Professor Mindy Treftz
15 November 2010
Becoming the Employer of Choice
During the course of a day, one is likely to be exposed to dozens of interactions with service providers. Whether at the coffee shop getting ready to start the day with a warm cup of coffee, the doctor's office signing in for an appointment or the taxi driver who has the important task of getting you to the airport in time for an important business trip. Each one of these interactions will contribute to a positive or negative experience that will lead to future decisions on whether or not to visit the same coffee shop tomorrow morning, the same doctor for your next annual visit or the same cab company for a future transportation needs. Many organizations understand the revenue impact of loyal customers and believe in investing in their employees. Employee satisfaction should be one of the top priorities of organizations because becoming the employer of choice will lead to increased revenues and lower labor costs. The term Employer of Choice can be defined in many different ways but often relates to employees making the choice to remain employed by a certain organization based on satisfaction at the workplace. According to Roger E. Herman and Joyce L. Gioia, authors of How to Become an Employer of Choice, "Any employer of any size in the public, private, or not-for-profit sector that attracts, optimizes, and holds top talent for long tenure ... because the employees choose to be there". Besides the choice process to remain employed by an organization, being the Employer of Choice also relates to the same employee performing to high standards dedicating themselves to the organization mission, vision and goals. Being the Employer of Choice today is the most important approach to attract qualified employees who will bring a great deal of knowledge, skills, enthusiasm towards the organization's values, building significant competitive advantage. During our grandparents’ generations, it was very common for an employee to remain with the same organization for the entire work life. Many would get hired during teen years and retire from the same company after a lifetime of dedication and loyalty. This is almost unheard of nowadays. According to The Daily Recruiter, employees are expected to change jobs at least seven times during their work career, many occasions several times more. One must question what makes employees leave an employer for another. It is possible that a long list of many different reasons could be created from better pay, promotion opportunity, luxurious office with view, to improved benefits and better work hours. However, one may be surprised when hearing about the three top reasons published by Gallup Organization: Lack of faith in the leadership or vision of the company. Concerns with the way employers/management are treating people. Lack of employer/management support in areas of performance reviews and employee development. It is fair to state the relationship with the direct boss is a main contributor for employees satisfaction at the workplace. Being able to trust those you report to is an important relationship building process that must take place in order to build loyalty. Understanding and believing on the organization's vision will also produce positive results through added commitment. Employees must feel appreciated and rewarded. The ability to identify opportunities for the future within the organization is a great motivator, along with fair and timely performance appraisals. Organizations that take the time to listen and understand what employees need and want at the workplace are more likely to deliver a desirable environment; a place employees feel welcome and want to stay. Simple examples of areas of opportunities in many organizations are the back of the house space, the areas customers do not see and do not know about. Some organizations believe in spending dollars to make customer areas more comfortable, modern and clean but forget those internal customers who spend a great part of their day at the organization, their employees. Break rooms, restrooms, locker rooms and employee parking are some of the areas organizations who believe in being the Employer of Choice tend to spend time and money to improve in the effort to satisfy employees. Every organization, despite their size or number of employees, has the opportunity and should have the desire to become employer of choice. When employees are happy at work they are more likely to speak positively about their employer and service and products available. Happy employees are often identified as those putting in the extra effort and time to make the organization successful, more productive and effective. Satisfied employees become loyal employees. They tend to remain at the job for many years and perform to or above expectations. This in turns, reduces turnover rate, as well as, hiring and training costs. In addition, loyal employees generate loyal customers. It is common to hear stories about customers who visit the same business for many years despite lower cost or convenience of competition because of the service they receive from employees. Customers and employees often build long lasting relationships that generate repeat visits and additional revenues. High recruiting and training costs are strong reasons to invest in your current talented workforce. According to Beverly Kaye and Sharon Jordan-Evans, authors of Retention: Tag, You're It! studies have found that the cost of replacing lost talent is seventy to two hundred percent of that employee's annual salary. Identifying how to retain qualified talent is the first step to success. Although Human Resources is responsible for the hiring process and many times the initial training the new employee receives when joining the organization, most of the retention efforts are assigned to line management. Here comes another challenge: Are line managers aware of challenges and importance of employee retention? Most organizations do not include retention as one of managers’ performance measurements. This causes managers to have minimum to zero knowledge and awareness of what makes employees happy and what