It’s straightforward stuff: retaining your talented employees is necessary for your organization to grow and thrive. What’s less straightforward is where to start with accomplishing that task. What kind of turnover is healthy turnover, and what can you do about the preventable turnover? What kind of data tracking should you be doing, and how do you use those numbers to make improvements? What’s an easy way to go about stay and exit interviews to ensure you’re getting honest, raw feedback?
Jeff Kortes, employee retention speaker and author, joins Brandon Laws in a discussion of all things employee retention. Listen in to hear about practical tips and tools to introduce into your workplace practices as well as the meaning of Jeff’s “C.R.A.P.” leadership system and what it could do for your company and people.
MP3 File | Run Time: 25:16
Brandon: Hey, it’s Brandon, welcome and thanks for the download today. In today’s episode, we invited Jeff Kortes on the podcast. He’s the author of Employee Retention Fundamentals: No-Nonsense Strategies to Retain Your Best People and Welcome to Dodge: Tales from the Frontiers of Business.
In this episode, we discussed why losing top talent is a huge cost to the business and what we as business leaders can do to make sure we retain our best people. Jeff has some really interesting methodology around retention and I think you’re really going to enjoy this discussion.
Brandon: Hey Jeff! It’s great to have you on the podcast, welcome.
Jeff: Good to be here!
Brandon: So Jeff, employers, I think they’re getting hit from all angles. Industry professionals, business articles, they’re all talking about why we need to retain talent. I think in a labor market like this one right now where employers are really trying to fight to keep their good people and to find highly skilled people for those unfilled jobs that they have, I wanted to ask you, what’s the monetary cost of losing somebody? Not only are they trying to find talent, but if they’re losing talent at the same time, what’s the cost to the business?
Jeff: There are a lot of different formulas. I take a very conservative formula to determine cost because I don’t like to overstate it, but I say 25% of a person’s annual salary. And I’ve heard estimates that go as high as three times a person’s annual salary as being the cost of turning over an individual to an organization. But I think beyond that the costs are even becoming more and more important and the reason for that is that people are going to get to the point where they’re not going to have enough people to simply staff their organization. Aside from the bottom line, if you can’t get the people you need because of your turnover, the reality is, is you’re not going to be able to survive.
Brandon: Where does that number come from? Is it just the cost of retraining somebody and ramping them up to where that person that left was already at or are there some other factors? Does it have to do with the revenue a little bit? Where does that number come from?
Jeff: Comes from a lot of different things. Lost productivity, potential lost customers because you don’t have an established relationship, having to pay overtime, the cost of the time of your people to replace them. It loads a whole group of different factors into it.
Brandon: I don’t know if you’re an active user of LinkedIn, but I’ve seen a version of this particular meme floating around for a long time and it goes something like this. A CFO says, What happens if we train somebody and then they leave? And the CEO says, What happens if they don’t and they stay?
I always think it’s funny because you have one person who’s thinking about cutting costs and saying, Oh, why should we train somebody? They’re just going to leave us and take the skills elsewhere, whereas the CEO should be thinking kind of big picture and like, Hey, no, we need to train somebody so they stay with us and keep producing results.
Have you seen that? What do you kind of think about that?
Jeff: I actually use that when I’m doing my program, Give Your Employees CRAP and 7 Other Secrets to Employee Retention! Because what do you want? Untrained people dealing with your customers, producing your parts, whatever it is?
The other thing is, is because growth is such an important thing to most employees. Training them is one of the things that’s actually going to keep them as opposed to have them leave and go elsewhere.
Brandon: In your book you mentioned that we should start classifying turnover in certain ways as good, bad, and neutral. Can you give an example of each of those? I thought it was brilliant, I never really thought of it that way.
Jeff: Good turnover is – let’s say you have a poor performer and you have to exit them from the organization. That’s the sort of turnover that you want to have.
Poor turnover is when you have a good employee who, as a result of potentially his relationship with his supervisor, decides to leave and go elsewhere.
