Management Development

H uman Resource Strategy

Second Quarter ****

Understanding Employee

Attraction and Retention As Key

Drivers in a Down Economy

N

ews of the state of the economy is flooding

the marketplace with startling and increasing

unemployment rates, speculation of mass

layoffs, buyouts and bankruptcies. It makes for nervous

chatter at the water cooler and on blogs but different

Stacey Randall

chatter in the C-suite and management ranks.

IMR Research Group Inc.

Among the more savvy and forward-thinking execu-

tives there is an increase in discussion centered on the

new and unprecedented opportunity to acquire top

talent. Talent is flooding the marketplace and according

to the Corporate Executive Board, 24 percent of corpo-

rate leaders said making critical talent plays will be one

of their biggest challenges in 2009 (Corporate Executive

Board 2009).

The study also found that one in four top high-

performing employees expects to leave his/her current

job in the next 12 months, up from one in 10 during the

12 months previous to the study. Considering the cost

of turnover, loss of productivity and how employee

engagement and loyalty strongly influences the orga-

nization s financial health, and combining those factors

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with the need for an organization to be able to emerge stronger from this economic

downturn, understanding employee motivation becomes critical.

The economic recession is uncovering a unique opportunity to garner top talent

and is placing retention efforts at the forefront of forward-thinking management

discussions. Management, including total rewards professionals, must be careful to

avoid the thought that the recession will finally make those employees feel lucky

to have a job and remove their sense of entitlement. Assuming the employees

will fall in line is a dangerous and slippery slope managers and/or leaders can

easily find themselves sliding down, with negative consequences. An organization

or its management with this attitude, may find that the best employees are biding

their time until the economy improves and they exit the organization. According

to a 2008 Leadership IQ study, 47 percent of top performers are actively looking

for a job, but only 18 percent of low performers are.

Based on a survey by IMR Research Group Inc. (2008) of more than 1,900

full-time employees in the United States, the key to understanding employee

motivation lies in an analysis of both what employees say is important in the

workplace as well as what drives employee loyalty. IMR Research Group uses

multitiered assessment of employee loyalty through a model called the Employee

Motivator Matrix (EMM).

U NDERSTANDING THE MODEL

Looking at what employees say is important as well as determining the factors

that actually drive loyalty gives organizations a focused, yet big-picture view of

employee motivation and engagement. In the IMR survey, employees were asked

to rate the importance of the 44 workplace attributes, ranging from a high degree

of trust between management and employees to creativity and independent

thinking is valued to a relaxed work environment. The rating of each workplace

attribute combined with how strongly it influences loyalty to an organization

(based on statistical analysis) determines where on the EMM the attributes fall.

While the information is used by the authors company for its EMM tool, the ratings

provide solid input for organizational evaluation of loyalty.

Figure 1 on page 42 provides two dimensions. Stated importance (the bottom

axis) reflects what employees explicitly indicate is important to them when rating

the workplace attributes (i.e., articulated, on-the-surface motivators). Derived

importance or unarticulated importance (the left axis) is determined using

statistical analysis, obtained by computing the degree of correlation between

the attributes with the likelihood of recommending the company to others as a

good place to work an attribute that the authors consider the best measure

of loyalty. Attributes in each quadrant are important to understand, but focusing

resources on the workplace attributes in the top right quadrant, which are high

in stated importance as well as strongly correlated with loyalty, will effectively

increase loyalty and reduce turnover.

Second Quarter 2009 41

FIGURE 1 Metrics Used to Evaluate Pay and Reward Program Success

A dded Value/Unspoken Motivators Key driver/high impact on loyalty

L eadership with vision H igh level of trust between management

High

and employees

V ision/goals/mission clearly communicated

I nfluence on goals/strategy related to job

C reativity and independent thinking valued

Professional development encouraged

C ontinuous innovation viewed as vital

Derived Importance

E mpowered to use own judgment

O rganization reflects the employee s

values, aspirations and beliefs N ew ideas encouraged and tried out

Passionate and motivated employees

Low-Yield Attribute Expected/Minimum Requirement

A ll other 26 attributes measured R ecognizes/rewards excellent performance

O pen communications across all levels

Low

O pportunities for advancement

G ood benefits

G enerous paid time off

Fair compensation for job asked to do

R easonable number of hours worked

Low High

Stated Importance

KEY DRIVERS

In any economy, retaining top talent should be a priority, but it is especially

important in a recession. But trying to figure out how to retain talent, and recruit

when needed, can become overwhelming when an organization is faced with

many possible workplace areas on which to focus resources. However, resources

focused on the key motivating drivers will increase employee loyalty and satisfac-

tion and boost retention rates.

