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April 03, 2006

Why retention is always "tomorrow's task"

My brain is forever looking for connections - and thats why when I read "Marketplace of Perceptions", which explains why we procrastinate, I couldnt help think that the arguement definitely holds some water here - whether the author talks about procrastinating retention strategies.

Quoting behavioural economist David Laibson from Marketplace of Perceptions -

“There’s a fundamental tension, in humans and other animals, between seizing available rewards in the present, and being patient for rewards in the future,” he says. “It’s radically important. People very robustly want instant gratification right now, and want to be patient in the future. If you ask people, ‘Which do you want right now, fruit or chocolate?’ they say, ‘Chocolate!’ But if you ask, ‘Which one a week from now?’ they will say, ‘Fruit.’

Can we say that in HR terminology, that would translate as – Recruitment? Now!...Retention – Tomorrow? So recruitment remains a “current hot topic,” while retention becomes a “future hot topic”.

Why so?

Laibson offers a mathematical explanation -

Consider a project like starting an exercise program, which entails, say, an immediate cost of six units of value, but will produce a delayed benefit of eight units. That’s a net gain of two units, “but it ignores the human tendency to devalue the future,” Laibson says. If future events have perhaps half the value of present ones, then the eight units become only four, and starting an exercise program today means a net loss of two units (six minus four). So we don’t want to start exercising today. On the other hand, starting tomorrow devalues both the cost and the benefit by half (to three and four units, respectively), resulting in a net gain of one unit from exercising. Hence, everyone is enthusiastic about going to the gym tomorrow."

So there is a gain in procrastination because what we start tomorrow will always have more value than what we start today, given our tendency to discount the future. And this especially seems to apply to acts which have an outcome in the "future" as opposed to "now"

Let me try and apply that back to our recruitment-retention issue.

What is the first thought that crosses our mind when our team member leaves? Who is going to replace him? (If you didn’t think that – you are probably a little ahead of this post!) And after that, we ask (if at all!)“How do I make sure the others don’t leave?”

Why so?

Maybe because – "getting a replacement" is an act in the “here and now” that gives us an immediate reward, while "making sure the others don’t leave" is of the “to-do list” variety, a more hazier proposition which we will crystallize tomorrow? Even though we know fully well that the cost of a new hire far exceeds the cost of retention efforts? Yes...and thats why behavioural economists say rational thought cannot always explain decision making.

So how do we solve this?

Two things that come to my mind -

Increasing the knowledge of "how"
Irrationalilty would mean refusal to see reason despite facts pointing to the same. Personally, I believe that in the case of retention, it is less to do with “refusal” and more to do with “ignorance of how”. Every manager “intends” to retain, but struggles with “how to”. Its like this – if a manager wants to get a replacement – he knows what to do – he will call up his recruitment manager, give the job specs, and the next day – he has five resumes in his inbox. He shortlists profiles, interviews them, the offer is made, and there!you have the person on board. It’s a concrete process, visible to one and all.
But if he wants to retain his people – does he see a similar concrete “how-to” process? Yes - he sends encouraging messages, takes his team out for lunches, and make sure they work don’t work weekends. But there is more to it right? Does he know what spaces his team members’ value? Does he know how to provide for them? Does he know how to work on a personal retention plan for each of his team members? Does he know if the organization can support him in that?
And when we don’t “know” we don’t act.........we procrastinate.

“Priming” to retain
I believe we are all “primed” to recruit, not retain. Think about it. How often do you send recruitment updates? Weekly? Daily? Hourly? How often do you send attrition reports? At best monthly? At worst….i dread to think? Do you know your source mix for this month’s recruitment? Yes ofcourse – “XYZ” consultant has given me the best results. Do you know your source mix for this month’s attrition figures? That I'll have to check. Hmm…. Whose scorecard really has a retention parameter that receives a “significant” weightage in the appraisal? Does your “off-shoring” (i can't remember where I first read this term!) process receive as much hype and attention as your “on-boarding” process? I have seen so many individuals whose conviction to leave gets strengthened only because of the treatment meted out to “employees serving notice”. What if we were to think of ways in which to “weaken” these convictions, even after an employee has resigned? So that even if he doesn’t stay, he might come back to join us at a later date?

In asking these questions, I am not talking about individual acts of good / bad (they may count for the situation) – I’m talking about the system as a whole, the way it works – IT IS JUST NOT PRIMED TO RETAIN.


And carrying out that shift will involve linking every single act of everyone of us to the goal of “making the employee stay”. Every decision that we make, every policy that we frame, every metric that we design should indicate how it contributes to this goal. And, most importantly, our processes should track it.

To conclude – if retention is everyone’s business – then lets provide the wherewithal to run it.

6 Comments:

  • That was, quite simply, a brilliant post. Well done. (came here from Gautam's site)

    By Anonymous Jim Durbin, at Monday, 03 April, 2006  

  • Am not sure how the conflict of positions, between the Present and Future would actually resolve itself in this context.
    It may so happen that some of the decisions one makes are rooted in the Present and they themselves would undergo a radical upheaval if a balance is sought.

    By Blogger Anand, at Monday, 03 April, 2006  

  • Thank you Jim!

    Hi Anand: Two points -

    >> There would be no (or less) conflict is retention is also thought of in the “present” right? That’s what I was trying to get at.

    >> Is all recruitment necessarily about the present? Then why do we build pipelines? There is a “futuristic element” to recruitment also – but it has traditionally received more attention because of some of the reasons I mentioned – it is backed by a strong process & its impact is more perceptible.

    By Blogger Anuradha, at Tuesday, 04 April, 2006  

  • Excellent post anuradha...

    By Blogger Ajit Chouhan, at Wednesday, 05 April, 2006  

  • Neat post.

    If I quit will my manager be held accountable? Nah!! ;)

    By Blogger An Ideal Boy, at Thursday, 06 April, 2006  

  • Excellent Post...I do believe we could use priming for things other than retention.

    By Blogger illusions, at Thursday, 06 April, 2006  

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