How to Retain Employees: 8 Practical Takeaways from 3 Case Studies
Will my top performers stay?
What more could I be doing to keep them?
Learning how to retain employees is a top concern for today’s CEOs and HR pros … and for good reason. It seems, is increasingly becoming the norm, thanks in part to a workforce comprised of more and more Millennial workers, who are likely to have twice as many jobs over their lifetimes as baby boomers. This trend is only amplified in an economy, where workers can change jobs with more frequency and fewer consequences.
We have listed 3 case studies by Jeff Murphy (snacknation), highlighting examples and takeaways from the companies who are winning the war for talent and getting the retention question right
Over the last decade, Netflix has rewritten the rules in the cable, video rental, and VOD spaces. Disruption, you could say, is in their DNA. So when Patty McCord, the company’s first Chief Talent Officer, arrived at the company, she refused to take a business-as-usual approach. Her novel yet practical style sent a shockwave through the business world, and the culture deck that she developed alongside Netflix CEO Reed Hastings has been hailed as a defining document of Silicon Valley.
Here’s what Netflix taught us on how to retain employees:
According to tradition thinking, your organization will always be stratified – there will be a small group of “A” players (high performers who provide the bulk of innovation and results), a large group of average performers, and another small group of poor performers who will either have to be replaced or will leave due to lack of engagement.
McCord asked, if we know how much more value they provide, why hire anything other than “A” players?
Identifying these “A” players in the hiring process is a challenge, but Netflix found that the key was to focus on character as much as skills or experience. McCord and her team took great care to only hire mature, “fully formed adults” who put the success of their teammates and the organization before their own.
For McCord, hiring top-talent constituted the ultimate perk.
The benefit to the company is twofold—having more “A” players means more productive and motivated individuals, but it also means a better, more engaging working environment for everyone. Of course, hiring more top talent likely means a more involved hiring process and higher starting salaries, but the approach has apparently worked for Netflix, who recently beat HBO’s 17-year streak of most Emmy nominations in a year.
“The best thing you can do for employees—a perk better than foosball or free sushi—is hire only ‘A’ players to work alongside them,” she wrote in the Harvard Business Review.
“Excellent colleagues trump everything else.”
This insistence on surrounding top talent with other top-talent is a key driver in the company’s above-average retention rate.
According to McCord, the best thing to do once you hire fully formed adults… is to treat them like adults. In practice, this means an expense policy that’s just five words long (“act in Netflix’s best interest”) and things like unlimited vacation time, which sends the message that Netflix trusts their employees to do the right thing for the business. Most recently, the company garnered international attention by offering salaried employees up to a year of paid paternity leave. Policies such as these encourage employees to stay for more than just the cushy benefits. They convey a sense of value and trust—in other words, they tell employees that they are valued for more than just the profit they create. This is one of the great advantages of hiring “A” players: given ample time and space and minimal micromanagement, they will produce great work for their company.
Above all else, it’s this insistence on treating people like trusted partners – something unthinkable in the command and control management styles of days past – that has contributed to Netflix’s above average retention rate.
All effective retention strategies must include a plan to develop great managers. After all, managers are the direct link between the C-suite and the rest of the org, and are responsible for executing leadership’s strategy and vision. Good managers aren’t necessarily star performers – they are leaders first, and doers second. At Netflix, leadership emphasized the importance of team building above all else. “We continually told managers that building a great team was their most important task,” McCord wrote in HBR. “We didn’t measure them on whether they were excellent coaches or mentors or got their paperwork done on time.”
This year Amazon made headlines and ignited a national debate after a New York Times expose uncovered what they called a “bruising” company culture at the e-commerce giant. According to the article – which spoke to dozens of former and current employees – the defining characteristics of the Amazon experience was intense pressure, unreasonably high expectations, and constant backstabbing from colleagues.
And while CEO Jeff Bezos and other executives dispute the Times’ depiction, their high employee churn rate seems to support the claims made by the employees who went on record. According to a survey conducted by Payscale, the median tenure at Amazon is just one year.
If you care about keeping your top performers, heed these lessons from Amazon’s retention missteps.
According to the Times article as well as subsequent employee commentary, the culture at Amazon was viciously competitive. One of the biggest factors was the company’s Anytime Feedback Tool, a communications platform that enabled any employee to provide feedback about colleagues directly to that colleague’s manager — anonymously.
The AFT was created to collect both positive and negative feedback, but because all Amazon employees are ranked and the bottom of the ranks culled, the tool was often used by cutthroat employees to sabotage one another.
