contract is the materialization of the motivations, expectations, judgments, traits of the worker. Which he believes is fair and deserves. It affects how you will perceive and interpret all the events around you.
How much does it cost to lose essential workers?
The violation of the psychological contract becomes, to explain the phenomenon of demission, the most negative cause for how the worker-company relationship deteriorates.
This worker will probably never come back, cooperate little during his departure and become a cynical promoter of the institution compromising future recruits and even business.
By violation of a psychological contract. We understand the perception that the organization itself has failed to properly comply with one or more of the obligations that made up the contract.
The employee experiences a negative emotional sensation, with certain feelings of betrayal and injustice, and tend to respond with anger or disappointment.
Violation of a psychological contract can originate in two ways: breach or inconsistency.
The infringement occurs when the agent of the organization consciously breaks a promise made to the worker. While the mismatch happens when there are different understandings about a commitment between the worker and the company.
The breach of the psychological contract, from the company, when they sincerely believe that they have responded to their promises while the worker perceives that the organization failed them.
1) Different ways of representing the same thing, 2) complexity or ambiguity in both parts obligations, 3) lack of communication.
There are three of the most common factors that play a crucial role in the emergence of such discrepancy.
In this sense, it is essential to recognize that “we live in a world of implicit promises that are usually part of the culture of organizations.
The inherent nature of these promises becomes visible only when they break.
When we perceive a discrepancy between our reality and what we expect. A comparison process begins immediately through which the worker weighs his promises and contributions. On the one hand, and the signs and participation of the company, on the other.
Due to the comparison process may lead to the perception of a breach of the contract. The worker will find that the contributions have not adequately matched.
The perceived violation of the contract can have severe consequences from the moment it damages the trust. Good faith that is inherent in the employment relationship: commitment and pro-role behaviors, that extra so necessary today.
Loss of trust is especially significant because it is considered crucial for organizational effectiveness. The damage of commitment and initiative of the worker can be costly for the company in terms of productivity, quality, and work environment.
If we are going to represent the effect of the violation, we will say that the worker “takes distance,” is separated psychologically from the employer.
the employee will be less willing to wait, will be less involved. The relationship will be a bit of “give and take,” take and give me, now, without further commitment or future.
It may still last a little longer in the organization, but without fidelity, just because there is no other choice. This type of situation is not reflected in the statistics but leaves traces.
A worker who takes distance from the company weakened his attachment. Reduced his dedication to a moderate level. It remains open to any offer of external employment. Without a doubt, he will not give us the best contribution and influence.
The need for a change of employment that has not been able to materialize will always hit the productivity and quality of work. The initiative of the worker, and the agility of the change that the company requires.
We will retain a productive worker – How much does it cost to lose essential workers?
Positioning in the Market can be two of the most traditional and current goals within any company but, looking within the organization, which ultimately produces or offers services thanks to its people, know-how, internal synergies, and motivation.
It is not unreasonable to highlight the joint need to retain the Worker and position himself in the Labor Market as an attractive institution in the eyes of those in a position to work.
There are numerous examples of companies or business groups that have adopted this policy, and their commercial activity has improved.
We realize that we look so close out of the organization that we forget who we are. We lose contact with our corporate identity, which distinguishes us.
In the end, the company inevitably does not know where it is going, moves without strategy or vision, accumulate different decisions, and barely survives. We speak of an immature organization that oscillates to the sound of the environment without creating and consolidating its strengths.
It is simply not possible to aspire to success and organizational effectiveness by avoiding the organization itself, in particular, its culture and business climate.
And within the company’s culture, its strategy and policies, a central line of action are to ensure the loyalty of employees. Whose presence is considered strategically vital by the contribution they make and the cost of losing them? In our area, we call these: “key positions.”
A segment to build loyalty
If we pay attention to those who have worked on the issue of staff loyalty. We join the consensus that the loyalty instrument should be devised for a selective application, mainly targeting the most effective, letting less effective people leave quickly.
Retention efforts must first and foremost be directed at “strategically important employees” that would be difficult to replace. In business terms, “not all employees have the same level of result. Therefore there is no reason to feel it in the same way when they leave”.
There is the fact that we know and dislike mentioning: the retention of ineffective people not only compromises the success of the company but also runs the risk of demotivating the rest of the staff.
It is clear that the concept of retention based on a classification/segmentation of workers. It requirements for effective management of people and derived from the Management by Competencies approach. It is only useful depending on the quality of the Performance Evaluation.
But this often faces severe problems of methodology and varies significantly according to the evaluator. For this reason, it is advisable to approach our policy of careful management of fluctuations carefully.
Many actions management can execute in order to retain the valuable workers of the organization. As a wise Buddhist would say, the essence is not to know them, but to practice them.
Here is an extract ready to apply:
- Tell the potential worker in recruitment procedures what you can expect from the company. Be honest and look for a real interest match between the two.
- Orient the reception and initial training of the new worker, not only to provide information but to transmit the Culture (values, customs, beliefs) of the company and Sense of Belonging.
- Organize the work of your posts attractively, with doses of Autonomy and possibilities of Success. Entrust them with an important role that reinforces their feeling of association with the company (an exciting activity is to designate them as leaders of a group or project)
- Continually offer development possibilities: promotion, specialization. (The danger of them being “diverted” by other employers may increase, but it is a necessary risk)
- Develop incentive and recognition systems that, be sure, respond to the worker’s aspirations.
- Probe the level of commitment of workers with the company and the intentions to leave. This survey should identify obstacles to motivation and highlight opportunities for improvement.
- Practice the Separation Interviews with the workers who leave the company to gather information on the reasons for their decision.