Whether the economy is good or bad, all companies depend on their talented people to sustain and grow their business. Finding talent is a denting task in any economy; retaining them is another matter.
Talent is everything. The success of any organization requires fully engaged and productive employee that care about the well-being of the business, customers, community, and its shareholders.
In this digital economy, most organizations would agree that talent is a key differentiator and a significant competitive advantage that can be leveraged to grow revenue, reduce cost, and win market share. Yet, the same organizations do not know how to address issues related to employee engagement and retention efficiently.
Talent (high performer, promotable, and solid individuals that can lead to transformative change) retention is identified as physical, emotional, and phycological. You want your employees to be engaged in body, mind, and soul.
Most managers know that engaged, happy employees are more productive and essential to an organization’s long term success. Winning employees’ loyalty and commitment is a critical managerial responsibility and a key to long-term growth.
- According to data from the U.S. Bureau of Labor Statistics, Three million American employee voluntarily quit their job every month.
- BambooHRSurveyed over 1,000 American workers and found that a third of them left their role within their first six months of employment.
- According to Kronosresearch, 87% of H.R. leaders acknowledge the value of employee retention and are working to address within their organization means.
- Owl Labs found that organizations that enable remote work have 25% lower employee turnover than companies that discourage it.
- A Gallup poll found that a pay increase of 20% or less, will trigger an employee to change job
- According to Pew Research, 45 million baby boomers are within five years of traditional retirement age.
- A Gallup study revealed that millennials are by far the least engaged employees (29%)
- A Career Buildersurvey of 3,697 U.S. employees found that two-third stated they took a job only to realize that it was a bad fit. 46% percent said they left the job due to toxic work culture, 37% recognized that the job they had to do didn’t match the company job description, and 33% left due to lack of clear expectations about the role. At least half of these recruits left their position within less than six months.
Today’s employees have vast career choices; talented individuals are rare. Acquiring talent is extremely hard, but turnover makes it even harder. It’s estimated that employee turnover costs our economy between $300-$500 billion every year.
Most organizations rely on their HR and outside consultant to pool candidates on the job board. Current standard interviews gauge the candidate aptitude to do the job using a set of questions that provides the hiring manager with an idea about the candidate capability and technical knowledge.
Most onboardings and training take less than a week. Performance management is often rushed, and inaccurate and incentive plans are often arbitrary. Training sessions are sporadic, and coaching is rare—no wonder why turnover is so high.
Today’s employees are looking for a job that promotes healthy career growth, job satisfaction, recognition, and financial rewards.
Millions of people quit their job every year, as reported by the Bureau of Labor Statistics. People generally quit their job for better opportunities and to avoid the stress generated from unrewarding, unappreciative, intolerable, and toxic workplace environments.
Human resource exit interviews rarely gather the facts behind employees leaving their jobs, as employees try not to burn bridges or mistrust human resource employees’ assessment.
The Manager’s Impact on Hiring and Retention
A Fintech sales organization that had a significant new hires’ retention issue, low morale, and poor sales profits decided to conduct an internal study to understand the main drivers behind these hiring and retention problems to implement corrective changes.
A quick examination of the situation revealed that the situation was dire: 70% of new hires left the company within 12 months of employment, and 90% left the company within 24 months. The situation was untenable; changes needed to happen fast; otherwise, the company risked failing to attract talented individuals and harm its market competitiveness. No one wanted to work for an organization that churns and burns its sales force.
A radical solution was needed fast. The company hired an external consulting company and tasked it with studying its turnover causes.
The consultant created the following list to evaluate salespeople’s attrition.
- Known factor and assumptions
- Unknown factors and assumptions
- Total attrition of current year versus the prior year
- Voluntary attrition of the current year versus the prior year
- Involuntary attrition of the current year versus the prior year.
- First-year attrition versus the previous year
- High-performer attrition of current year versus the prior year
Early trends indicated positive retention of new hires within higher performing teams while low performing teams experienced the highest attrition.
- Senior sales reps with at least three years’ tenure and high performance showed excellent job satisfaction and stability. The top 5% of producers show zero attrition.
- Notable new hires’ increase of resignations occurred post the first six months in the job.
- Notable increase of departures happened at a higher rate among the hunters’ (Account Executives and Business Development reps) team category versus farmers’ ( Relationship Managers) category.
In addition, the following questions were covered during employee exit interviews conducted by the human resources department to uncover the main reasons behind these excessive trends of resignation and termination.
- Dissatisfied with or loss of referral source/poor quality of lead flow?
- Dissatisfied with the compensation plan?
- Dissatisfied with/lack of support from the manager?
- Dissatisfied with sales culture/direction
- Dissatisfied with the quality of client service and support?
- Better opportunity/ job fit elsewhere?
- Job abandonment?
- Family reasons?
- Better opportunity: leadership role?
