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Retention – Tuition keeps workers loyal

Studies Reinforce View
Of Improved Retention;
UTC’s Plan Stands Out

Great article By ERIN WHITE

Economists have long questioned the value of corporate tuition-assistance programs, asserting that employees’ new degrees would make them more marketable and more likely to leave.

But a growing body of research concludes just the opposite: Paying for employees’ education makes them more likely to stay.

One new study, by Stanford graduate student Colleen N. Flaherty, found dramatically lower attrition among participants in a tuition-reimbursement program at an unnamed nonprofit institution. Among employees hired the year after the program started, only about 33% of participants had left the employer within five years, compared with about 60% of employees hired the same year who didn’t use the tuition program. The study was published by the National Bureau of Economic Research as a working paper in March.

Ms. Flaherty’s research supports results from other recent studies. Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School, found in a 2004 study that “tuition assistance appears to select better-quality employees who stay on the job longer,” in part to make use of the benefit.

The academic research may come as comfort to executives, who overwhelmingly back tuition-assistance programs. In 2006, 85% of about 1,000 large employers offered some form of educational assistance, a figure that has remained roughly constant for the past several years, according to Mercer Human Resource Consulting.

Jennifer Calhoun, a Mercer principal, says employers see the programs as retention and recruitment tools. Their value may be increasing in a competitive labor market where employers must worry about retaining good workers and replacing the legions of baby boomers heading for retirement.

Genentech Inc. says it believes its tuition-assistance program, which covers expenses up to $10,000 annually, helps attract, keep and develop talented scientists. Last year, 500 employees took a total of about 1,200 courses. “Having these opportunities makes it more exciting to work here,” says Kenneth Bradshaw, associate director of benefits for the South San Francisco, Calif., biotechnology company. Mr. Bradshaw says recruits in competitive Silicon Valley expect employers to provide such benefits.

United Technologies Corp. has a particularly generous tuition program, which it believes bolsters employee retention. The Hartford, Conn., conglomerate started the program in 1996 amid restructuring, in part because Chief Executive George David wanted affected employees to have a better shot at landing other jobs.

UTC pays the full cost of a degree program, including tuition, books and other fees, and provides up to three hours per week paid time off for employees to study. Employees who earn associate’s degrees or higher also get a grant of UTC stock; a bachelor’s degree earns $10,000 in company stock. By comparison, a recent survey by Hewitt Associates Inc. found that overall, big employers limit benefits to a median of $5,000 a year.

About 12% of UTC’s approximately 72,000 U.S. employees are enrolled in the program. That is more than most companies; consultants estimate that nationally, fewer than 10% of eligible employees tap tuition-assistance programs. About half of UTC’s participants are getting master’s degrees; most of the others are earning bachelor’s and associate’s degrees. The company spends about $70 million to $75 million annually on the program world-wide.

Bill Bucknall, the company’s senior vice president of human resources, says some managers initially worried that degree-earners would take the money and run. Instead, UTC says participants are less likely to leave. Turnover among employees who enroll in the program runs about two to three percentage points lower than the rest of the work force. “People are pretty loyal as a result of being sponsored by the company,” Mr. Bucknall says.

Linda Stra, a purchasing analyst at UTC unit Hamilton Sundstrand, which makes aerospace and industrial products, has earned associate’s and bachelor’s degrees through the program. She says she joined UTC in 1999 as an administrative assistant, choosing the post over a job at another company partly because UTC’s tuition program was more generous.

Ms. Stra says the degrees helped her move ahead at UTC; she has been promoted several times and feels loyal to the company. “The benefits of [the program] are obvious in my career path,” she says. Now she’s considering getting a master’s degree. If she seeks another job, she plans to stay inside UTC. “I wouldn’t think about going someplace else,” she says.

Employee Retention strategies for small to mid-size businesses….what works!

I recently engaged in an in-depth dialog with several heavy weight recruiters throughout the US regarding the subject of employee retention. Specifically, What retention strategies can a small to mid-sized companies use when they can’t compete against larger companies on salary alone?

You may find this topic very interesting, especially coming from a headhunter perspective. “Why would a headhunter’s opinion matter to me? ” you may ask. Because headhunters are on the front lines. They are the ones who can penetrate and recruit away your best talent. By showing an employee that the grass is greener at a clients company, they may just leave yours. IF, you are not utilizing the best retention strategies available.