And then neutral turnover is things like retirement, somebody decides the time to retire. That’s something that you really can’t do anything about. So I classify that in the neutral category.
Brandon: How should employers or HR managers, how should they be tracking this? What do they do with that data?
Jeff: I believe that you have to track things on a monthly basis and I think you need to classify them as good, neutral or bad turnover. The real key is, is you can have a variation as to how you do it in your organization as far as how you classify. The key is to keep how you classify them the same. You don’t want to be saying, Well, one month this is good turnover and the next month is bad turnover. Whatever standard you come up with, you want to keep the same standard because you’re measuring against yourself and I find that if you’re not measuring on a monthly basis, you can lose sight of things.
So you should be tracking those numbers every month so you can see if you’re starting to get an uptick. I always compare them year to year, month to month, because depending on the nature of the business, there might be some cyclical components that drive turnover within an organization.
Brandon: If you take that data and you say, ok, year over year, maybe our bad turnover is up. What kind of conclusions could you make based on that data? It’s like oh, we’re just not hiring the right people, or what do you do with that?
Jeff: Just having the number isn’t sufficient. You’ve got to have data such as things like exit interviews, stay interviews. I’m a big proponent of just knowing what’s going on and having your pulse on what’s going on in the organization because I’m a believer that nobody should quit that you don’t expect to. If it takes you by surprise, it means that you’re not on top of things.
Brandon: You mentioned stay interviews. Are you a fan of stay interviews?
Jeff: I am. Mine tend to be informal stay interviews because if you make them formal, people aren’t going to tell you what you need to hear. When I was an HR director, I would just start talking with people and out of the blue I would say, Well, why do you stay? Or Why do you come to work every day? And just listen. Because they will tell you. They will tell you what’s important and if you talk to enough people, you will start to see the common threads that are important within your organization.
Brandon: Going over to the exit interviews, is there a way in which you do these or a certain type of employee that you do these with? Do you do it for all types of turnover?
Jeff: I would not for bad turnover because you know you’re exiting someone because of poor performance. But everybody else, I always do an exit interview. Mine are informal. I don’t put a form in front of somebody because as soon as you put a piece of paper in front of somebody and you ask them to put it down in writing, they will clam up.
Brandon: Yeah, they will.
Jeff: And then the other piece I find is, is that – I actually just wrote an article for LinkedIn on this – I’m a believer that when you do the exit interview, you don’t want to share it with the supervisor because if the employee knows that you’re going to share it with their supervisor, they’re not going to tell you anything because they don’t want to burn that bridge and they ultimately want a recommendation or a reference. So I just take that data, use it for what it is, and look to see if there are issues with supervisors because if you let people know that their supervisor is going to hear it, they won’t tell you anything.
Brandon: You spend a lot of time in the book on supervisors and you say they’re basically the backbone of an organization. They have a lot of control over retention. What are some of the behaviors of the bad supervisors that you should probably consider making a switch?
Jeff: The biggest one is micro managing. You can have a department that’s stable and then you change managers and all of a sudden you see the whole department start to turn over and usually it’s because, I find, that people are micro managers. That’s one of the biggest things and then there are some people that set unrealistic expectations and for no other better term, some people are just poor leaders and they’re jerks and people don’t want to work for them.
But it’s really about that first line supervisor and middle level manager because that’s where the vast majority of people in an organization report to and it’s my philosophy that to the average employee, the supervisor is the company because they don’t usually interact with their boss’s boss day in and day out. It’s their boss and I’ve seen a number – 75% of the people say the worst thing about their job is their boss.
Brandon: That’s why people leave.
Jeff: Yeah. They usually leave because of the boss, in my opinion.
Brandon: It’s interesting, you went on to say good bosses, they will not necessarily manage by walking around but they will be more visible. How do you, especially in this day and age of the knowledge worker and computers, stay in front of people so that they feel connected with their supervisor?
