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The title of this Blog series is taken from an article published in INSEAD Knowledge. The content is mine. [Link to article appears at the end of post]
‘Butterfly Effect’ is when an apparently stable, well-performing employee suddenly announces his/her departure from the organization. This phenomenon happens regularly in all organizations. It leads first to confusion as to what happened, and then to questions as to why it happened. The sudden departure of employees certainly impacts an organization’s plans and performance.
In the last part, we shall see the measures that may be considered by organizations for eliminating/ minimizing the risk that an employee may choose to leave suddenly. Following points may be considered before we go for solutions.
We must understand that No Employee Leaves Suddenly. Sometimes, the final act appears sudden, but the background activity would have been going on for some time. We have discussed the likely reasons in the previous post. People tend to think that if a lucrative opportunity pops up out of blue, the employee will jump to avail it. This is not entirely true, particularly for seniors and mid-career managers. They would always consider pros and cons of a move and it will not be money only for sure. This preamble is necessary to dispel the impression that organizations are helpless in the averting employee turnover. The reality is that most organizations take a reactive, rather than proactive approach. When a senior employee announces decision to leave, the concerned seniors try to convince him/her to change the decision. It is a self-defeating effort due to two reasons. One, the reasons due to which the person considered change would keep existing. Two, the person may have committed to the new position and it would not be ethically and professionally right to go back on commitment.
Suggestions for Improvement would therefore start from taking proactive approach so that the organization becomes a ‘preferred employer’ in spirit. Suggestions would fall in three main categories.
Selection, Hiring and Compensation Package
They say, opposites attract but similarities sustain’. Selection criteria must include a section on screening for ‘cultural fit’. Culture is based on value system. When people carry similar values, they work better in and across teams. Technical competence is important and cultural fit is equally important. I see hiring managers and HR managers often falling for technical competence alone. They regret later but it is not easy to displace a senior executive very quickly. Substantial damage may be done before relief comes along.
Hiring in our organizations does not follow proper timeline. Many a times, critical positions remain vacant for long time for no reason or some untenable one. It could be as silly as saving a certain cost for a month or two. Hiring should follow the organization chart read together with HR planning. It should not be an open process which runs its own course. It should rather be a time-barred activity with pressure on hiring managers to find appropriate person and induct him/her within stipulated time. The argument that hurry may lead to compromised hiring is not acceptable. Greater effort should be put on HR planning. It is not a plan for hiring, it is how the organization will function in future.
Compensation benchmarking is done in few organizations only. As per the ‘Inside-out’ approach, the company says they would pay what they think is enough for various positions. It is a ‘take-it-or-leave-it’ attitude’. If the compensation is reasonable, it works fine. If not, then it becomes a major reason for employee disengagement and departure. Independent salary surveys are available at cost. These help in adjusting own packages to stay market competitive. It also helps to determine what may be considered to attract desired talent. In HR lingo, C&B – Compensation and Benefits are two separate parts. Compensation is salary while Benefits are perks and benefits such as car, certain additional allowances, provident fund, gratuity, medical insurance, life insurance etc. Both are important and should be considered simultaneously.
Every organization monitors performance of its employees, though methodology varies greatly. It may be some pieces of observation, reporting by the respective officers, reporting by secret informers, gut feeling, simple performance appraisal tools, or an elaborate, multilayer appraisal system. All methods bring results, some may be totally unreliable though.
Performance is a sore point in every organization. That is why it is important to measure and reward performance in a visible manner. Clarity in the process brings healthy competition, while dubious practices lead to unnecessary rivalries and negative competition. Negativity in any form is detrimental to organizational performance.
Performance management is at the heart of talent retention which is among the biggest problems for the industry. Butterflies may be motivated to stay rather than flying away with a fair, transparent and visible performance management system.
Work environment is difficult to define precisely, but is critically significant. Adjectives such as congenial, conducive, threat-free, friendly, encouraging, productive etc. are used to describe the work environment but none of these entirely reflects the overall work environment.
Work environment evolves from the culture, values, direction and orientation of the organization. For example, an organization working in an extremely competitive market will have to focus more on agile market responsiveness and customer service. Those aiming for a leadership position will be more focused on innovation. Herzberg advised to take care of ‘hygiene factors’ which is related to overall comfort level. Essentially, the work environment should be consciously built and maintained in such a way that it remains a source of strength for the organization.
This concludes our discussion on the subject of employees unexpected departures.
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