Remember back around 1999? It was the height of the technology boom, the latest gold rush to hit America. Companies couldn’t hire people fast enough. As long as they were breathing and had some semblance of knowledge, they were hired. But then the competition started poaching your best people – making outlandish offers to steal them away. The poachers started offering salaries twice and even three times the going rates causing over-inflated salaries throughout the country. Then, when the lures of high salaries no longer worked to convince people that the grass was greener at one company vs. their competitor, they turned to more materialistic endeavors; 10,000 shares of company stock and extravagant stock options, BMW’s and Corvettes as sign-on bonuses and in some cases, brand new houses. It was truly a candidates market, where even the average skilled employee could demand outrageous money and benefits. As you know, when the market came back to its senses and readjusted – like it does in every boom throughout history; salaries dropped, companies failed, stock options became worthless, cars were repossessed, and unemployment rose as high as 6% in the U.S.

Since that time, the economy has steadily rebuilt itself. In 2007, we are enjoying a steady resurgence of economic growth with unemployment around 4%.

The new problem in this economic growth is that the baby boomers are beginning to retire and the population is not growing in numbers we’ve seen in the boomer and post boomer years.

The US government as well as economists and business leaders agree that we are heading for severe talent shortages requiring skilled labor. In 2007, companies are already experiencing the pinch of the “Candidates Market”. There are fewer skilled candidates than positions needing filled and we are going to see more and more of this in the years to come. We’re seeing this in product development, healthcare, nursing, financial, IT, high technology, biotechnology, research, engineering and other fields. It’s another supply/demand issue, except this time; so far, salaries are not going through the roof. Candidates are being more selective in new companies. They are still very recruitable, they are looking or at least keeping their eyes out for better situations, especially if you didn’t treat them well during the recent recession. They have good memories.

Why people leave companies:

• People don’t leave jobs just because of the money; they leave because they are frustrated by micromanagement, poor communications and bad management decisions.
• Lack of respect for the person or their position in the company by management
• Unpleasant working conditions,
• Irrational and belligerent bosses or coworkers,
• Corporate failure to truly assess work loads and expectations, by ignoring competence and screaming at mistakes,
• Taking employees for granted
• Assuming that the company is perfect the way it is.
• Red tape often slows things down & gets too many people involved in decisions.

These are just a few of the reasons, but darn good ones, that headhunters look for when talking with potential candidates. If you as a manager or executive can remedy these causes, you can bring your retention upwards to 97-98%.

If a company is basing its employee retention on salary or compensation alone it will always have excess turnover.

Employees choose to work for companies for a number of reasons. Salary is generally not the first compelling reason a candidate works at a small to mid-size company. Regarding compensation, small and mid-size companies need to be competitive with companies of similar size in their industry. Companies do not have to pay the highest compensation in the industry to retain their employees. They just need to be competitive. Therefore, it is important to note that companies do not have to spend a lot of money to attract or retain high caliber people. They just need to take the time and make sure they have a positive corporate culture that offers a future for individuals.

Small to mid-size companies should take a look at their internal culture and workplace. Fostering an atmosphere of a positive nature is important.

Do people receive recognition for what they accomplish?

Is it a fun place to work?

Good employees (those you want to retain) need to feel their efforts and work contribute to the company’s plans.

Employees understand that larger companies have their pros and cons. The plus is a higher salary.

For you, it is really a marketing question. How do I differentiate my product or brand, in this case, my company from the competition?

Companies can preach all they want about how people are their number 1 asset.

The key is their actions!

Although larger companies typically offer a wider range of titles and promotion opportunities, smaller companies might offer a shorter waiting list for a promotion. Another advantage of a smaller company is that some higher-level executives will interview a candidate where it would not have been possible in a larger company.

What successful management is doing now to retain employees:

• Provide a workplace where people feel respected and valued,
• Provide a workplace where employee ideas and efforts are noticed and considered important, where talent is promoted and celebrated.
• Provide less bureaucracy, less red tape to make decisions.
• Adopt a management style that is inclusive and recognizes the value that the individual brings to the shared success. People have to be motivated by something, if it isn’t money – which is a short term motivation, a feeling of belonging and value can be a very strong substitute. I believe this management style breeds loyalty and loyalty, even when misplaced, can help keep an individual in the fold.

 

A great leader listens to their employees and preemptively acts to prevent problems, seeks information and ideas from all levels of employee and customer and acts to continually improve conditions on all levels. A great workforce feels and believes that each member is a respected and important member of the team. Employees don’t leave a company like this unless someone makes them an offer they simply can’t refuse and there is always that 1% unexpected reason or need to leave a company that cannot be avoided, but you can keep the majority of people.