- Territory too large/too far away?
- Burned out?
Below are the top reasons why sales reps left the company.
The number one reason affecting new hires within the first 12 months were as follows:
- 42% of new hires cited “Dissatisfied with/lack of support from the sales manager.“
- 30% of new hires cited “Dissatisfied with the sales culture/direction” and “compensation” as the second-highest reason for leaving.
- 19% cited “Dissatisfied with/or loss of referral source/poor lead flow” as the highest reason for leaving.
Employee Comments HighlightsDissatisfied with or Lost Lead Source/Poor Lead Flow.
“I live in a rural area, with the poor lead flow. I was promised during my job interview that the company would supplement my self-generated effort with internal leads. Once onboard, the guaranteed leads vanished; instead, I was advised to join the Chamber of Commerce at my own expense. Despite my best effort, I failed to meet my goals. The underwriting department rejected most of the self-generated signed accounts for sometimes ridiculous reasons. I was desperate; I pled with my sales manager for help and direction.
My sales manager seemed to be always busy and has never spent a single field day with me, and our phone conversations were brief, directionless, and redundant. I often get responses like “I understand what you are going through, hang tight, it’s going to get better, keep doing your best, you will be fine.”— Those were my manager’s motivational words. “Find a way to hit your quota.” I felt abandoned, and I decided to leave at the first opportunity that came my way. I was willing to work as hard as possible, but I recognized that I needed some assistance and occasional coaching. Alas, no one seems to care about whether I make it or not, so I decided to leave to work for a smaller competitor that seems to care.”
Dissatisfied with Sales Culture and Direction.
Another veteran salesperson felt that he was being “forced out” by his sales manager because he tended to be more vocal during their meeting, not because he was arrogant, but because he was concerned.
“I felt that my manager and the company do not care much about me, my career, or anyone for that matter. We were COGs, robotic units of productions, used to the maximum, but the moment we need some assistance, we become needy, aggressive non-compliant. The sales manager and the company treat sales reps as disposable tools. I felt as the company has moved away from recruiting top talent to hiring warm bodies to fill in the gap, and I no longer feel valued and wanted. My manager was negligent, distant, and dictatorial.”
“In this workplace, you are forced to produce results at an ever-growing untenable pace, and if you fail, you get terminated. You feel hopeless serving a company that pretends to care, and a sales manager who pretends to help. New hires get lost in a corporate maze, with no training and no assistance.
You get torn between trying to build a relationship with your customer in an unforgiven, complex service environment or focus on getting the required transactional deals to meet the company goals to keep your job and your manager at bay regardless of whether you meet your customer needs or not.
In addition, no one seems to recognize that leadership was amending our goals regularly without explanation. It’s hard to plan in this work environment, knowing that your quota may fluctuate without any warning. Most days, you are pulled in every direction, making it harder to deliver on all your revenue buckets.”
Dissatisfied with Sales Compensation
A sales rep cited the following “Within three years I saw nine amendments to the compensation plan, most made it hard to make money — recently, I lost 50% of my residual income compensation with the last modification. I went overnight from being among the top 5% of performers in the entire company to the bottom 50%. I felt that I could not get ahead within a chaotic system. I was miserable for a while; my conversations with senior management were ignored. I had no choice but to join a competitor.
The irony of the matter is when I presented them with my two weeks’ resignation notice, my previously ignored requests were suddenly accepted. My senior vice president (a man I never met or spoke with since I joined the company) was begging me to stay in order not to disrupt the relationship I had with several large national accounts that I had acquired. Unfortunately, the company had me all along, heart, soul, and mind, but no one ever cared before. I had no value while I’m serving the company; it’s customers and shareholders with faith and integrity.
My value became apparent and increased dramatically only when I had a competitor offer at hand. Without a job offer in hand, I was worthless, couldn’t get a raise, or even secure a conversation with my vice-president of sales. I was presumed to go nowhere until I did.”
Why be reactive instead of hyper-proactive in a world of breakneck speed. Why take salespeople’s efforts and loyalty for granted when you can retain their hearts, mind, and soul for almost nothing? Why do you have to lose something or someone to realize their value?
Exit Interviews Tell Half the Story
Exit interviews are great, but they don’t always portray the whole picture or the main reason for leaving the job. Here are a few examples that depict the exit interview shortfalls.
- Hiding the truth. Most employees don’t want to burn bridges on their way out. Some employees may provide unauthentic feedback, misleading experiences, and falsehood to keep a good face, avoid potential retaliation, and burning bridges.
- Identify real reasons. Not all employees are a good fit for the position. Every organization has its share of employees who met unethically their corporate goals, by using questionable approaches and methods and leaving a trail of unhappy customers behind. I have witnessed situations where underperforming sales reps forged their client’s signatures to only be discovered post their employment resignation or termination; others guaranteed unauthorized promises knowing that they will be quitting the job soon. Some unethical employees may be too toxic for a healthy sales organization culture. Competence is one thing, good corporate fit is another. Taking preventive measures may eliminate reoccurrence.