The Trust Factor

Trust is a key driver of employee loyalty and engagement, as shown by its placement

in the top right quadrant of Figure 1. Numerous research studies in recent years

have consistently shown trust to be of critical importance to today s workers. When

employees lack trust in management, productivity decreases, morale sinks and an

us versus them culture emerges, undermining an organization s health and future.

According to the Institute for Corporate Productivity (i4cp) (WorldatWork 2008),

most organizations recognize that trust is an important consideration in their success,

but many employees don t feel it is being nurtured internally. The main culprit is

senior-management credibility, which is seen as a problem in a quarter of companies.

In the institute s study of hundreds of companies, one of five respondents does not

feel his or her organization engenders trust. Forty percent thought trust is nurtured

42 WorldatWork Journal

only to a moderate extent. When segmented between low- and high-performing

companies, the difference is starker: Forty percent of low-performing companies

feel their organizations do not nurture trust, while only 16 percent of respondents

from high-performing companies feel the same.

A solid strategy to increase trust, and reduce time wasted, rests in providing an open

and transparent working environment that strengthens the organization, as employees

spend less time engaging in distracting chatter and more time in productive work.

Other Key Drivers

Employees also indicate that they need to influence goals and strategy; feel

empowered to use their own judgment; and find that new ideas are encour-

aged. One way to know if the organization s employees feel empowered and

influence their work is how they express opinions of their work. For example,

do they use the word own or portray ownership in referencing their projects

and responsibilities? Employee opinion surveys are also significant in this area.

Another key driver is offering professional development, and organizations

making professional development a high priority and an ongoing endeavor will

capitalize on strengthening employee loyalty.

Addressing the key motivation drivers will result in more motivated employees.

IMR s research indicates that in this economy focus is renewed on working

with passionate and motivated employees, as this affects the day-to-day life within

an organization and directly influences the happiness and focus of employees. It has

become imperative for organizations to keep an eye on the morale of their workforce

and work to keep it positive through effective communication about the state of the

organization, the industry and the employee s role in the organization.

Unspoken Motivators

T he key drivers previously discussed are articulated by employees as important.

Equally insightful are the unarticulated or unspoken attributes (Figure 1: top left

quadrant). These attributes are unique in that they can provide employers with

an opportunity to delight recruits and employees and further the organization s

competitive positioning for the best talent.

Two of the top five unspoken motivators relate to creativity and innovation.

America s economic future may rest on the ability to innovate, and if workers under-

stand how brainstorming and other creative-thinking sessions can contribute to

the organization s bottom line, they will feel their input is valued. Other unspoken

motivators relate to the organization itself and its leadership. Employees desire

to work for a leader with vision and an organization reflecting their (employees )

values, aspirations and beliefs. These unspoken motivators have a low-stated

importance according to employees but a high-derived importance, which means

they don t stand out as critically important in the employee s mind, but efforts to

improve these will greatly affect attraction and retention.

Second Quarter 2009 43

Minimum Requirements

R ESOURCES PLUS

The expected or minimum require-

For more information related to this paper:

ment s (Fig ure 1: bot tom r ight

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quadrant) have a high-stated impor-

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tance and low-derived importance.

E mployee engagement

Feedback from surveyed employees

R etain top talent

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ments are important, but they do

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Workforce Engagement Strategies requirements quadrant in which

to Attract, Motivate and Retain Talent

fair compensation, good benefits

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and generous paid time off fall

A Guide for Managers and Supervisors

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B attling to Be the Best Why Companies

Compete for Best-Place-to-Work Lists.