it takes to keep them. According to the Harvard Management Update, nine of ten managers think employees stay or leave because of money. We know that's not true. Although money is important, what employees really want is a safe and healthy environment to work, a good relationship with their bosses and opportunities to learn and grow with the company. A Hay Group study of more than 500,000 employees in three hundred organizations found that of fifty retention factors, pay was the least important. These are some of the most common reasons employees gave for wanting to stay with a organization, based on a research conducted by Beverly Kaye and Sharon Jordan-Evans: career growth, learning, and development; exciting work and challenge; meaningful work; making a difference and contribution. Because research tells us a different picture of why employees leave their jobs, it is important to have line managers accountable and more involved with employee satisfaction projects to ensure what really means to employees is being practiced by their direct managers. Training and development is often one of the reasons employees chose to stay or leave an organization. Providing proper training will assist with your future business growth. Companies with positive retention rates are often identified as those with strong and effective training and development programs. The opportunity to grow and advance within the organization tells employees there is no need to look for career growth elsewhere. By implementing a structured training and development program in place, organizations will be promoting the belief in development of the team. This approach also allows organizations to build talent within their current teams, ability to grow quicker when needs arise, rather than invest in outside talent that many times requires relocation cost and additional training in hopes of a positive culture adaptation. Why is adapting to the organization’s culture so important? We have all seen or heard of organizations hiring promising candidates with significant experience for a significant increase of salary in hopes to join the organization and fix things specific to their background. In the same note, we have probably all seen that this type of approach is not always successful. This is usually because despite the capability and knowledge of certain area, the new employee does not adapt to the organization’s culture. The Organization culture is the personality of the company. Just like at times great people who work well on their own may not produce the same results together, the culture of an organization is not a fit all approach. The culture is a combination or beliefs, values and assumptions of the organization’s members and their behaviors. This is another good reason for investing in training and development of current employees who understand and believe in the organization’s culture to promote growth within rather than bringing the unknown to join the team. Turnover is often seen negatively by organizations. As mentioned earlier, the cost of hiring and training a new employee is often very high and therefore organizations should strive to retain employees. This is true. However, the loss of poor performers may come with positive benefits. Some long term employees sometimes do not adjust to organization's changes. They are set in their ways and tend to be known as those who show up to work and collect a pay check, but do not contribute to the organization's goals. These employees are also known for bad mouthing the organization and its services and products, causing the complete opposite effect from loyal employees, costing the organization valuable customers and significant revenue. In this case, turnover should be seen as a positive impact to the organization. Loosing those employees who do not want to be with the organization despite the efforts to please and appreciate employees, will open doors to promote or higher someone with better work ethic who will produce and deliver more. Jim Collins, author of Good to Great” has a great analogy of people and a bus. He wrote: “… to build a successful organization and team you must get the right people on the bus…” His research shows that great successful companies do that, they hire the right people for the right jobs. Collins says “Leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats”. The idea of having the right people on the bus comes with the belief that if an employee joins the organization because of the people and not because of the direction the organization is going, it is much easier to change direction in the future if things are not going well. It also relates to the right people in the right seat on the bus. Hiring a great talented employee and assigning them to the wrong task is also a mistake organizations need to avoid. Talented employees are not great at everything. By not properly assigning the right employee to the right position will contribute to poor performance, poor results and consequently turnover that could have been avoided if the right employee was hired for the right job to begin with. In addition Jim Collins mentions getting rid of the wrong people on the bus will benefit the entire organization. This is a good example of when turnover can be positive as mentioned above. Another example when turnover is necessary; is the fact that often leaders waste time with poor performers taking away from valuable time that should be spent with star performers. How is this relevant to being the employer of choice? As an organization, it is important you dedicate time and effort with your employees. By holding on to those not performing, managers often neglect team members who are meeting expectations from receiving recognition because they are too busy coaching those who do not perform. Becoming the employer of choice is not an overnight process, but a well worth journey. It begins with hiring qualified employees for the right job in the organization. This may seem simple but an excellent controller at one organization may not be the fit for another. Financial needs and organizations' goals and cultures are different and therefore a qualified candidate is