- Not all employee turnover can be prevented. Employees leave for financial reasons, upper mobility opportunities, and dissatisfaction with the organization’s sales management team. A departing employee may not always be sincere, and they may pin the blame of resentment on their sales manager behaviors. Taking the time to understand the source of displeasure is essential to mitigate future risks.
- Fix the root of the problem. When faced with several sudden resignations, have an honest conversation with the employees who are sticking around. Exiting employees will be more open with a peer than with a human resource employee during the exit interview.
- Knowing is not doing. Most sales organizations invest incredible resources in understanding the reason behind turnover. Then, they either implement poor strategies to remedy the issue or file these findings and facts into a forgotten folder. It’s vital to understand the problem and implement a policy that promotes radical changes to stop current losses while making progressive improvements consistently to turn the company from a talent repellent to a talent magnet.
How to Attract and Retain Top Talent
Build a company that truly embodies its mission and vision. Words matter, but more importantly, your deeds must be congruent with your company’s purpose.
- Hire passionate advocate. Hire fans or turn your employees into fans. Empower them to do what you collectively believe is right for the company and customers. Hire passionate people that represent the world around you, hire across ages, races, and creeds. Your employees should love coming to work and sharing their passion with your customers.
- Love them like family. Hold on tight to your existing talent, not with ridiculous “non-compete” contracts, but by winning their minds and hearts. Make people feel at home, and be loyal to them rather than ask for their loyalty.
- Work should be like home. Make your working environment so inspirational and stimulating that no one will desire to leave. Make the workplace feel like a home where creativity meets competitiveness, curiosity and friendship.
- Value out, not time. Be as flexible as possible; don’t judge people by their working hours, but rather by their contributions. Measure your people by their value-add, not political savvy. Reward and promote people based on merit, not internal affinity or personal partiality.
- Work from home. Encourage hiring remote employees, and allow for flexible working hours and flexible vacation time. Don’t promote what’s convenient for you; support what’s right for your salespeople. Remote employees are the future, invest in all the necessary platforms that allow your people to work seamlessly and effortlessly from their home. In this digital economy, leaders must replace command and control dogma with trust and empower mindset.
- Encourage creativity. Offer challenging projects, listen to people’s ideas, input and insight and implement and reward creativity, while recognizing and celebrating people’s genius and contributions. Most leaders are hampered by cultural inertia, specifically a reluctance to cede control to other subordinates that think, behave, and view the future differently. Collaborative work, increase awareness, ability, and create urgency when it matters most.
- Respect your employee’s freedom and privacy. Allow your employees to promote and speak about the company on social media, accept suggestions for improvement from both employees and customers without retaliation and with sincere gratitude. People want to help employers who care for their employees, the community they serve, and society.
- Hire with diversity in mind. Nature is diverse for a reason — creating balance. Nature has crevasses and mountains, valleys and dunes, oceans and deserts, mammals and amphibians, predators and prey. The business should emulate nature’s characteristics to generate harmony and balance. You need to hire people who look different, sound different, and act differently than what you are comfortable with. Your salespeople should be as diverse as your customers. Diversity is a mental force that spurs creativity and growth.
- Pay above average and be generous with your benefits. It pays ultimately multiple folds in the long run. By paying your salespeople above market price, you win your employees’ loyalty, creativity, minds, and hearts. A happy employee will promote your brand for free and attract great external candidates. Additionally, happy employees are more productive, and your company will save money through employee and customer retention.
- Upgrade new and existing talent. Managers should spend time uncovering their new hire potential and help them specialize on specific channels. Team performance requires specialists and generalists. Specialization should not be contingent upon tenure, but rather as a discipline that has to do with capability.
- Coach for Growth. The new hire should be coached and trained continuously for the first six months. Their education should encompass product knowledge, systems, and company culture. Employees should be equipped to fight on their own post the first 180-days periods. Then they should enter phase two where they should start learning how to handle higher complexity and larger deals. The third phase should encompass education led by veteran specialist reps, the managers, and other external sources that can add-value unique expertise.
Some of the statistics above may be alarming. However, employee retention is not rocket science. Still, it requires the allocation of resources to train all employees from the CEO to the Janitor on the value of transparency, empowerment, empathy, fairness, connectivity, humility, and genuine care.
Employees quit for many reasons discussed above, but mostly because they feel ignored, underappreciated, abused, and mistreated.
Most employees report to one or two managers within the organization. The key is to ensure that these managers apply good leadership judgment and fairness in everything they do. Sound judgment and genuine care are the essences of a healthy corporate culture that attracts happy customers and shareholders.