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T1: Total Rewards Management

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lower initial attractiveness and greater

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The final quadrant is the low-

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yield attributes (Figure 1: bottom left

quadrant), which have low-stated

importance and low-derived importance. They are not good indicators of employee

loyalty, and resources focused on these attributes are ultimately wasted.

T HE GENERATIONAL DIFFERENCE: KEY DRIVERS

Unlike any time in U.S. history, four generations are in the workforce at the same

time, each with distinguishing characteristics.

For the purpose of the author s study the three dominant generations by size

are included. The fourth generation, the Matures, is a relatively small percent of

the workforce and not statistically viable for the survey s purpose. The generations

in the workforce are as follows:

Generation Y (also called Millennials ) (74 million are less than 30 years of age)

Generation X (slightly less than 50 million are between 30 and 45 years

of age)

Baby Boomers (76 million workers are between 46 and 64 years of age).

Many managers, consultants and researchers feel that this generational difference

is significant and plays an important factor in employee engagement. For example,

Berkshire Associates (2008) noted:

Outside your office door, everything may appear fine, but tension may

be brewing among your Baby Boomer, Generation X and Generation Y

workforces. How can managers and HR work together to optimize each

44 WorldatWork Journal

group s strengths while creating a productive and satisfying environment

for all three styles?

The core of this tension originates from differing work values and

perceptions of relationship with employers.

Understanding the differences between these three groups will allow

you to effectively use their experiences and diverse views. It s your job to

figure out how you can best build your environment to balance the needs

of cross-generational workers in your company.

The generational consideration is one that is somewhat controversial.

Author Frank Giancola wrote recently (2008):

The generational approach has many serious weaknesses. First, academics

believe that two of its main premises lack support and that the Cohort

Generation is not worthy of serious study. Second, there is disagreement

among experts over the birth periods and number of generations, making

defining a generation a problematic task. Third, people born near the start

or end of a generation exhibit characteristics of two generations. Fourth,

the Baby Boom generation is long enough to cover parents and their

children. Fifth, research shows that the most valued and defining rewards

of some generations are valued equally or higher by others. Finally, recent

research shows that generational conflict at work has been exaggerated.

These weaknesses make the Cohort Generation a challenging concept

for HR professionals and provide a valid rationale to focus on other talent

strategies. The best advice comes from Gallup: Organizations need to

understand employees as individuals to determine whether they share the

same interests and values as the organization. Intensive candidate interviews

and employee surveys are needed to gain this knowledge. HR programs

based on the deeply flawed generational approach increase the chances

of suboptimal organizational performance and wasted resources.

(A Cohort Generation is a group of people who experience the same historical

events at about the same age.)

In addition, a study by Sirota Survey Intelligence indicates that the generational

employee engagement differences are small (WorldatWork 2008a).

The authors, however, believe that the differences are strong and that the genera-

tional differences are important to consider in attracting, motivating and retaining

employees. IMR Research Group s survey results are presented here.

Millennial Motivators

As employers get to know the latest generation to join their ranks, they are thirsty for

information on how to attract, retain, manage and maintain loyalty from this genera-

tion. Figure 2 on page 46 presents the key drivers motivating this generation.

Particular to this generation is working for an organization with open commu-

nication across organizational levels. Millennials are highly motivated by bosses

Second Quarter 2009 45

who help them understand how they

FIGURE 2 Millennial Generation Key Drivers

fit into the larger picture to under-

O pen communication across all levels

stand why they are being asked to

I nfluence on goals/strategy related to job

do what they do, which begins with

N ew ideas encouraged and tried out

H igh level of trust between management open communication. The Millennial

and employees

generation is the first to be included

Passionate and motivated employees

in its own family budget discussions,

C reativity and independent thinking valued

so members are accustomed to a seat

at the table. Organizations leveraging

this attribute will find ways to allow

this generation to influence goals

and strategies as they relate to their job and allow this generation to share new

ideas and try them out. Millennials value their creativity and independent thinking,

and though they are looking for direction and guidance, they want to be valued

for what they bring to the table.

