Brooks Holtom, professor at Georgetown University, has spent the better part of the last 20 years researching organizational people practices. His research has focused on how organizations acquire, develop and retain human and social capital. Publishing to much acclaim, his research has appeared in the top journals in management, and in newspapers and magazines like The Wall Street Journal, The New York Times, and the Washington Post.
We were pleased to have him present at TINYcon 2017, where he shared some of the latest on the core theories surrounding retention. A thought leader in the space, he presented some of his research on job embeddedness, and findings that suggest that getting employees to stay may not be the best retention strategy—reluctant stayers are as harmful to an organization’s health as the employees who leave.
Watch the video, or read our take-aways below. And as always, share with your networks to start the next great conversation around retention and engagement.
Defining the cost of attrition
When it comes to retention and attrition, there are some costs that have been well-studied and documented. These often get the bulk of the attention—costs associated with the recruitment, selection, and training of new employees.Josh Bersin of Deloitte suggests that the dollar amount adds up to about 1.5-2.0x of that employee’s annual salary.
If you’re curious about your own attrition costs, this Huffpost article does a great job presenting the formula to calculate it for your own org. However, it does only take into account those recruitment and training costs—Holtom explains that one of the greater, and unmeasured costs, is that of lost knowledge, slowed production, decreased customer service, and the drain on leadership.
The hidden costs: a blow to resourcing
As Maia Josebachvili points out, the costs of an employee leaving can actually be much higher than simply the cost to replace that person. During the time that the position is open, there is a cost of decreased production. There’s a loss of knowledge that happens when a high-performer takes their best practices with them. And there’s the loss of productivity when an employee on their way out starts to invest less in their work. Her case study suggests that cost, per employee, is conservatively predicted at S1.3 million over 3 years.
There’s also the drain on developing your leadership team. Says Holtom, “if your top performers are being pulled out to other opportunities, and you’re pushing out, systematically, your poorest performers, whose left to lead the company in the future?”
But what happens to the ones who stay?
As we’ve been focusing on retaining employees, one region that has gone relatively unchecked until now is the cost of “reluctant stayers”: the people who have checked out and are no longer engaged at work, but haven’t yet left for other opportunities. These people are perhaps one of the greatest costs, since according to Holtom, they make up 43% of the workforce at organizations studied.
The theory of leaving versus the theory of staying: job embeddedness
Historically, the theories surrounding retention have focused on job satisfaction, organizational commitment, and employee engagement. If you can achieve good marks in all three, then retention shouldn’t be a problem, right? Is it just a matter of offering more money to the candidates that could be on their way out?
Holtom wants to push employers to think harder about retention: “If we care about keeping good employees, why is it that we focus on who’s going to quit?” His dissertation led him to a new theory; one of job embeddedness.
Job Embeddedness explained—briefly
The idea behind job embeddedness is intuitive to the name, once explained. It hinges around the question, “How hard would it be for you to leave?”
The idea is, once you’ve controlled for job satisfaction, commitment, and employee engagement, the next biggest leading indicators of retention and performance hinge around an employee’s links to their organization and their community, their fit culturally, and the sacrifices that they would have to make in order to leave.
So, if you want to make sure that a high-performing, engaged and committed employee doesn’t leave for a better offer, it’s a good opportunity to start measuring how embedded they are in the organization and in the community. And if you’re looking for those reluctant stayers, who still come to the office every day, but with one eye always on the door, embeddedness will be a good indicator of them as well.
So, if the goal isn’t to keep everyone, what is it?
According to Holtom, it’s important moving forward not only to measure functional and dysfunctional attrition, but also to measure functional and dysfunctional staying. Then, you can truly identify the effects of your people within your organization.
“I find it useful as a researcher to be able to see the trends, as well as the static point-- and I can see multiple applications for understanding and predicting who’s going to be a top performer in the future and who’s going to be a less productive employee.”
Surveying your workforce
As a CEO, or an HR manager of an organization trying to understand the make-up of your employees-- from reluctant stayers to enthusiastic leavers-- the first step is to collect the data. Asking questions around embeddedness, like “What keeps you coming in every day?”, “How connected to your coworkers do you feel?”, and “What would you be sacrificing if you left?”
Since we’ve determined that embeddedness lies within 6 key metrics, questions related to any of those will give you some insight into how deep your team’s roots are. For instance, “Do you feel as if you have a best friend at work?” is a great indicator that someone has built links within their organization.
Once you've started collecting that info, you're well on your way to understanding your workforce; how many enthusiastic stayers you have, and how many people have checked out, but haven't given you notice yet.
Brooks Holtom spoke at this year's TINYcon 2017. To reserve your tickets to next year's TINYcon, and make sure that you're keeping up to date with the latest in employee engagement and company culture, get your early bird tickets now! If you're looking for more tips or info on improving company culture, you can also read our culture report here.
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