not always the right candidate. According to John Reh, founder of www.peoplearecapital.com, “Hire talent, not just trainable skills. Skills can be taught to a talented employee. A skilled employee cannot just be given talent.” Training is often seen as nothing further than the hiring process. The truth is, employees are motivated by the opportunity to learn and do better. Ensuring a training and development budget line is available in an organization is as important as making sure it is spent appropriately. Other learning opportunities that will ensure your organization continuous knowledge growth is the ability to promote cross-training, mentoring programs, hand on training and brainstorming activities. Creating a learning culture amongst employees will ensure they remain energized and excited about work new ideas and approaches. Loyal employees are not born loyal; they are developed through organizations' beliefs. Continuous training and development will contribute to their growth and keep employees motivated and engaged. Communication is a priority to ensure success within the organization. Promoting an open door policy and ensuring employees feel welcome to share their ideas, suggestions, questions and concerns is a main part of becoming an employer of choice process. Employees must feel appreciated and valued. By listening to their feedback organizations foster a teamwork environment that benefits employees and the company. Involving employees in departmental or company's tasks and projects in order to make decisions is also a positive approach towards team member satisfaction. It will ensure the buy in of employees prior to making a significant change or implementing something new. When employees know why and what the positive impact will be by making the change, they are more likely to support and put in effort to deliver desired results much faster and in a more productive way. Employee satisfaction surveys and focus groups are often present in organizations. These are tools to truly understand how your team feels about their leaders, the department and the company. The satisfaction measures are often changing because people change. Scheduling surveys and focus groups on a consistent basis will ensure the organization remains focused on what is important to the employees. It is very important employees feel their opinion is valued and confidential when appropriate. Conducting a property or organization wide type of survey may require the process to be completely confidential in order to gather candid feedback from your employees. If employees do not feel secure about the confidentiality of the information they share, they will fear retaliation when sharing negative point of views and therefore will chose not to complete the survey or not to be open and candid about the information they share. Doing something about the survey results is a seal the deal type of approach. Organizations should not conduct such tasks if nothing will be done to improve employee satisfaction. Asking your employees what they want requires that you deliver results. A very effective approach to ongoing communication regarding what employees want is management engagement. When managers are engaged with their employees, they often know when things do not go well and what needs to be changed prior to surveys. This allows a quick recovery and prevents damage that could result in turnover. Recognizing employees for a job well done is just as important as coaching those who do not meet expectations. When employees feel appreciated, they feel proud and motivated to continue to deliver results. The important part of delivering recognition is to ensure it is sincere and personal. Telling the team they do a good job does not mean the same as telling a specific employee what a great job was done with a specific task the employee accomplished. Being timely with recognition is also very important. Ensuring the annual appraisal is accurate and on time is much appreciated by employees. However, at times, waiting an entire year to receive feedback is not good enough. Real time appreciation and coaching goes a long way. Although money is not everything, making sure employees receive compensation increase according to their efforts is also a big part of being the employer of choice. Delegating and trusting is an important process of being an effective leader. Employees like the opportunity to be responsible for tasks and projects and want their manager to trust them to do the job. According to the Better Business Bureau online article “Ways to Keep Your Employees Happy”, “Empower workers to do the job you hired them to do. A work environment in which employees are constantly monitored, micro-managed and bossed around can be stifling. While most employees are capable of receiving empowerment, not all will seek it, however. The overriding motivation for all employees is to be treated with respect.” Although it is true employees want to be trusted and dislike being micromanaged, some are motivated by constant feedback, a more structured supervision than others. Organization's leaders must be able to identify what motivates their employees to ensure they remain satisfied at work. A term often found when describing managers who contribute to employee satisfaction in many aspects of the process of becoming the employer of choice is called Retention Manager. These are often front line managers who work side by side with their employees, better known as department managers or supervisors whose jobs are to deliver results through an effective team. Retention managers are true leaders who take the time to ask questions and listen. They get to know their employees and their needs. They are well known for being respected and trusted by their team and for promoting a fun environment to work at. These are the managers who often ask their employees how to do something better and often implement ideas presented by the employees. Retention managers are born leaders who identify with people and have natural ability to build teams. They have the organization's goals as top of mind and achieve them through the effort of happy employees. Retention managers are