Two Steps to Improve Employee Retention & Engagement

The key to employee retention is ensuring you have talented and personable supervisors on staff. Studies show that employees who have good feelings about their bosses also have good feelings about their jobs, pay and benefits. So why do only 14% of companies hold supervisors accountable for employee retention?

June 3 2011 by Richard P. Finnegan


Our business is helping companies cut employee turnover and improve employees’ levels of engagement. Last year we worked closely with two hospitals and reduced turnover in each of them by nearly 40%. One hospital improved nurse retention by 70%. The challenges for these two assignments were compounded by the global shortage of healthcare professionals as baby boomers age and patients begin to out-number qualified helpers.

We use many methods to re-build organizations where good employees want to stay but one of our keystone principles is that employees care more about how you treat them than what you give them. And the best way CEOs can ensure employees are treated better is to hold direct supervisors accountable for doing so.

I could cite 20 impressive studies here about the power supervisors have over whether their employees give their all each day and continue to work for you. The jewel among them tells us that employees who feel positively about their bosses also feel good about their pay, benefits, learning, development, and advancement…and employees who feel negatively about their bosses feel poorly about those things. Consider for a moment how many hard dollars you pay for that list, beginning with your entire payroll and benefits costs. Whether that investment works is mostly in the hands of those many levels below you who supervise your teams.

That being said, the common approach to both retention and engagement is to ask Human Resources to sponsor various employee programs for recognition and communication, while managers each year review employee survey results and submit action plans for improvement. This synopsis leads me to ask executives during presentations, “When’s the last time you heard a prized employee say ‘My boss treats me like dirt but I’m holding on for employee appreciation week. I’ll get a balloon and a hot dog and I’ll be over the top’?”

Both respected research and our experience confirm that anything HR does beyond hiring has little impact on your employees’ performance, except for those employees who work in HR. This is not to diminish the many important contributions HR makes, but the equation for high retention and high engagement is good programs and good supervision. Bad supervision will trump good programs almost every time.

Employee retention and engagement are profit-sustaining metrics that will also drive your growth. And the first and most vital step you can take to improve them is a simple one: Hold supervisors on all levels accountable for achieving employee retention goals, starting with yourself. The second step is to place a dollar cost on losing employees from key jobs and incorporate those costs into your monthly reporting for supervisors’ retention goal achievement.

The CEOs of the two hospitals cited earlier would tell you that establishing goals and costs is the essential first step for re-directing supervisors’ attention to their employees in meaningful ways. One of those CEOs went a step further by re-evaluating each factor he had included in his direct reports’ bonus plans and inserting retention for a value of 20%. While tying retention directly to compensation is a sure-fire way to gain supervisors’ commitment, any type of meaningful goal-setting and reporting will  by itself create positive change.

While the logic for holding supervisors accountable for retention is indisputable, common sense does not always lead to common practice. Studies tell us no more than 14% of organizations do this, so one can suspect that the other 86% either hold HR accountable or hold no one accountable. Arguments against supervisor accountability might include that employees sometimes leave for reasons the supervisor cannot control, or the supervisor inherits employees she didn’t hire. These same arguments apply to whether salespeople retain customers as well, and no conscientious CEO would overlook holding the sales teams’ feet to the fire regarding customer retention.

The secret to retaining and engaging the employees you want to keep is to establish goals, provide well-designed tools, and lock in the supervisors’ full participation with follow-up processes. This is how you drive sales, service, quality, and safety, and the same concepts apply to managing your employees…who are likely to be your most expensive asset. In future articles I’ll dig deeper into methods for setting goals, establishing costs, and inserting the right tools and skills for supervisors to gain the highest possible ROI from your people investment…and include the right things for HR to do, too.