Keeping the best: the difference between retaining and losing top staff talent is leadership.

Todd was brilliant. He graduated at the top of his class and had interned and worked with some of the best organizations in Washington, D.C. He could pick his host opportunity--and he did. He joined our association as a team leader. Todd was full of enthusiasm and knowledge, and he was just a bit impatient. He knew his job, and he was going to get it done. But that drive and impatience began to rub other staff members the wrong way. Unfortunately, no process was in place to help Todd's manager identify the gaps in Todd's behaviors. Instead of Todd getting help to fit into the organization, he was alienated. Eventually, his behavior began to affect his direct reports. No one realized the depth of the issue until it was determined that the only people leaving the organization were those working for Todd. By the time the problem was identified, it was too late. The organization lost tremendous mind-share in Todd's team, and Todd was gone as well.

The story is fictional. The issue is not. Despite today's challenging economy, turnover continues to be a huge problem for many organizations. Compounding the issue, demographic trends indicate that soon we may have fewer qualified choices or, even worse, no choices to replace the people who leave (see sidebar, "Where Did All the Workers Go?"). The solution: Create an environment in your association that retains your best employees.

While various studies report the cost of turnover differently, the result is the same. Employee attrition costs U.S. businesses billions of dollars per year. Need proof? Consider the consequences of turnover within your own organization. Ask yourself, "What is the cost of ... "

* The lost productivity of a dissatisfied employee before departure?

* The separation process?

* Work team disruption before, during, and after a departure?

* Decreased productivity and job satisfaction as team members complete the work of the lost employee before a replacement is hired, trained, and acclimated?

* Attracting, recruiting, and training replacements?

* Lost productivity as the new employee gains proficiency?

* Mistakes made by the new hire while in training?

* Reduced customer satisfaction due to mistakes?

* The edge provided to competitors that hire your former quality employees?

If you need more evidence, visit www.sibson.com/solution/retention for an easy-to-use turnover cost calculator.

What causes turnover?

In addition to understanding the financial consequences of attrition, it is important to understand the drivers of turnover and retention in your organization. One of the most common tools used to understand turnover is the exit interview. Unfortunately, departing employees have no motivation to provide a complete and insightful explanation for their departures. Reasons typically cited include better pay, a promotion, better location, and myriad other reasons that help employers rationalize departures and help departing employees remain on good terms with the organization. The problem is that employees made the decision to look for another job or talk to another employer long before we ask them why during an exit interview.

Whose problem is it?

Old business paradigms dictate that the keys to improved retention are better pay and benefits and effective reward and recognition programs. If those are the only solutions, then turnover, naturally, is a problem the human resources department must manage.

Recent studies, however, have shown that pay, benefits, rewards, and recognition are insufficient tools to effectively retain employees. In fact, while pay and benefits are effective in attracting employees, their effectiveness drops dramatically once a new employee is on board.

A 2000 retention survey administered by the Society for Human Resource Management (SHRM), Alexandria, Virginia, to its members validated the use of traditional human resources tools. Human resources leaders around the country identified compensation, benefits, and reward and recognition programs as key drivers to employee retention. That same year a survey conducted by Walker Information Global Network and the Hudson Institute asked 9,700 employees in 32 countries what they sought in an employer. They identified fair treatment, care and concern, and trust as the key drivers to joining and staying with an organization.

In 2002, TalentKeepers, an employee retention firm in Orlando, Florida, surveyed 4,299 workers about the factors that affect an individual's decision to join and stay with an organization. In almost 100 percent of the cases, people joined their employers for organization and job factors such as compensation, benefits, location, convenience, and reputation. However, the factors that kept them there were almost always based on leadership interactions. In fact, according to the study, issues with leadership surfaced in as little as 90 days after starting the job. Similar in the Walker study, the TalentKeepers research identified trust, communication, and flexibility as the top concerns for employees. One respondent reported that "working with a supervisor who doesn't allow room for growth or uses his or her title to intimidate all of his or her direct reports would drive me to leave."

In their landmark study of 1 million employees and 80,000 managers in 400 companies for their book First, Break All the Rules: What the World's Greatest Managers Do Differently (1999, Simon and Schuster), Marcus Buckingham and Curt Coffman confirmed that the front-line manager is the key to attracting and retaining talented employees. No matter how generous its pay or renowned its training, the organization that lacks great front-line managers will bleed talent.

