Employee retention

July 1, 2007
TRANSPORTATION COMPANIES invest millions of dollars in the purchase and maintenance of their equipment. They may not, however, be making the necessary

TRANSPORTATION COMPANIES invest millions of dollars in the purchase and maintenance of their equipment. They may not, however, be making the necessary investment in the hiring and retention of good employees, said Chuck Udell of Essential Action Design Group.

“The difference in your business versus the competition isn't about your products, services, or tools,” Udell said during the Heavy Duty Aftermarket Week 2007 in Las Vegas, Nevada. “It's about people. Hiring and retaining good people is an investment, and high employee turnover is one of the most expensive costs of doing business.

“How much you invest in your employees is part of the cycle of success, and that's the name of the game for any company,” he said. “If we start with good customer relations and services, that will give us satisfied customers. If we have satisfied customers, we will have lower customer turnover. If we have lower customer turnover, we will have higher sales margins. If we have higher margins, we will have satisfied employees. And if we have employees who maintain good relationships with your customers, we will be able to maintain good customer relations and wonderful profits.

“We often say our people are our greatest assets,” Udell said. “Let's look at ourselves in the mirror. Compared with other industries, we don't invest in our people, and we don't train our people. We always find reasons not to invest in them. When they hear through their friends that not all companies are like us, they're gone. And it takes a ton of money to replace them.”

Demographic changes in the United States point to an extreme shortage of qualified people in the future. The Bureau of Labor Statistics reports that by 2010 as many as 10 million more jobs could be available than qualified employees.

“People have choices,” Udell said. “Industries that don't have the most glamorous image, such as trucking, will be even more challenged to fill job vacancies. Other reports show that job hopping will continue to increase.”

In September 2006, the Automotive Aftermarket Industry Association sponsored a town hall meeting in Bethesda, Maryland, focusing on the graying of America and the coming workforce shortage. Kathleen Schmatz, AAIA president and CEO, moderated a candid discussion and presentation of data, trends, and strategies exploring the impact of the impending workforce shortage on corporate America and the aftermarket industry.

“It is very clear that our industry will face a workforce shortage caused by the retiring baby boomers,” said Schmatz. “I read that throughout human history, a country's population always had more young than old, until today. This demographic shift means that for the first time in American history, there won't be enough young workers to replace retiring workers. Imagine how this will impact how aftermarket companies manage their businesses and recruit and retain employees to produce, distribute and sell products and services, not to mention the distinct characteristics of the next generation of consumers.”

“Older workers will become more highly valued,” Udell said. “To retain this experience, companies will have to offer more flexible work arrangements and packages. When you talk about replacements you can hire, you're looking at recruiting the Generations X and Y, and they think differently and have different expectations than the Baby Boomer generation.”

Gen X-ers and Gen Y-ers want far more collaboration with companies — both as customers and employees, according to the Leadership and Management Research Center. These new generations think differently and want significantly different things out of life than previous generations. And they are demanding new business models to give them the kinds of work experiences they seek. The Center also reported that the number one value shared by Gen X-ers, Gen Y-ers, and Baby Boomers is family. Other appreciated values include integrity, achievement, competence, love, happiness, wisdom, responsibility, and self-respect.

“So these shared values prove that it's just as easy to hire and retain a younger person as it is an older person, because all of the generations are looking for opportunities to advance,” Udell said. “Everyone is looking for respect and a better quality of life.”

Money talks. That's how bills are paid. People may join a company based on compensation and benefits. But what keeps them are such issues as company culture, sense of contributing, being recognized, and most importantly, “by treating every employee exactly the way you want to be treated,” Udell said. “The Golden Rule was written more than 2,000 years ago and never has it become more appropriate to the business world today.”

Research continues to document that money is not the primary reason people voluntarily leave their jobs — and usually not before leaving a trail of hints about work dissatisfaction. One or a combination of the following reasons can explain why someone voluntarily left a job:

  • The job or workplace is not what they expected.

  • The job does not fit their talents and interests. What went wrong during the interview?

  • They do not receive feedback.

  • They don't see any opportunity for career growth.

  • They feel overworked and stressed out.

  • They have no trust in senior management.

“When you notice a change in an employee's behavior, you shouldn't wait to meet with him or her,” Udell said. “Hopefully you've already established a good working relationship and can get them to explain what you've recently noticed and find out the underlying cause. This is much more cost effective than having to recruit replacements for people who could have been easily retained.”

Udell outlined some of the warning signs of job dissatisfaction:

  • Change in work behavior — arriving later and/or leaving early

  • Decline in performance

  • Sudden complaints from a person who has not been a complainer

  • Talking about “burnout”

  • Withdrawing from others compared to previous active participation in meetings

  • Wistful references to other team members who have left the company

To avoid having to conduct an exit interview after an employee is walking out the door, Udell suggests conducting a “Stay” interview — testing the satisfaction temperature to make sure it remains high — before any employee ever considers the option of leaving. This should be a discussion outside of the performance review, especially if there are signs of job dissatisfaction. Suggested questions to ask include:

  • What interests you most?

  • What do you do best?

  • What are your short term goals?

  • What are your long term goals?

  • How do your short term goals fit your long term goals?

  • What do you need from me? How can I, or the company, help?

Incentives for retaining employees include trust, open communication, and a real interest in the person, rather than just the job. Citing a recent Harris poll of 23,000 U.S. employees, Udell said that only 17% of respondents said they felt their company fosters open communication that is respectful of differing opinions that could result in new and better ideas. Only 15% responded that they work in a high-trust environment within their company. Thirty-seven percent have a clear understanding of what their company is trying to achieve, and only 20% were enthusiastic about their team or company's goals. Only one in five said they have a clear “line of sight” between their tasks and their company's goals.

“The issue is not whether senior management can express clarities or goals,” Udell said. “They can. The challenge is that these clarities become less clear at the middle management level and even less clear for junior managers, and at many companies most non-managers do not have any idea what the clarities are.”

Every company should communicate three clarities to employees, Udell said. “Clarity of direction focuses on our goals. Where are we headed? What's our gross profit goal? For a shop, for example, do we have goals to reduce comebacks?

“Clarity of structure means that each employee knows how they contribute to profitability and they understand their responsibilities. Clarity of measurement provides clear expectations and quantitative analysis. It answers the question of ‘How do we know if we are successful?’ The employee being measured must be able to control what is being measured. For example, your sales counter person controls related sales.”

To promote open communication with a company, owners and senior management must overcome fears of disclosure and practice open book management, Udell said. With most family businesses, financial information is one of the most guarded secrets.

“Is it really your competitors you fear or your own employees by hiding numbers from them?” he asked. “Understanding the financials by all people at all levels can be a very competitive tool. When people who create the numbers understand the numbers, open communication between the bottom and the top of the organization is awesome. Open book management keeps employees focused on the important issues affecting your business.”