Jeff: I tell supervisors when I train in what I call C.R.A.P. leadership, I tell people you got to get out of your office. It doesn’t matter if a person is a software developer. If they’re working in the cube, the difference between a factory versus a cube environment, it’s a cube factory and you got to wander around. You got to talk it with your people. You got to poke your head in the cube and say, How is it going? Anything exciting happening? You got to make conversation with people. I equate working in a cube with a machinist working at a machine. They’re in a defined area and you’ve got to be visible.
Brandon: What’s an appropriate way to do that without really interrupting their workflow, especially somebody who’s on a factory floor where there are safety concerns. What’s an appropriate way to interrupt somebody and make sure that you still have that connection?
Jeff: You can usually tell if somebody is preoccupied, at least I always could when I was an HR professional. You can see if somebody is preoccupied. they got their head in the machine. You’re not going to bother those folks or even when somebody might be doing some coding in the cube. It’s instinctual. You can tell when someone is engrossed in a task, you just leave them alone.
I talk about strolling through a facility. You don’t have any particular route but you’re wandering around and you will find plenty of people that as you walk by will say hi to you and it creates an opportunity to have conversation.
Brandon: For the office worker nowadays where the knowledge workers sit behind the computers, are you liking the open office space where now you can see people a bit more and conversations tend to happen a little bit more? Do you like that versus cubicle land?
Jeff: I guess I never thought about it because I’ve worked in both environments. Even if people are in an open area, you can tell if people are engrossed in a task. But I don’t know that it matters because I find that the supervisors who are going to wander around and talk to people are the ones that are going to get out of their office. And we still do have offices, particularly when you start talking to managers, unless you’ve gone to a totally collaborative environment and total open concept type of environment, you still got to get out of your office and talk to your people.
Brandon: You have this methodology called C.R.A.P. What does that stand for? I imagine it has something to do with the supervisors.
Jeff: C.R.A.P. stands for Caring, Respect, Appreciation, and Praise and that’s one of the key components in driving employee retention. When I do my program called Give Your Employees C.R.A.P. and 7 Other Secrets to Employee Retention, there are seven other key factors that drive employee retention. But caring, respect, appreciation, praise are at the heart of it. If you’re not giving your people C.R.A.P. and showing them that you appreciate them for what they do, praising them when they exceed expectations, demonstrating that you care and, again, giving people respect, you’re going to lose people because it’s different than it was 25 years ago. People just won’t tolerate that anymore.
Brandon: In your book, you had a really nice definition for the difference between respect and appreciation. For listeners, could you mention that? I thought it was just a nice definition.
Jeff: Everybody deserves basic respect. I mean that’s part of what I consider human dignity. Showing appreciation is telling people when they do a good job. So if someone gets you the report in a timely manner, you say, Hey, thanks very much. I do appreciate it.
Again, you say something to them and then I will even take it a step further. When people exceed expectations, we’ve gone praise-crazy with the young generation, to the extent that there’s this need for praise. When I do my C.R.A.P. Leadership System, I tell supervisors that appreciation is telling somebody when they do a good job. Praise is when they exceed expectations and should only be given out when they exceed expectations.
Brandon: On the appreciation side, you mentioned for the younger generation, they’re always wanting feedback. Have you seen some pretty unique ways of showing appreciation either in a public or private setting?
Jeff: I think the key to showing appreciation is to personalize it and not be robotic about it. Again, I think you just got to personalize it and explain why it was important, but not get into any big, lavish presentation as to what it was. It’s really the personal touch that makes appreciation worthwhile and accepted by employees. And it has to be sincere.
Brandon: Yeah. It seems like in the moment, specificity around what they did that was so great would be really important because that will stick in the back of their mind. Like, Oh my gosh, I killed it on this one, and they would want to keep doing it.