Tangible ideas that are working:

• flex time
• 4 day work weeks as well as
• Ability to work from home.
• Convert extra space to put in a gym with men and women’s showers and hire a fitness coach who comes in 3 times a week.
• Provide Massage services twice a week
• Vacation time
• Health club memberships
• Provide more responsibilities than what big companies can give, Decision process involvement at the top levels.
• Recognition programs
• Creative bonuses paid quarterly
• Daycare
• Instituting an equity program for key employees. Typically this can be either a stock option or profit sharing program. Once again this shows the willingness of the company to reward people for their efforts, it is a tangible way to demonstrate the value the company places on the individual.
• UP your 401k contribution. I have a client that offers fifty cents on the dollar matching up to 6% where the industry average is 3%. This is an attractive benefit to many employees.

• Offer strong leadership – evaluate managers and train poor managers.

• Offer a fun atmosphere,
• A firm that donates money to nonprofit,
• Flexible schedule,
• Ability to work from home a couple of days a week,
• Recognition for a job well done,
• Recognition in front of other staff when an idea was theirs, ideas listened to,
• Send to training classes(they can be for a half day),
• Weekly and monthly contests with different criteria so that all have ability to win, the weekly prize could be a scratch ticket…
• In-house training classes …

Where do I start?

A beginning point for any company would be to assess what is currently being done now to effect retention. That is, are there any clearly known and understandable strategies currently in place to improve employee retention? By examining what actions a company is currently taking is, in itself, a step that will reveal logical next steps.

1. Is your company experiencing an above average turnover rate compared to the market?

· For example, is there a particular Division/Branch/Department that has a high turnover rate? If so, your may have someone in leadership driving people away from your company.

1. Does your company conduct employee surveys? If so, do you act on the results?
2. Does your company offer tangible career paths? What objective data do you have to support your claim? That is, how many professionals have been promoted to higher levels of responsibility? Have they been successful?
3. Who in your management ranks interviews and selects the best people who have been hired? You can track this.
4. Likewise, who has hired the worst people? (you should remove them from the interview process)
5. What training do you offer your management team? Is the training offered considered beneficial by those who have taken it or is it just a requirement HR said you had to take?
6. Is your company performance reviews serving the purpose intended or is it just a paper exercise? Whatever your answer, what objective proof do you have to back-up answers (or is it just someone’s opinion?) For instance, you could confidentially survey your management ranks and obtain a report that quantifies their perspective.

These considerations just scratch the surface of steps a company can take to attract and retain professional talent. Essential questions a company should ask are 1) Am I taking action to address this and 2) and am I sincere in my motivation to understand how to create a positive work culture?

In the Recruiting profession we try to impart the knowledge to Hiring Authorities that “people go to work for people”. Notice that the majority of reasons people leave jobs – has to do with people. Therefore, it is important that candidates feel comfortable and confidant in the quality of the people who are interviewing them and who they will be working with. People normally do not leave a job; they leave the people, they leave poor management, poor company cultures. Every company, no matter how great you are, can improve in these areas. It is important, now, more than ever, to focus on these issues if you want to retain and recruit top talent.

-Gary Perman

Do’s and Don’ts Before Considering a Job Change

Now that the economy is strong and the media is reporting on-going “Talent shortages”, maybe you’ve thought about taking a look outside of your current employment - Is the grass really greener on the other side?

Your reasons could vary – perhaps your current employer doesn’t offer the career growth they promised you, maybe you didn’t receive an expected year end bonus, maybe you know you can make more money somewhere else, possibly your contributions are not recognized or it could be simply that you don’t get along with your boss. There are plenty of reasons to move on, and now could be the time to start looking.

However, before cutting the ties with your current employer, consider these important Do’s and Don’ts.

1. Don’t Quit without having another job to go to. Even if you’ve got lots of money socked away in the bank, you are most likely going to experience a few months of searching, interviewing, and negotiating before landing that next job. What if it falls through? You’re back to a continued search. A month turns into several months, sometimes even a year. Then a potential employer wants to know why you quit your job, why you’ve been unemployed for so long? Both are red flags that can mean the difference between an interview and continued unemployment. Plus, if you quit, you carry a certain stigma with you that can also create a red flag to a potential employer. “Why did he quit? If he gets frustrated here, will he just up and quit as well?”