Think about your career and your organization. "When was the last time you heard a really good worker say, 'My boss treats me like din, but I am holding on for Employee Appreciation Week.'? It just doesn't happen," says Dick Finnegan, chief client services officer for TalentKeepers.

So is the human resources department the sole owner of recruiting and retaining employees? No. Successful employee retention is a team effort. Human resources is a co-owner of the problem with every leader in the organization. Indeed, executives, team leaders, and even team members play a role in retaining employees.

What do I do now?

As the SHRM study showed, pay, benefits, and reward and recognition programs are all important. Regularly review your organization's pay and benefits structure against the local market to determine the association's ability to complete against other employers. ASAE offers compensation studies and operating ratio reports that will allow you to compare your organization to similar organizations. Many local chambers of commerce and employer organizations also offer survey data.

Hire well. Hiring the right people is the first step in retaining great talent. When hiring, be certain that the candidate understands the job, organization, and culture. First impressions work both ways (and go a long way) in the preemployment process. For example, several years ago while on vacation, 1 jogged past one of the nicest resorts in the vacation community. As I neared the driveway, I noticed a directional sign for deliveries and personnel. It pointed directly to the loading dock and dumpster. What message would that send to the potential superstar joining that organization? How do your surroundings speak to applicants?

Use preemployment assessments. Used properly, such assessments provide insight into an individual's propensity to perform. Keep in mind that good fit not only means finding an individual with the requisite skills, but also finding someone who will fit into the organizational culture.

When I was in sales and marketing at the Disney Institute, our hiring process for sales consultants was a multi-step process. It included an initial phone interview, written and oral sales simulations, and an on-site presentation, which included existing members of the sales team. Those steps were supplemented by a formal assessment offered by the human resources department. Through this process, we were able to quickly learn how an individual understood and adapted to our culture. My observations were supplemented by those of my team. We could see a candidate in our working environment--something that is not always discernable in a standard panel interview. The formal human resources assessment typically validated our observations and served as a good tool to help us finalize decisions.

Reward and recognize. Once you've hired the right people, rewards and recognition are tools designed to help keep them. Such actions do not have to he expensive, but they do have to be sincere, timely, relevant, and public. Keep in mind, though, that by themselves, rewards, recognition, pay, and benefits are not the most important factors in retaining staff.

Among the most effective companies at recognizing employees is Walt Disney World. One such effort encourages Disney "cast members" (employees) to recognize one another for extraordinary service to guests and cast. Outstanding staff are handed recognition cards, which ultimately become part of their personnel files. Cards are signed by the people giving the recognition and identify the award-winning behaviors. During team meetings, cards are randomly drawn and employees receive additional team recognition and a token award, such as movie tickets.

At a broader level, Disney also recognizes cast members with a lifetime achievement award, which acknowledges employees in three areas: guest satisfaction, cast satisfaction, and business success. Again, fellow employees nominate cast members, and award winners receive a banquet, a statue, and various company perks.

Support your leaders. Your real success in retaining your employees will come when you focus on your team leaders and their interactions with employees. Fred Fonseca, a former call center executive turned operations consultant based in Phoenix, knows this firsthand. Fonseca recently leek an active approach to identifying and improving leadership behaviors that affect employee turnover. The results so far are impressive. He says, "Not only are we taking a bite out of our attrition problem, but learning how to retain our talent by developing the future leaders of our business has become a truly rewarding experience for the entire company. I believe the company always knew the importance [of good team leadership], but our rapid growth prevented the proper focus."

Many tools are available to support your leadership development efforts, including 360-degree surveys, employee "pulse" surveys, and competency and skills assessments. The key is to use a combination of tools to get a good cross section of data. Done properly, your data should provide you with the factors that keep your team working for your organization.

Look first to understand the needs of your team. When new employees join the organization, identify what they seek in a leader (someone they trust, who communicates, is flexible to their needs, etc.). Share that information with their team leaders so that the leader can adapt his or her style to the needs of the team and each individual on the team.

Next, identify the competencies you seek in a team leader. Assess current leaders for strengths and weaknesses in those areas, but don't abandon the leader. Once you determine the competency gaps, provide training.