Generation X Motivators

FIGURE 3 Generation X Key Drivers

As the Baby Boomers begin to retire,

Fair compensation for the job asked to do

the business world will rely heavily

Passionate and motivated employees

on Generation X to lead organiza-

H igh level of trust between management

tions. Figure 3 presents the key drivers

and employees

motivating members of Generation X.

O pportunities for learning

Professional development is encouraged Gen Xers coined the term life-

R ecognizes/rewards excellent performance long learners, thus opportunities

E mpowered to use own judgment

for learning and the encouragement

I nfluence over goals/strategy related to job

of professional development are

uniquely important to this generation.

This generation is at midcareer, and

as members continue to climb the

corporate ladder, receiving fair compensation for the job they are asked to do is an

important key driver. They also need to feel trusted and empowered to use their own

judgment and influence their goals and strategies, especially when leading teams.

Baby Boomer Motivators

Millions of Baby Boomers will pass retirement age in the next 10 years, but with

the financial hit many retirement funds have taken recently, this generation may

not be in a hurry to retire. However, the decision to keep working is not solely

based on financial reasons. In addition, Boomers are becoming known as the

sandwich generation as they deal with aging parents and growing children, many

of whom return home after graduating college or never leave. With new stress and

pressure on their time, members of this generation will be looking for balance

in their work and personal lives.

46 WorldatWork Journal

It is easy to deduct from the key FIGURE 4 Baby Boomer Key Drivers

drivers motivating this generation R ecognizes/rewards excellent performance

that they want to influence job H igh level of trust between management

and employees

goals (they want their experience

C reativity and independent thinking valued

recognized and respected), to be

N ew ideas encouraged and tried out

able to try new ideas, to have their

I ndividual and team successes celebrated

creativity and independent thinking

E mpowered to use own judgment

valued and to be empowered to use I nfluence on goals/strategy related to job

their own judgment. And unlike the

Millennials and Generation X, the

Boomers expect that individual and

team successes will be celebrated,

which is in line with their leadership style of leading by consensus and having a

team perspective. Figure 4 represents key drivers for Baby Boomers

CONCLUSION

Employee engagement directly impacts profitability, and organizations are wasting

resources human and financial unless the focus is on policies and practices

that are going to provide the best return on investment in helping to attract as

well as retain talent. Organizations must figure out how best to retain their top

talent to be well positioned for an economic resurgence. Understanding what

drives employee motivation and loyalty is key to the sustainability and growth

of an organization.

AUTHOR

Stacey Randall i s the founder and chief consultant of SBR Consulting LLC and is the workplace futurist for IMR

Research Group Inc. As an employee retention specialist, she works as a generational consultant and leads

IMR s proprietary work-life attraction and retention scorecard for companies and city groups across the United

States. She can be reached at ********@***********.***.

R EFERENCES

Corporate Executive Board. 2008. E xecutive Guidance for 2009. h ttp://www.executiveboard.com/2009guidance/

pdf/Exec_Guidance_TC_Web.pdf. Viewed: Jan. 15, 2009.

Branham, Leigh. 2005. T he Seven Hidden Reasons Employees Leave.

Berkshire Associates. 2008. T he Generation Factor Understanding how differences in generations affect

your workforce. w ww.berkshireassociates.com/infocenter/whitepapers.aspx. Viewed: Feb. 25, 2009.

Giancola, Frank. 2008. Is the Generation Gap a Bogus Issue? workspan, N ovember: 23.

IMR Research Group Inc. 2008. Work/life Survey: Attraction & Retention Scorecard.

Taylor, Craig. 2004. Retention Leadership, T&D, M arch.

WorldatWork. 2008. Organizations Are Failing to Create Trust Internally. Newsline: Aug. 21. http://

www.worldatwork.org/waw/adimComment?id=28005. Viewed: Feb. 25, 2009.

WorldatWork. 2008a. Employee Engagement Differences Across Generations Relatively Small. Newsline:

April 3. http://www.worldatwork.org/waw/adimLink?id=25544Viewed: Feb. 25, 2009.

Second Quarter 2009 47

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