capable of customizing their leadership style to each of their employees. They do that by asking questions, getting to know what motivates each member of their team. They know what will keep an employee with the organization and what will drive another away. It all may seem simple and obvious when it comes to satisfying employees, but many companies still find the need to manage from the corporate office the only way to control results. Retention managers know better. It takes time to identify, hire and retain the right team. Depending on the size of the organization, this process can take years and be an ongoing task. Once the right team is formed, the benefits of becoming the employer of choice are many. Dr. John Sullivan writes about the benefits of becoming the employer of choice on his online article “Employment Branding: the Only Long-Term Recruiting Strategy”. According to Dr. Sullivan, employment branding will result in the end of talent shortage in any organization. Some of the main benefits include the increase on qualified candidates wanting to join the organization. Once the word is out that the organization is a great place to work, not only more candidates will apply for jobs but a higher quality of candidates with significant experience and desire to join your Team will line up in hopes for an opportunity. Employee referrals are another positive approach on hiring the right candidate. It will reduce advertising costs as well as the recruiters’ workload. Happy employees tend to bring their friends and families to the place where they feel proud to work at, generating even greater employee satisfaction. Because employees are satisfied at work, a decrease of turnover rate and improved employee retention will bring benefits as well. An increase on employee motivation, corporate culture, managers’ satisfaction and shareholder value, along with a competitive advantage are some of other benefits of becoming an employer of choice. Every year a list of best employers to work for is published by Fortune Magazine. Many companies remain on top of the list for several years. Others make the list and soon fail to deliver initial promises of a desirable place to work. Amongst a list of well know companies that often are used as examples of happy employees are Google, Whole Foods Market and Southwest Airlines. Monsanto is one of the companies with a local headquarter in Missouri, listed in this year's Fortune 100 Best Companies to Work For. Why are they considered employer of choice? Google is known for a fun place to work. Number nine listed on Google website as “Ten Things We Know to Be True” describes the importance of focusing on employees and the workplace. “You can be serious without a suit... There is an emphasis on team achievements and pride in individual accomplishments that contribute to our overall success. We put great stock in our employees – energetic, passionate people from diverse backgrounds with creative approaches to work, play and life...” Google's culture states: Though Google has grown a lot since it opened in 1998, we still maintain a small company feel. At lunchtime, almost everyone eats in the office café, sitting at whatever table has an opening and enjoying conversations with Googlers from different teams. Our commitment to innovation depends on everyone being comfortable sharing ideas and opinions. Every employee is a hands-on contributor, and everyone wears several hats. Because we believe that each Googler is an equally important part of our success, no one hesitates to pose questions directly to Larry or Sergey in our weekly all-hands (“TGIF”) meetings – or spike a volleyball across the net at a corporate officer. We are aggressively inclusive in our hiring, and we favor ability over experience. We have offices around the world and dozens of languages are spoken by Google staffers, from Turkish to Telugu. The result is a team that reflects the global audience Google serves. When not at work, Googlers pursue interests from cross-country cycling to wine tasting, from flying to frisbee. Southwest Airlines is also known for happy employees. They are the ones who are free to be themselves, to tell friendly jokes and entertain the customer the way they feel comfortable, rather than a script guest service training manual that stating employees must smile. Southwest employees smile because they feel like, because they enjoy their job. It is fun and casual, but seriously committed to take good care of their employees and customers. Gary Kelly, Southwest Airlines CEO states: “Our people are our single greatest strength and most enduring long-term competitive advantage.” The company is also known by their New York Stock Exchange symbol “LUV”, described in their website as “Southwest has been in LUV with our Customers from the very beginning. As our Company and Customers grew, our LUV grew too! Over the ensuing years, our LUV has spread from coast to coast and border to border thanks to our hardworking Employees and their LUV for Customer Service.” Monsanto lists eight topics under their commitment on how they do business: Integrity, Dialogue, Transparency, Sharing, Benefits, Respect, Act as Owner to Achieve Results and Create a Great Place to Work. By reading these one may state Monsanto is a company that cares about people. Fortune Magazine asks: “What makes it so great? Despite vociferous protests by activists about its genetically modified seeds, employees say they are proud to work for a company they see as feeding the world”. This statement alone is a proof that being the employer of choice has many benefits and can become the organizations biggest marketing tool when customer perception is in question. Loyal employees believe and understand the organization’s mission and values. They are supportive of the organization and will stand by their company despite negative publicity. What differentiates Whole Foods Market? Well known for referring to their mission in terms of Whole Foods, Whole People and Whole Planet, Whole Foods Market has built loyalty brand amongst its customers for the quality of the product and service provided. Whole Foods Market is an employer of choice. “Supporting