Improving profitability through employee retention analytics
To stay competitive, banks must face down big challenges – such as cyberthreats, over-regulation, digital transformation, and geopolitical uncertainty – but without the right talent, this is impossible to do successfully.
When you have an employee turnover problem, you have a profitability problem: taking into account the direct costs of replacing an employee, interim reduction in labour costs, and costs of lost productivity, the total cost of voluntary turnover is $109,676 per exiting employee for an average US organisation, according to Bersin research.
For employers looking to deliver a bigger business impact in 2019, driving employee retention should be a key priority. This is where HR can have the greatest impact: an in-depth knowledge of people dynamics is invaluable in making talent decisions that directly affect the top and bottom line.
By using people analytics – the systematic analysis of workforce data – employers can see how people decisions directly impact business outcomes and make targeted data-driven plans that can improve organisational results.
Follow these steps to build the right employee retention programme for your needs:
Step 1. Understand your business goals
Start by connecting with different areas of the business to understand how the organisation makes and spends money. This will give you the context you need to establish precisely how turnover is impacting the bottom line.
Also consider what the broader business goals will be one, three, and even five years into the future. If there is an M&A deal on the horizon, for example, you will need to consider how the deal will impact retention, and which programmes – training and development, promotion, merit restructuring – can help.
Step 2. Apply dollars where they will have the most impact
Very high turnover for talent in critical roles poses the greatest business risk. Before designing any kind of retention programme it is important to understand levels of turnover across tenure, roles, teams, and geographies.
For example, the people analytics team at BBVA Compass, a US banking franchise, discovered that turnover was highest for one particular revenue-producing role. Using a people analytics solution, they quickly discovered that at certain branches, turnover for that role was significantly higher: 70 branches – about 10% of all branches – accounted for 41% of all turnover.
With a granular view of where turnover is happening, you can then dig in to the why of the problem to gain an understanding of whether a learning programme would be the right solution. A clustering analysis in the data will reveal what is common among people who are leaving, whether it’s long commute times or specific managers. For example, if limited growth opportunities are impacting retention, then the people within this population may be good candidates for leadership development investments.
This kind of analysis can’t easily be executed by querying disparate HR and business systems. A technology solution that identifies and ranks, in real time, all factors contributing to resignations, can help you design retention programmes to reduce turnover rates and retain high-performing or critical employees.
Step 3. Monitor trends to show causation
It can be difficult to identify the main thing impacting retention, but when you can explore trends, clusters, and correlations – not just point-in-time metrics – the insights become more actionable.
Instead of reporting single metrics, find out how resignations are affected by things such as compensation ratio, promotion wait time, pay increases, tenure, performance, and training opportunities. This insight supports better decisions around changes to pay, benefits, and learning and development in order to manage costs, while retaining the right people. You can then dig deeper into the data and refine the learning content to focus on what really matters for the business.
For many, getting this level of insight at the right time is just not feasible: it requires a mind-numbing amount of time to cobble the employee, learning, engagement, performance, financial, and business data together. An alternative is a people analytics solution that allows for dynamic interaction with the data; you can create charts on-the-fly that reveal key trends.
Deliver the right employee retention results
People analytics is a way not just to see what happened, but to understand why it happened, what will happen next, and how to adapt one’s workforce strategy to align with company objectives.
The new approach to HR requires evidence to support a well-crafted employee retention programme – tied to a key business outcome – which is monitored and adapted constantly.
Before rushing to introduce a new set of variables into your complex workforce environment, stop and adopt a more scientific approach to the design and implementation of these programmes. This way you will get full support for what your business really needs: a retention programme that works.
By Ian Cook, VP of people solutions, Visier