Very often, this negative feedback was used as the basis for withholding promotions and other benefits, without the employee ever being able to defend herself from her accuser. This contributed to an overarching atmosphere of fear and mistrust, and was cited as a major factor for the company’s high employee turnover.
In what’s a rather conventional retention strategy, Amazon offered employees stock options that vest after a period of years, usually three to four. Employees, the theory goes, will stick around at least enough to see their stock vest, during which time you can extract enough value out of them to make the relationship worthwhile. (Compare this to Netflix’s stock plan, which empowers employees to choose a compensation mix that includes stocks that continually vest.) But as a Buzzfeed News piece points out, the vesting strategy seemed to have little effect on employee retention at Amazon. The average employee lasts just one year.
The lesson? The so-called “golden handcuffs” can’t compensate for a toxic culture.
Year after year, Hyatt ends up on Fortune’s famous 100 Best Companies To Work For list. The hotel brand also enjoys a high ranking within the list, landing in the ninth spot in 2018. Hyatt treats employees like family, caring for them on a professional and personal level. By creating a thriving environment, Hyatt is considered one of the best places to work in the world.
Employees don’t just stay at Hyatt; they love working at Hyatt. A Great Place to Work® survey found that 95% of Hyatt employees say “I’m proud to tell others I work here.” So why do employees love work at Hyatt?? The Hyatt philosophy is people-centered, regardless if it related to a customer or an employee.
By bringing out the best in employees, Hyatt knows it can deliver the best possible hotel experiences. Talk about premium hospitality, right?
One employee summarizes why it’s wonderful to work at Hyatt:
“Hyatt takes care of their employees. Training is so thorough that there’s nothing for you to guess about.” We hope you find inspiration in these takeaways from Hyatt’s world-class employee engagement and retention techniques.
“In an industry with historically high turnover, we are honoured to have more than 14,000 colleagues with 15+ years of service – proof of the positive impact of our effort,” Hyatt says. And according to HubEngage, Hyatt housekeeping employees usually stay on board for 12 years or longer—practically a lifetime in the hospitality field.
Hyatt keeps turnover down with retention initiatives that are also central to the overall business strategy. Their retention initiatives include an in-depth training program that fuels employees’ internal advancement, a Caring Fund for employees suddenly facing emergency situations, and diversity and inclusion initiatives that make sure all employees can meet goals and enjoy satisfying work lives. For example, Hyatt established Diversity Business Resource Groups that bring together employees who share cultures, races, genders, ages, and interests.
These in-depth initiatives take time, energy, strategic thinking, and devotion to employees, so naturally, employee happiness and loyalty follow.
Employee empowerment is at the heart of all Hyatt’s training and development initiatives. The hotel chain recognizes the value of investing in employees who, in turn, invest in their work and deliver committed performance that shines through in Hyatt’s spotless rooms, dedicated customer service, and pristine events.
In addition to training employees on key skills, Hyatt empowers employees by treating them like family members.
“Our commitment to caring for people starts first with our colleagues because they are the heart of Hyatt. Our focus is on listening and cultivating an environment where our colleagues can be their true selves – one where their career development is supported, their uniqueness is celebrated, their voices are heard, and collaboration and innovation are encouraged. We refer to ourselves as “the Hyatt family,” because it really feels that way,” Hyatt says.
Creating a family environment requires the cultivation of safety and security—some of the most empowering emotions employees can experience. Secure employees are motivated to solve problems, come up with new ideas, and take measured risks that lead to company-wide excellence.
Hyatt chooses to spend time and energy developing internal employees, preparing them for advancement. This allows the hotel to fill positions with trusted employees who know their business instead of spending millions of dollars recruiting candidates who also require training and may not be around for much longer than a year.
“We are proud to say that many Hyatt leaders grew their careers from entry-level roles with the company, and we support opportunities for our colleagues to move between functions and locations for professional and personal development,” Hyatt says.
HubEngage reports that Hyatt offers, in addition to a robust internal training effort, one-off classes and training sessions from Khan Academy and generous tuition reimbursement programs for employees looking to learn new on-the-job skills.
As you can see, effective employee retention strategies come in all shapes and will look different depending on a variety of factors including your industry, the size of your organization, as well as its culture and demographics. However, certain themes appear over and over again, including trust, collaboration, values and purpose, personal development, and authentic communication. Use these ideals as a guiding principle when developing or refreshing your retention strategy.
Note: Infidea does not take responsibility for any findings of the above Case Studies. The studies have been sourced from an open platform https://snacknation.com/blog/how-to-retain-employees/. It is the reader’s discretion to follow or ignore the points discussed.