2. Do Ask Yourself Why you want to leave your current job. Before you consider a move, make sure you have done everything you can to make changes at your current employer. When I speak to a potential candidate about leaving a current job, I ask them this question: “If you were your boss what four things about your current job, would you change?” There are no right and wrong answers here, but the answers themselves will divulge the real reasons you are searching for another position. You may find that the answers are issues that you can resolve simply by speaking with your boss or co-workers. If “more money” is your reason, exhaust all avenues of obtaining a raise before seeking employment elsewhere. Headhunters are not prone to working with candidates whose main reason for leaving a company is “more money”. Why? Because these candidates are most likely to accept a counter-offer by their employer. Accepting a counter–offer from your current employer is a recipe for disaster. In short, you’ve marked yourself as a person not happy where you are and disloyal in the eyes of many employers. Guess who will be laid off at the most convenient time for the employer? Guess who will be passed over for promotion? Guess who will find themselves on the outside of “inside information” circles? If you are truly serious about looking for a new opportunity to better your career, go ahead and look, but be discreet and continue to give your current employer 100%.

3. Do Accept Calls from Headhunters. As a professional, you should have a relationship with a headhunter or two, before you ever need one. Just as you have a team of health, legal and financial management in the form of a doctor, dentist, attorney, financial planner and CPA, you must also have a headhunter as part of your career management. Working with headhunters gives you an opportunity for broader exposure than you can get on your own. Always take their call. On average, three out of ten people won’t return a headhunters calls or will say they’re too busy to talk, with science and technology professionals being the worst offenders. If you don’t cooperate, chances are you won’t be contacted by that firm again.

One engineer I know refused to speak to a recruiter when he called about an opening for a vice president of engineering job. Less than a month later, that same engineer’s resume arrived at the search firm. He’d been downsized out of his job. Want to guess where his resume went? Not wanting to talk to a recruiter shows that you lack sophistication — a definite blow to your prospects.

I recall one company that threatened to fire its employees if they accepted a call from a headhunter. Did that stop employees from talking? No, it actually encouraged it; they just carried on the conversations at home. Any company that threatens its employees can’t be the best environment for an employee and sets itself up for turnover issues. Today, that company is out of business.

What if you don’t get calls from headhunters? Make yourself more visible within the market and industry. Become involved in industry associations, professional networks (I don’t mean Chamber of Commerce events either, see below) and research recruiters that specialize in your industry; call them and introduce yourself. Don’t email blast your resume to every headhunter in the universe – it just ends up in the trash file. Also, don’t send mass “snail mail” of your resume to recruiters. That just ends up in the trash can as well. Offer to be a source of leads. “Give and you shall receive” goes a long way here. I have a large network of industry people who keep in touch with me, some offer me leads, some I bounce prospective searches by, some give me feedback on industry and market trends, while in turn, I give away tons of advice on career situations, resume writing, search methods as well as national trends I see in the industry. Some candidates I’ve helped place twice in their industry due to company restructuring. This is because I maintain a relationship with candidates I’ve worked with in the past.

What if you are not “the best”? Let’s face it; although we may rule the roost at home, not all of us are “top dogs” at work. Not all of us are superstars, trend-setters, and employee of the month. Many of us are “salt of the earth”, loyal, hardworking, get the job done kind of people. Does that mean you are not deserving of bettering your career? Not in the least. Despite beliefs to the contrary, employers are not always looking just for the superstar, or the person who walks on water. Most Type A personalities, superstars, and water walkers are also hard to manage. Some may be superstars, but many times they also require high maintenance. Executives and mangers also depend greatly on the “salt of the earth” employee. So what do you have to offer a potential employer if you are not a superstar? Well, take an honest assessment of your career – we’ve all had accomplishments – list them. Do you also have a strong work ethic? You’d be amazed at how many people today have no work ethic, are self centered, and believe they are entitled to everything in life for free. Employers are not looking for people like this. They are looking for team players with a strong work ethic, loyalty, hard workers, and those dedicated to company and industry. These are but a few traits you can offer a new employer.

4. Do Join a network of professionals. Make it easy for headhunters and recruiters, as well as business associates to find you. I recommend Linked-In and Zoom Info. Professionals can post their bios for free. Not only can you be found, you but you can also network with people within your industry. Industry trade associations are other great places to meet like minded professionals as well as network for new job opportunities without announcing to the world that you are ready to leave your current employer. Building a network for yourself will be an invaluable asset if you decide (or are forced) to make a career change.

