Retention Practice #5:
Reward Employee Referrals of Successful New Hires

Why is there a significantly higher retention rate for employee referrals?

1. Current employees are usually realistic in the way they describe the job/environment.
2. Current employees tend to know the person they are referring and can make a reasonable guess as to how well the person will fit into the job and culture.
3. Current employees have a strong self-interest in seeing the right people hired; they want to have competent co-workers on their team.

There are several key questions to consider when implementing a new hire referral program:

1. Is the incentive offered sufficient to motivate employees to make the referral?
2. Are you prepared to publicize the program well inside the company?
3. Are you prepared to offer rewards for referrals of all kinds and levels of employees, and will you vary the amount of rewards by level?
4. Will you offer cash, merchandise, time off, or vacations as the reward?

Examples of successful employee referral programs:

1. Half-day off with pay if they recommend a person who is hired and makes it past the 90 day probation period. (Career Track)
2. $5,000 bonuses and airline tickets to recruit software personnel. (GE Medical Systems)
3. Referral rewards based on how long the new employee stays with the company. (UPS)
4. All persons who join are expected to bring an additional person with them. (Juniper Networks)
5. $2,000 for each successful referral regardless of the level of the job filled. (GeoAccess)
6. Employees earned one point for recommending a qualified candidate, two points if the referral led to an interview, and another 3 points if it led to a secured hire. Winner chose from a list of prizes valued at $2,000 each. Second and third prizes, too.
7. Encouraging the hiring of current employees' relatives, usually with the caveat that a family member cannot supervise another. The belief is that talent and good work habits run in families and that family ties make for more enduring bonds between people and the company, which results in longer-term retention. (Southwest Airlines, Motorola)
8. "Friends Program" online help prospective employees make a friend at the company who can describe the benefits of working at Cisco. Generous referral fee, starting at $500, and a lottery ticket for a free trip to Hawaii for each prospect they befriend who is ultimately hired.
9. Disney materials that resulted in 50% of 9,000 employees being hired in a 15 month period.

Retention Practice #6:
Hire and Promote Managers who have the talent to manage people

Why is it so common in companies to hire and promote managers of people with so little people management ability?

• Good technical specialists are still being promoted into management positions as a reward for technical competence, without any assessment by management of their talent for or interest in managing people.
• Managers who achieve bottom line results and skillfully "manage up" continue to be promoted despite the fact that they may have abused many of their staff and caused many good people working under them to leave the company.
• Those who hire managers feel that they are too busy or hurried to do the preparation work that hiring good managers requires.

Competencies needed by managers in Fortune 500 companies
Leadership competencies	People-related competencies
Written communication	Oral communication
Results orientation	Customer focus
Entrepreneurial orientation	Tolerance of uncertainty
Integrated functional perspective	Flexibility/adaptability
Global perspective	Community/social focus/responsibility
Strategic thinking	Empathy
Planning/organizing/prioritizing	Ethical behavior
Envisioning the future	Interpersonal skills
Time management skills	Ability to manage a diverse workforce
Reliance on quality methods	Confidence and self-esteem
Goal setting skills	Conflict resolution
Creativity and innovation	Judgment and decision making
Financial management	Delegating
Learning focus	Motivating
Initiative	Influencing and persuading
	Stress tolerance
	Team skills: leader, member, facilitator
	Project management skills
	Building followership: coaching/mentoring

Do's and Don't of Great People Managers:

1. They don't always hire the best, but they do hire the "best fit."
2. They have the insight to realize that, however menial a job might be, not just anyone can do it well. Good managers study their best people at all levels and know what to look for when they hire.
3. They focus on matching a person's strengths to the right challenge and the right role, not on improving weaknesses to the point that every employee is well rounded.
4. Good managers realize that they need to occasionally rotate people in and out of new assignments. Cross training does prepare for higher level assignments, improve team versatility, and makes the group less vulnerable to turnover and absenteeism.
5. Good managers realize that there is more to be gained in performance improvement and retention by spending more time with their already good performers than be spending more time with poor performers.
6. They encourage autonomy instead of insisting that employees do things the way the manager would do them.
7. They manage different people differently, realizing that not all people have the same motivations.
8. They see themselves as serving their people, not the other way around.
9. They are very tolerant of diversity but intolerant of non-performance.
10. They are not afraid of strength in their associates and are confident enough to seek to surround themselves with the most talented direct reports possible without feeling threatened.
11. They care about their workers and take a personal interest in what is going on in their lives.
12. They let their subordinates move on to growth assignments outside their team instead of selfishly blocking the move, because they know that these people might otherwise leave the organization.
13. Good managers give feedback, praise, and recognition on the spot. They don't wait until performance appraisal time.
14. Good managers know when to confront non-performance and either redesign the job so that it fits the individual by re-assigning the person to a better fitting job, or terminate as quickly as possible.

How to Select Managers with the Talent to Manage People:

1. Prepare for the interview by listing the results you expect them to achieve, paying special attention to the leadership, people-related competencies, and emotional intelligence traits.
2. List several questions that will elicit examples of past behavior when candidates were challenged to use people-related talents. Examples: "Tell me about a time when you helped one of your people grow and develop on the job." "Tell me about a time when you rewarded or reprimanded one of your people." "Tell me about a time when you rewarded your employee in a creative way."
3. Don't be misled by strong technical ability. Technical ability may be necessary but it is not enough to make an individual contributor an effective manager of people.
4. Check references. In particular, check out how the candidate has performed per his/her people-related competencies.
5. Let finalists for the job know that effective people management and retention are so important that a major piece of their performance evaluation and monetary rewards will be based on performance in these areas. Tell them that they are expected to achieve results without alienating their people in the process. Then back up your words with action.

Summary

The later part of the twentieth century was largely devoted by employers to outsourcing and recruiting talent that could be cultivated according to a company's own corporate culture. Managers were told to focus on core competencies and create knowledge based organizations where skills and expertise could flourish. Meritocracies replaced hide bound hierarchical organizations and bureaucracies. Meanwhile, talented professionals were looking for meaningful work where they could exercise their autonomy and independence. The preliminary results indicate that the transition is still a rocky one. Smart companies are still grappling with the need to treat their talent in more flexible and creative ways. Time will tell which companies are smart in harnessing their human talent - or will suffer dire consequences by not changing fast enough. The six retention tips listed above should give plenty of ammunition to companies to begin now!

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Dr. Jane Lommel is an expert in the field of human resource management and workforce development. Her current activities with Workforce Associates include teaching, lecturing, and consulting in such areas as: workforce development; best practices in recruiting and retention; re-employment of older and displaced workers; tapping underemployed and underutilized workers; and Internet applications in recruitment and job searching. She is the author of the NetWork series of books about using the Internet in a job search, with titles ranging from Maximizing Your Career Resources on the Internet to the forthcoming NetWork for Free Agents. These books are in online and print-on-demand formats.

Dr. Lommel's holds degrees from Syracuse University and Kansas State University. She was a founder and serves on the Board of Directors of the International School of Indiana. She is an active member of the Society for Human Resource Management and the International Association of Career Management Professionals.