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Employee Retention: It's A Changing Game

September 14, 2005
by Mike Beitler

As a management consultant, I have seen some poorly conceived retention policies at otherwise well-run companies. The philosophies underlying these policies lack some basic knowledge of two things:

1. human nature, and

2. the changing world around us

Human Nature

Let's start with human nature. The practice of management requires an understanding of how people work. Successful managers can be forgiven if they do not know how a particular machine works, or how to debit and credit the general ledger, or how to write HTML code. But, managers must know how people work. Specifically, they need to know how people work well.

People are motivated by goals. their own! Organizations that help individuals achieve their goals and career aspirations have less trouble with retention. Are you helping your best employees achieve their goals?

I recently read some research findings that were just plain silly. The findings you ask: Workers leave organizations for two reasons:

1. they feel mistreated or unappreciated

2. they can get more money/compensation from another organization

The researchers went on to say, most workers are unaware of more money at other organizations until they feel mistreated or unappreciated. Did you catch that? If not, re-read the "two" findings.

Here's my interpretation: If you treat your workers well and make them feel appreciated they will stay with your organization; money is not the primary driver for workers leaving. Help you workers achieve their goals. I believe "appreciative" workers are more motivated than "happy" workers.

Before you think this is more "soft" management talk, let's look at some "hard" facts. The average cost of hiring a new worker is one-and-a-half times the worker's annual salary. And, the average worker will need a year to master his/her job skills.

The Changing World Around Us

As the world changes around us, we must change the way we think about retention (and everything else). Gone are the days of the homogeneous workforce. The world is being changed by unstoppable trends: globalization and an aging workforce.

Future work teams will include three generations of workers (a 23-year-old worker, a 48-year-old worker, and a 73-year-old worker), workers with different religions and nationalities, and workers with dramatically different life experiences.

The brain drain in developed countries can be slowed by retaining older, highly skilled workers. But, that is not nearly enough. Companies must compete globally for talent. (And remember what is necessary to retain these individuals. We must understand their individual goals and career aspirations.)

American companies that hope to depend on American talent exclusively will fail miserably. American knowledge workers are losing their competitive edge. Let's look at some more "hard" facts:

1. In China, 42% of students earn undergraduate degrees in science or engineering. In the U.S., the figure is less than 5%.

2. Only 70% of U.S. high school students graduate. The U.S. public education system was recently ridiculed by a British news journal. When you consider that the British public school system is arguably the worst in Europe, Americans should hear this as a wake-up call.

3. Only 32% of U.S. students leaving high school qualify to attend a four-year college or university.

Add to this some alarming facts about off-shoring. One organization recently said it was off-shoring jobs to India not simply because the cost was lower, but because the quality of work was better. The off-shoring of high-level professional jobs (such as engineering and IT) is now a common practice.


Organizations must do two critical things:

1. develop retention policies that recognize the need to understand the individual workers' goals and career aspirations, and

2. learn how to recruit and develop talent from around the world.

These are big changes for most organizations. Is your organization ready for these changes?

Dr. Mike Beitler is the author of "Strategic Organizational Change." Get a free 7-part mini-course and learn more about the book at


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