5. Don’t Post Your Resume On Job Boards. There are large job boards, and there are specialized job boards, many of which will allow you to post your resume for free. Job board postings are for unemployed people. What do you think your current employer will think when they find out (and they will) that your resume is posted online? Some will call a headhunter and start a search for a new person to fill your position. The least that will happen is that you will be branded disloyal and ostracized from the “inner group”.

6. Do Go back to School. If you do not have a four year degree, you are at an extreme disadvantage in the employment market as well as advancing in your career. You can argue all day long about how successful you’ve been without a degree or how smart you are without a degree, but the simple facts of life are: if you want to move up in your career, a degree is vital. I recruit in the technology markets and I can’t remember a client over the past ten years that would even look at a candidate who didn’t possess a four year degree. It’s a fact of life in the business world, so if you don’t have one, get one. I recall a candidate who was one credit shy of receiving his bachelors degree. After ten years, he still hadn’t gone back to earn that one credit. He had every excuse in the book; marriage, kids, new home, hobbies, etc. This reflected a red flag to the potential employer about his personality and professional ability to complete projects. They wouldn’t hire him.

7. Do Make A Decision. Once you’ve made a decision to explore new employment situations, look for situations that would fit your behavior, skills and background. If you want to change careers to a new field, you need to speak with a career counselor, not a recruiter. Recruiters and headhunters specialize in placing people in specific positions that they are already qualified and experienced to fill. When I’m approached by employees who are not happy where they are, I ask them to do three things: First, make a decision as to what they are looking for in a new situation. Second, list geographical areas they are willing to consider relocating to and Third, decide what companies they are interested in working at.

· To start, decide what you are looking for in a new opportunity, go back to the list of reasons you want to leave your current job. There you will find your reason for wanting a new situation. Be realistic though. If you are an engineer now, you may want a new job as a Director, but realistically, you need to be looking for the next step towards that title which may be a Team Leader, or Group Manager.

· Decide what geographical area you are willing to consider. Many candidates decide they will not, under any circumstance, relocate. Nine months of unemployment later, they start to change their mind. You may be passing up the best situation for your life or career by refusing to look outside of your current city. Your current industry may also limit your opportunities by not relocating. You may also have kids in high school or a spouse whose career is not relocatable. These are all situations to consider. Remember, headhunters usually work a national desk, so most are unable to use the full extent of their skills, network, and expertise to help you, if you limit yourself geographically. I have a brilliant engineering friend who hates his current employer and calls me every other week to see if I’ve found him a job. He has limited his geographical area to a 30 minute commute from his home in Los Angeles. Well that’s extremely limiting to a headhunter, so as you can see, there’s not much I can do to help him, unless he goes to the next step…

· Decide what companies you want to work for. You may ask, “Isn’t that the job of a headhunter, to find opportunities for the candidate?” No, its not. A headhunter is paid by employers to find top talent for a specific position. Many may specialize in a specific industry and know of other opportunities not posted on line. Most headhunters will also market a select few candidates, what is called a “Most Placeable Candidate” (MPC) to industry companies. I ask employees who request this type of assistance from me, to give me a list of 25-50 companies they would like to work for. It doesn’t matter if they have a position posted or not. There is an entire “hidden job market” out there in companies that do not post jobs on-line because they get inundated with thousands of unemployed, non-qualified resumes. Other companies will look at a top talent, knowing they will need to hire someone a few months down the road anyway, and if the right person came along now – it would be time to grab them. HR may not even know this, so if you blast your resume out to the company HR department, it may be overlooked or chucked in the deleted file, but, if a headhunter picks up the phone and calls an executive of a desired company and “sells” your skills and abilities, you just may have a shot at an interview. I know some people who are arrogant enough to think they can do this themselves – these are the same people who think they can diagnose their own illnesses, represent themselves in a court case, and cut their own hair.

Decision making on your part must include your significant other as well. You’d be amazed at how many people, especially men, will talk to a headhunter about relocating to a city, without ever talking to their significant other, only later to find out that they will be divorced if they accept a new job in that location.

These are some of the most important things to keep in mind when you are considering making a career move. Depending on which poll you subscribe to, sixty to eighty percent of employees are not happy at any given moment with their current employment. If you aren’t happy, decide why and if you can correct the situation before investing the time and energy into seeking greener grass elsewhere. If you’ve tried with no success, then it’s time and the economy and market today make it a great time to make a move.

Gary Perman is President of Perman Technical Search Group, a national search firm that specializes in recruiting Executives to Engineers in the technology industry since 1996.

If you have questions about this article, feel free to contact him at gary@permantech.com

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