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HR's role in proving that retention efforts save money

Jim Giuliano
by Jim Giuliano
March 28, 2008
2 minute read
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Payroll Software


You may know the value of retention. Now you can make sure everyone else in the organization does, too.

First, you have to show that retention efforts really are worth the time and bother. Or do they just amount to busy work for HR? The answer comes in 13 words:

Organizations with loyal, longtime employees get sued less and make more money.

That may seem obvious to you. Now it’s been verified by at least two studies comparing employee loyalty and longevity with profits and the number of employee lawsuits filed against companies.

Companies can spend a lot of time and resources on revenue generation or on management training to avoid employee lawsuits, but they’ll be running a losing race if they don’t have a solid loyalty and retention program in place. That’s according to employment expert Kenneth Yerkes, who’s looked at the payoff for spending on retention.

Setting the foundation

Your first question might be: “OK, good retention and loyalty programs work. So, what makes a good program?” You probably have a pretty good handle on the answer.

Most of the basics you’ve been preaching to your managers still hold:

Implement recognition programs that reward employees at all levels of skill and responsibility.

Don’t wait for the annual formal performance appraisal before you give feedback. In fact, holding performance appraisals only once a year may be a bad idea.

When interviewing candidates, managers should ask themselves: “Does this person fit with the culture in this organization?” One study by HR consultant DDI shows that “lack of culture fit” comes up big when assessing employees who sued their companies or walked out early in the game.

Where does HR fit?

All right, so we know what managers should be doing. What about HR’s role?

Yerkes suggests that HR can best serve the organization by measuring the success of retention and loyalty programs. Doing that will help the organization determine if the programs are working and what the payoff is.

Establishing a benchmark and goals is a good start. A Gallup poll shows that on average, 47%  of employees who’ve been with an organization one year say they’re “very loyal” to the organization. The figure rises to 59% with employees who’ve been with the organization two years.

That makes sense. Loyalty should increase as longevity increases. Is that what’s happening at your company?

Yerkes says if you don’t know the answer for certain, you could be missing a key to fewer lawsuits and higher profits.

One way to learn the answer: Include the “loyalty” question in periodic employee surveys. You can ask employees to anonymously rate their loyalty – using a “very,” “somewhat,” “slightly” and “low” scale – and give the number of years they’ve been with the company.

An annual analysis of their answers should tell you where you’re headed

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