Retaining Employees for Future Growth

September 24, 2007 Charles Coy

Director of Product Marketing Cornerstone OnDemand, Inc.

Poll Question #1
How would you describe your organization in regards to retention?
We do an excellent job very low turnover We do an OK job We are not very strong in this area

Food for Thought

56% of HR professionals expect turnover to rise
Source: CareerJournal.com

25% percent of Fortune 500 managers change jobs each year

Source: Knowledge Infusion

What some HR professionals are doing to combat turnover:

62% provide tuition reimbursement 60% offer competitive vacation and holiday benefits 59% offer competitive salaries
Source: SHRM-CareerJournal.com survey

76% of employees are looking for new employment opportunities, indicating that worker dissatisfaction is at a record high
Source: SHRM, 2005

It costs a company on average $100,000 for each professional or managerial employee that leaves the company
Source: US Department of Labor

Why Retention is Important

Up to 70%

Labor expense

HR / Payroll expense

- 1%

Why Retention is Important

Source: Bersin & Associates

Sure Ways to Backfire

It May Seem Obvious

        Vague job description Unclear objectives No introductions and no mentor Not having a dedicated place for the employee to sit / work Scheduling an employees first day on the job when the manager is on vacation Leaving the employee to eat on their own the first few days in their job Assigning your employee to be mentored by a negative, companybashing individual Assigning the employee busy work, nothing to do with why they were hired

Poll Question #2
Do you have specific programs in place to address attrition/retention issues?
Yes No Dont know Looking to roll out more comprehensive programs

Retention Best Practices Overview

Overview of key retention factors

 Get the right person on board  Ensure solid onboarding processes  Communicate expectations  Establish fair & achievable goals  Deliver consistent measurement  Provide coaching and feedback  Develop your people  Reward / compensate

Get the Right Person On Board

Hire the right person in the first place Getting the right people on the bus
Create detailed job description with competencies aligned
 Ensure that competency proficiency requirements are determined  Ensure the role is aligned with the organizational objectives

Behavior-based testing
 Best way to elicit useful information from candidates

Competency screening
 Ensure you have defined your competency requirements  Ensure job descriptions cover those competencies

Staff adequately

Ensure Effective Onboarding

Ensure effective onboarding and orientation of new hires
Good orientation programs impact productivity and retention Strategic onboarding programs that are high-touch and can be individualized for varying needs increase new hire effectiveness, retention, and satisfaction Good onboarding programs are still the exception not the rule at most companies The process of acclimating to a new job or new company is one of the most significant, yet unstudied factors in getting the best use of a company's talent Create a Pal or Buddy program

Poll Question #3
In your organization, does your onboarding program have an impact on employee retention?
Yes, we find a direct correlation Yes, but we dont effectively measure the correlation Dont know No, we dont feel there is any impact We dont currently have an onboarding program today

Communicate Expectations
Its all about employee morale
Make sure employees have realistic expectations about their jobs Communicate expectations in initial interview and remain consistent Put things in writing, such as in an employee handbook Praise employees if they meet expectations Show they are appreciated Listen to their feedback Stay on message and remain consistent

A Communication Gap

Leads to dissatisfaction Managerial expectations Leads to lesser performance Leads to lower retention Employee perception

Establish Fair & Achievable Goals

Establish fair and achievable goals
Make sure individual roles are clearly defined Make sure individual goals are clearly defined Make sure company objectives are clearly defined Make sure employees have realistic expectations about their jobs Make sure goals and objectives are measured and linked back to career development

Reliable & Consistent Measurement

The dreaded performance review has a bad reputation:
Time-consuming Administrative Uncomfortable Inconvenient Biased Inaccurate Poorly linked to job roles A formality to get my raise!

How do forward-thinking companies achieve reliable and consistent measurement?

Employee performance levels Linking behavior and performance Consistent measurement across jobs and locations

Provide Coaching & Feedback

An Effective Way to Shorten the Learning Cycle and Impact Retention
Baby boomers as successful mentors
They are looking to give back to their organizations But employers need to recognize that knowledge sharing is strategic to their organization

Mentoring to create a supportive business environment Helps craft / visualize career path

Direct correlation between positive mentoring and productivity, employee satisfaction and retention

Develop Your People

Develop Your People

Provide opportunities for cross-training and career progression Encourage collaboration, knowledge sharing and teamwork Ensure your workforce has the skills to meet business objectives Align properly prioritized corporate tasks with required training and skills Tie training and development to performance objectives Provide visibility of key training initiatives

Develop Your People

Poll Question #4
In your organization, do learning & development programs have an impact on employee retention?
Yes, we find a direct correlation Yes, but we dont effectively measure the correlation Dont know No, we dont feel there is any impact We dont currently have an official development program today

Reward / Compensate

It is important to offer a combination of incentives and rewards to performers

Offer a competitive benefits package Link pay to performance Consider non-cash awards and incentives Promote from within

Recognize Generational Differences

Baby Boomers
Like more formal structure Prefer classroom style learning Want dedicated employees with high work ethic May not conform to generational differences Tend towards hands-off leadership Want employees that can figure it out

Generation X
Prefer adaptable employees Appreciate laid-back management style Dont like office politics Like casual work environment Base decisions on performance, not tenure Like flexibility and freedom

Generation Y
Need constant feedback on performance Need leadership and guidance Want to understand the big picture Need a fun and collaborative work environment Like to multi-task Want tools to do their job

Best Practice Strategy

Business Challenge Root Cause Issues
 Employees not accurately placed in the organization  No perceived opportunities for advancement  No perceived reward for performance  Subjective performance management  Unclear competency requirements  Unclear job roles

Best Practice Strategy

 Development paths based on competencies  Tangible outputs from performance management cycle  Measure employees against corporate goals  Internal recruiting and lateral movement  Identify employees previously overlooked for internal positions

Improving retention

Results of Effective Talent Management

3 year Total Shareholder Return* (TSR) relative to peers
15% 10% 5% 0% 9,6%

Embrace a talent mindset and make development a burning priority Broker talent across the organization Spotlight the best talent

-5% -10% -15% (5,8%)

Craft a winning employee value proposition

Organizations with top-tier leadership and talent management quality

Organizations with bottom tier leadership & talent management quality

Move mediocre people out of key jobs

- Clear correlation between company financial performance and effective talent management practices
Source: CLC 2005 Succession Management Survey Annualized Rate on Return (ROR) from 2002-2004

Company Overview
 Cornerstone OnDemand is the
leader in on-demand talent management software
and small business
 Over 800,000 users  Solutions for enterprise, mid-market

Tools address the employee life cycle:

    

Learning Compliance Performance Compensation Succession

Based in Los Angeles

 Sales, service, and customer support

Cornerstone provides an excellent integrated talent management solution for performance, learning, and succession. Cornerstone is a new breed

offices globally

Bersin & Associates Performance Management Industry Study, 2006.

Marquee Client Roster

Financial Services

Technology & Media

Retail & Distribution

Business Services

Healthcare

Automotive & Manufacturing

Energy & Utilities

Govt & Non-Profit

Thank you.
www.cornerstoneondemand.com
ccoy@cornerstoneondemand.com