Retain your employees

Technically competent people with hardware, software and related management skills enable business growth. However, while the demand escalates for these key people, the supply of them is shrinking. The resulting critical shortages of qualified personnel increases the competition between firms to attract likely candidates.

To compete in this dynamic environment, firms must increase their focus on human resource management (HRM). In particular, they should improve their strategy and practices for recruiting, developing and retaining qualified people.

Strategic HRM levers. Five useful strategic levers have been identified and are listed in two groups. The first group (or "hygiene factors") has two levers: recruiting posture and compensation. Without these elements, employees would probably not attain either job satisfaction or positive attitudes towards their jobs or employers. To hire or retain key employees today, it is absolutely essential that these factors are acceptable or better.

The second group has three levers"concern for productivity," "concern for the individual," and "concern for career development and security." When implemented properly, these levers can be very useful in the HRM process if the hygiene factors are reasonably attractive to potential employees.

These five strategic levers can be combined to implement the four different HRM strategies that follow.

STP, the short-term producer, is a strategy nearly inevitable in an organization that accepts high employee turn-over rates as a means to cope with a rapidly changing technology. Almost entirely concerned with current productivity, it spends little time on long-term goals.

HPP, the high-performance professional, on the other hand, is a strategy appropriate in a company where turn-over rates are lower than they are for the STP organization. Along with a primary focus on productivity, this strategy expresses a moderate concern for the individual, which usually improves loyalty all around.

BP, the balanced professional, is a hiring strategy appropriate in a company that has a strong focus on productivity and upon individuals with moderate concern for career development and security. This appeals to "free-agent syndrome" employees who change jobs every few years.

LTI, the long-term investment, is an HRM strategy that leans on all five levers. It strongly supports both recruitment and retention. It emphasizes self-concept, professional identity, recognizes competing demands and inclusion/insiderness. In addition, it provides recognition and tangible rewards for productivity, output and achievement.

The key. To increase the desired length of the employee/ employer relationship, organizations must progress from STP to HPP to BP to LTI approaches. Significant cost/benefits are associated with each strategy. However, the key to employee loyalty and retention is the achievement of a mutually acceptable balance between personal identity, professional identity, and organizational identity. No professional wants to be a cog in a mechanistic organization.

No single balance or key employee HRM strategy is suitable for every organization. One size does not fit all, yet a firm's HRM strategy can have significant impact upon its success.

Note: Material in this article was adapted from a presentation made at Babson College by Dr. Ritu Agarwal.

Ask the Manager

Q If a company wanted to implement a new human resources management strategy, where should it begin?

A Successful firms must first define their vision and strategy for key employee HRM as well as define their underlying assumptions. Then they must identify and implement appropriate practices. Finally, they must communicate, communicate, communicate these practices, and make sure that the communication travels both ways between employees and employer.

Q I have been confused about how I should use the concepts that you label TOP and POP. I have participated in management courses and leadership seminars that stress POP and don't say much about TOP. Yet, in my work situation, the opposite is practiced--lost of focus on TOP and little if any focus on POP. The integration of the two, as you discussed, seems like the best approach. Can you suggest some material that could help me remove some of my confusion?

A Until very recently, most of the material in this field did not discuss integrating TOP and POP. In fact, up through the 1940s and even into the 1960s, almost the entire focus was on TOP. Then in the 1960s starting perhaps with McGregor's famous Theory X vs. Theory Y, the emphasis on POP began to increase gradually, especially in this decade when being successful in the emerging business environment began to demand some sort of balance between the two extremes.

A recent book (Balance of Power: Authority or Empowerment? New York, Amacom, April 15, 1998) by James Lucas states that this balance should be considered in a power framework. He discusses how a balance between the two extremes can be achieved by balancing the power between them.