Your employee retention plan will fail

By Scot Herrick | Job Performance

Jul 06

Retention plans are the concern for companies now that the recession is “over.” Employers are now concerned about retaining their employees. Especially their most talented employees. Implied in all of this is that company management severely mistreated employees while going through the recession, so now, through retention programs, companies will need to win back their employee’s loyalty.

I don’t think that will work.

Layoffs rip employee trust away

When companies lay people off, they are doing it to cut costs. Often, they lay off employees instead of taking a hard look at costs simply because layoffs are easy. It’s simple, really. Labor costs are usually number one or two in terms of the expense line, so getting rid of employees is a quick way to significantly reduce costs.

But employees don’t take layoffs that way. They view layoffs as a company eliminating their ability to earn a living. To pay their bills and put food on the table. Layoffs take away a family’s lifestyle and ability to pursue happiness. Even if you stay and are not laid off, the trust is gone. Layoffs show that management wasn’t managing, it was reacting to events. If management can’t manage, why would an employee trust that management knows what they are doing?

Employers treat employees like commodities

For all the talk about how important employees are to the company (“Our employees are our most important resource!”), the fact of the matter is that employees are a commodity. There are numbers and costs and what you do is manage those numbers and that cost to improve the bottom line. The fact that there are people involved in the numbers and costs is a sideshow that needs managing.

I get that numbers and costs need to be analyzed, but people get counted the same way the number and costs of leases are analyzed. The way office supplies get examined. The way energy costs are accounted for with recommendations to simply turn off the culprits to save money.

No one likes being treated like a commodity. We have too much pride in our individual selves to allow ourselves to be retained like some earnings on an income statement.

We did even more work and you cut our benefits

The string of benefits unilaterally cut or reduced during this recession is significant: furlough days is a great way of saying to take unpaid vacation. Companies have already cut out their pensions; now they suspend contributions to the employee’s 401(k) to save more money. Rather than addressing the cost of health care, companies now routinely pass on all increases and more of the original cost of health care to the employee to save money.

The harder we work, it seems, the less it matters. Even more was taken from the people still working, all in the name of reducing costs. Retention plans will work?

We reap what we sow

Don’t get me wrong. I get why companies need to reduce costs. And, on the face of it, each of these steps — layoffs, analyzing numbers and costs, and cutting benefits — make sense from the viewpoint of economics and perhaps company survival.

It just ignores the fact that there are people in those employee roles. As Daniel Pink notes on retention:

You can inspire, motivate, challenge, terrify, and bribe people. But thanks to man’s powerful combination of brains and legs, you can never “retain” him. Things you can retain: cattle, earnings, water. Things you can’t retain: human beings.

That was written in…2001. If your company has treated your talented employees well, you will continue to have engaged people working hard for the business. If not, boots were made for walking no matter how good your retention plan.

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About the Author

Scot Herrick is the author of “I’ve Landed My Dream Job–Now What???” and owner of Cube Rules, LLC. Scot has a long history of management and individual contribution in multiple Fortune 100 corporations.