Instill accountability. As leaders, we have one other critical task. We must hold our managers, directors, and so forth accountable for their leadership performance. They are responsible for improving their performance using the training and tools we provide, and they are accountable for ensuring the job satisfaction of the team members reporting to them.

While many organizations conduct surveys and assessments and offer reward and recognition programs, they most often fail to provide the training specific to performance gaps and then hold leaders accountable for improving behavior. For example, one company conducts an annual 360-degree leadership survey and, within the same survey, an organizational pulse check. Results are analyzed and returned to the organization within two months. The human resources department reviews the results and then shares individual results with team leaders. The leaders are responsible for sharing the results with their teams and, ultimately, creating plans to improve problems identified in the survey.

Unfortunately, the system offers no formal mechanism for holding leaders accountable. Great leaders in the organization share their data and are prompt in their planning sessions. Poor leaders delay sharing the data and typically blame poor results on malcontents who, by the time any planning can take place, have already become attrition statistics. The result: Poor leaders continue to lead poorly, and the attrition continues to grow.

Parting thoughts

Every year American organizations spend millions of dollars on leadership development training. The training often consists of a cross section of functional skills and soft skills training that helps us learn our leadership style. However, we never connect the leadership dots. Instead we confuse the purposes of management and leadership. Peter Drucker defined it this way: "Management is doing things right; leadership is doing the right things." Association executives must close the gap between leading and managing.

Extraordinary leaders recognize that great leadership is not about counting paper clips. Connecting the leadership dots presumes that we understand the functional elements of our organizations and that we have put the right people in place to perform those functions, leaving us to focus on motivating people to get the job done. In short, it means doing the right things.

Survey your team, identify the leadership competencies you seek from your team leaders, assess their proficiency in those areas, provide competency training and tools, hold leaders accountable, and reward and recognize everyone in the organization for the right behaviors at the right time. By taking these actions seriously and doing them consistently, you will build a stable organization for tomorrow.

If you do not create a culture in which top talent feels valued, they will leave for an organization that will value them. Whatever your perspective may be on the talent pool of tomorrow, will your association win the battle for top talent, or will you lose the battle and, ultimately, the business talent war?

Where Did All the Workers Go?

With unemployment hovering at 6 percent in the third quarter of 2003, it's hard to believe that anyone would be concerned with a scarcity of workers. Yet many of us are already seeing a shortage of workers who have the skills essential to our associations and businesses. The ability to compete effectively, deliver service that exceeds our members' expectations, grow, and even survive will rest in the level of talent and experience of those we hire.

Research by the U.S, Bureau of Labor Statistics shows that the driving force behind's pending labor shortage is purely demographic. By 2010, baby boomers will be between the ages of 46 and 64 and will comprise the majority of the workforce. Toward the end of the baby boom U.S. birthrates began in decline, dropping by 40 percent between 1955 and 1973--the period during which the generation destined to backfill baby boom roles in the workplace was born.

In 2011, theoretically, the boomers will begin to retire in large numbers. And the general conclusion is that the ranks of the three generations of workers behind them are not sufficient to fill the gap that will be left as the boomers retire. Add to this the Homeland Security Act and its effect on immigration and labor sources, aria some experts predict a massive labor shortage.

More recent research, however, suggests that the demographic issue may not be as ominous as it seems. Peter Cappelli, professor of management and director of the Wharton business school's Center for Human Resources, recently published a study on the topic. In "Will There Really Be a Labor Shortage?" published in the August 2003 issue of Organizational Dynamics, Cappelli argues that employers may face difficult challenges in recruiting and hiring people in the future. However, those challenges will stem from basic changes in the nature of the employer-employee relationship that contribute to the difficulty of retaining employees, not from a shortfall of workers due to a demographic shift.

Increasing numbers of college graduates entering the workforce and the assumption that baby boomers won't disappear from the workforce when they hit 65 both argue against a labor gap. But even Cappelli acknowledges that hiring may be difficult and suggests that employers work to improve their inadequate human resources capabilities to attract better candidates and retain the best.

Lawrence J. Lynch, CAE, is CEO, Integrated Organization Management Solutions, Inc., based in Orlando, Florida. Previously he served as a vice president for TalentKeepers and as director of the Disney Institute. E-mail. [e-mail].