Team Member Excellence and Happiness” is listed in the company’s core values. A couple of unique approaches Whole Foods Market is seen as team oriented organization includes a salary cap that limits upper management to nineteen times the average hourly wage of employees, as well as, CEO John Mackey has assigned himself a salary of only $1 a year. So why would an organization spend time and effort to become the best place to work? The best place to work translates into the best customer service and best quality product. When employees are happy they share that with customers by going above and beyond to make customers happy. The small turnover rate allows for customers to build relationships with employees who in turn get to know and anticipate customers needs, building loyalty for the product or service the organization provide. For instance, Mark works at the coffee shop you visit every morning at seven thirty on the way to work. He knows you will pull over in your silver SUV at about the same time each morning. Mar will start your coffee order and have it ready when you approach the counter, with s smile and a friendly greeting. Mark works at a well known franchise coffee shop that charges double or more for a cup of coffee you could get at the gas station. You visit this coffee shop because of Mark's friendly service and attitude. The same applies to many other choices we make in life. The family doctor you visit each year, for example. Despite the fact that your friends have recommended another well known physician in the neighborhood, you continue to see Dr. McDonald because him and his staff are attentive and caring to you. You feel safe, well taken care of and appreciated. You trust Dr. McDonald because you have a relationship with him and his team. That was enough to choose him as your family doctor. And how about the taxi company you call to take you to your early flight departures for a company meeting each month? We have many choices when it comes to transportation, from private town cars to public buses. The taxi company you dial from your cell phone contacts always gets you to the airport safely and on time. You trust they will pick you up and drop you off on time. In addition, you know many of the drivers who also have gotten to know you over the years. They often ask you about the family and provide you with the daily newspaper to read on the way to the airport. As shared in the examples above, employees who care will get to know their customers and deliver to customers’ needs. They treat customers as their guests and take pride on the service they provide. The coffee shop employee, Mark; the family physician, Dr. McDonald and his Team, and the taxi company drivers mentioned above are examples of employees who are happy in their workplace. Throughout our day we encounter people like them, people that go the extra mile and make you feel good about the product or service you purchased. They contribute to the organization bottom line by doing what they know best, along with being happy with what they do. But what about those situations we do not have a positive experience? It is fair to state people make choices about where they shop, where they dine and what kind of service they want when it comes to child care and other services we utilize daily. Many times, more than not, customers leave dissatisfied with a product or service and do not share with a member of the organization. Most people chose to take their business elsewhere instead. This causes a negative impact on the company bottom line because the revenue generated by this customer is no longer going to be available and it is likely the same unhappy customer will share their feelings with many other potential customers who will also choose a different business instead.
Despite belief that many organizations focus and invest on their Team Members, most of what is done is for short term gain. Many organizations still operate under the understanding of hiring qualified employees who will perform the job for a paycheck. These qualified employees can soon turn into dissatisfied employees. With lack of training and development, lack of recognition and award programs and an overall lack of focus on employees’ workplace experience, turnover rates begin to increase, and qualified employees resign for better opportunities, many times with the competitors. Losing a qualified employee is already a negative impact to the organization. Someone capable of doing a good job with great contributions is no longer with the company and now the organization is faced with the challenge of replacing the position. This process can take significant time and money to include in some cases advertising, relocation, training and time period for adaptation with the new team, called relationship building or trust building, prior to results being delivered once again. Things get even more difficult if the qualified candidate who resigned left the organization to work for the competition. Many times this can cause a much bigger impact to include loss of customers and at times, inside strategic information about the organization being shared with competitors. The focus on employee satisfaction often arises when high turnover rates are questioned and challenged. In these cases, organizations are quick to react to employees’ feedback from focus groups and surveys in hopes to stop damage and produce reports that display what is being done to resolve the issue now. Organizations with the desire of becoming the employer of choice must identify employees as their main priority. Taking good care of employees must become a daily goal that will bring long term results. Organizations that have taken the time to invest in their employees have not only proven to be successful in their market but also become examples of business for many different organizations. Companies such as Google, Whole Foods Market, Monsanto and Southwest described above are mostly seen as a desirable place to work by many, and business of choice for most customers who will become loyal despite any major challenges and changes in service and price.
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