Jeff: I’ve seen statistics that 50% of the people out there do not feel appreciated. That’s a scary statistic and it’s not just young people. It’s all people. We just tend to have an old school thought process. Well, if you don’t hear anything from me, you know you’re doing a good job. That doesn’t cut it anymore!
Brandon: That’s the old school model. Yeah, I don’t like that!
You mentioned in the book that employers should really reduce the importance that compensation pay plays in the retention equation. What did you mean by that?
Jeff: We tend to use compensation as an excuse. We always say, oh, they got another job and they got paid more money. Usually what it is, is there’s some precipitating event that gets a person looking for a new job and then they wait until they get a job that pays them more money. Then they will come in and say, Well, I got a job for more money.
It wasn’t money that drove the decision to look. They just got more money in the process. I emphasize to my clients that you need to pay competitively and you need to make sure that you’re in tune with what’s going on in the market. But don’t use money as an excuse. That’s the thing that always concerns me is that a lot of organizations tend to use money as an excuse or supervisors use money as an excuse when there are other factors that really drive what precipitates someone to start looking.
I emphasize to my clients that you need to pay competitively and you need to make sure that you’re in tune with what’s going on in the market. But don’t use money as an excuse.
Brandon: With a top performer, what do you recommend employers do for pay? What’s fair in your mind? If you’re going to keep those top talented people, you got to pay them, right? So what’s fair?
Jeff: It really depends on the environment. I used to have a benchmark that a top performer should be making at least 10 percent more than an average performer.
You used the term “fair”. I mention to my clients all the time is you want to be fair, not equal, and in a fair environment, top performers get paid more. If you pay your Clydesdales the same as you pay your donkeys, the Clydesdales will know it! Because people always talk about money or people find out about it and before you know it, what happens is the Clydesdale says, Look, I’m pulling the wagon. The donkey is doing nothing and I’m getting paid the same as the donkey. And then what happens is your Clydesdales leave and all you’re left with are donkeys.
Brandon: You hate the word “rewards” when referring to compensation. Why is that?
Jeff: Maybe I’m old school! We go to work to get paid. I don’t know that we go to work to get rewarded. I consider pay – it’s pay for doing a job! I’ve never liked the term “total rewards”.
Employees laugh when they hear the term “reward”. You mean I’m being rewarded for showing up for work? Come on!
Brandon: Part of me thinks the reward is maybe just a reward for your production level or something and maybe that’s why it has kind of caught on. But yeah, I totally get what you’re saying. It’s popping up a lot, the total rewards thing. I see it more and more. So I wanted to see why that started and if you knew any background on that.
Jeff: Being a former HR professional, we tend to use buzzwords and the buzzwords, oftentimes, have a disconnect with our employees. Our employees are thinking one thing and maybe we wanted to think rewards but most people think pay; pay and benefits.
Brandon: On the benefits side, there typically has been a one-size-fits-all benefit offer to new employees and I think more and more people want unique benefits. They want flexibility. They want short term or long term disability policies. They want control over their work but they also want to be able to enjoy some of the other benefits. What’s your take on the one-size-fits-all versus some of the unique things that employers are offering nowadays?
Jeff: Well, I think for one size fits all, what you’re doing then is you’re spending money in areas that may not add any value from a retention standpoint. So the more flexibility in benefits you can offer so people can pick and choose what they want makes sense for them. What you want to do is you’re paying benefits, you want them to be competitive so that you take that component out of the equation, because unless you’re paying competitively, you’re going to have problems. So you want to take that out of the equation so you can concentrate on all the other things that don’t cost you a dime to do.
Brandon: When it comes to people who are non-performers and people know it, could that kill retention for some of the top performers?
Jeff: Absolutely. Again, the Clydesdales, they don’t want to be carrying the donkeys. It drives them crazy and when you’re sitting next to somebody who’s a non-performer day in and day out, you get angry. It destroys supervisory credibility because the reaction of people who see non-performers being tolerated, they look at their supervisors and say, Look, this person is either clueless or they don’t care. Either of those is deadly from a credibility perspective with the supervisor or manager because you need that credibility in order to be able to lead your people and to get your people to follow you.
Brandon: On a similar note, you made a really nice metaphor for culture fit and how it impacts retention. You mentioned it’s like having a size seven shoe when you’re really a size eight. You can fit into the size seven shoe, but after a while, your feet just start hurting really bad and it just doesn’t work out. So you end up having to throw it away and get a new shoe. How can culture fit impact retention, from that perspective?
Jeff: Well, culture fit is actually the very start of employee retention because it is the most important component of success on the job. It’s not skills, because if you have talented people, they can learn skills. But if they don’t fit in the environment, they’re going to be out of place. If you got somebody as an example who is – I use the analogy of somebody who’s top gun, used to a fast-paced environment, and they go to an organization that’s very methodical, it will drive that person crazy. And it’s only a matter of time before the person is going crazy and says, I’ve got to get out of this place. Or the organization looks at top gun and says, This guy is a bull at a china shop because they just don’t fit in!
So making sure you have fit on the front end is the perfect way to start your retention process because if you get the right people, then you can work on the other factors that drive employee retention.
Brandon: It’s so interesting because it seems to me like to make sure that you have the fit, for one, your interviewing process has to be buttoned-up. You’ve got to ask the right questions and just make sure that there’s the cultural alignment.
I don’t know if you knew this Jeff, but I’m in marketing and work for an HR consulting firm. So the employer brand is something that we talk a lot about. We developed one for ourselves. We’re helping clients with it. I feel like to make sure that you have culture fit, you really have to put your culture on display to make sure that any candidates walking in the door know exactly what they’re getting into.
What’s your whole thought on the employer brand when it comes to culture fit later on?
Jeff: First and foremost from a recruitment standpoint, you want people coming to you as opposed to having to go seek them out. You want to have a brand that people seek and come to you. But if you’re displaying your brand as one thing and it’s not correct, people will join the organization thinking the brand is one thing or the culture is one thing and then they find out that they don’t fit or the organization finds out that they don’t fit.
That’s why I’m a big believer in full disclosure. I believe that candor is important in the hiring process and employees like that. I believe that candor sells because a lot of organizations try to snow employees in order to get them to join the organization and that’s the last thing you want to do because that’s how you get bad fit.
Brandon: As we wrap up this discussion, I wanted to just overall ask you – HR managers need to start somewhere with retention. Where do they start? What are the most important factors when it comes to retaining your top talented people?
Jeff: C.R.A.P. is really at the heart of it and the people that drive C.R.A.P. are your leaders within the organization and I’m talking first line supervisors and managers. If you don’t have a core of people who care about their folks, who respect them, can show that they appreciate what they do and praise them, you’re in trouble. You want to have supervisors and managers that give their people C.R.A.P. and that should be the starting point. From there, you can work on all the other aspects that drive employee retention.
Brandon: Awesome, Jeff. I really appreciate you joining us for the podcast. Where can people learn more about what you’re doing? You write on LinkedIn, I know that. You’ve got a couple of books. What are you going to tell listeners?
Jeff: Go to www.JeffKortes.com and you can see all the various things that I do from a standpoint of speaking to organizations, training, consulting, pretty much whatever solution people need in order to get a handle on their employee retention because it is going to be the issue of the upcoming decade and it’s going to be a survival issue. It’s beyond just money, it’s about survival.
Brandon: I went to your website before we hopped on and I watched a video of you speaking and it’s just a very nice, inspirational video and I think it’s really powerful. I love seeing you in action too, it looks like you’re an amazing speaker. So I encourage people to go check that out and can see what you’re up to.
Jeff: Thank you! I love to talk CRAP to organizations. I’m passionate about it and as I tell people, CRAP works.
Brandon: Amazing. Thanks Jeff. I appreciate the time.
Jeff: All right. Thank you!