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By Ghalib Ata, Associate Professor,
Institute of Management Sciences,
The University of Lahore
Jul 10 - 16, 2000

Broadly speaking retention comprises the activities of rewarding employees for performing their jobs effectively, ensuring harmonious working relations between employees and managers, and maintaining a safe, healthy work environment. By effective workforce we mean the employees who produce results, their existence in the organization is vital for the overall corporate goal attainment. Global changes have de-shaped the scenario by evolving in new concepts. Some corporate jargons in management are loosing their value and new ones are getting more attention, Table 1.1 elaborates.

A farewell to employee loyalty

Thousands of mergers and acquisitions have taken place over the last decade among both large and small companies of the world. In general, after a buyout, the merged company eliminates staff duplications and unprofitable divisions. Welcome-Glaxo is a typical case in Pakistan scenario. Restructuring including downsizing is more familiar in public sector banks and corporations of Pakistan have lead to pervasive feeling of insecurity among the workers and diminished loyalty from the employees. In the wave of takeovers, mergers, downsizing, and layoffs, thousands of workers have discovered that years of service means little to struggling management or a new corporate parent. This leads to rise in stress and a decrease in satisfaction commitment, intentions to stay, and perceptions of an organization's trustworthiness, honesty, and caring about its employees. US Companies lose half their employees every 4 years, half their customers every 5 years, and half their investors in less than 12 months. Furthermore, employee turnover is expensive. It costs as much as $75,000 in case of a middle manager and 3 to 5 times annual salary for a CEO. Soon managers will hold 7 to 10 jobs in a lifetime, up from 3 to 4 in the 1970s. Some 10 per cent American workforce switches occupations every year. Similar situation exists in Europe. Even in such conditions there are examples of companies like Monsanto, Xerox, United Technologies, Herman Miller, Lucent, Praxair, Quantum and Sears that recognize an opportunity to create value in the midst of such turmoil. Their methodology is simple that they can retain loyal customers only with a strong base of loyal employees. Increased employee loyalty means decreasing rates of change in customers, employees, and investors this in turn leads to substantial growth, profits, and lasting value. That is a win-win situation for all the stakeholders.

Corporate Reinvention

Organizational

Traditional Model Prototype

Twenty-first Century Characteristics

Organization

Hierarchy

Network

Structure

Self Sufficiency

Interdependencies

Worker Expectation

Security

Personal Growth

Workforce

Homogeneity

Culturally Diverse

Work

By Individuals

By Teams

Markets

Domestic

Global

Competitive Advantage

Cost

Time

Focus

Profits

Customers

Resources

Capital

Information

Governance

Board of Directors

Varied Constituents

Quality

Affordability

No Compromises

Leadership

Autocratic

Inspirational

Paradigm for retaining effective workforce

A detailed review of contemporary literature highlights two major paradigms for retaining effective workforce. The first is based on the concept of Job Sculpting, which at times seems to be the ultimate adoption of marketing oriented concept — customize the job (product) according to the want (life interest) of the employee (customer). Though there are companies who have adopted the concept but its complete adoption by most key players in the business is yet to be seen. The other is based on Japanese model of developing employee loyalty, to retain lifetime workforce intact.

a) Job Sculpting

Sculpting is the art of matching people to jobs that allow their deeply embedded life interests to be expressed. It is the art of forging a customized career path in order to increase the chance of retaining talented people.

Over the past several decades, countless studies have been conducted to discover what makes people happy at work. The research almost always focuses on three variables: ability values, and life interests. It seems that life interests are paramount, the other two also matter but to a lesser degree.

Ability — meaning the skills, experience and knowledge a person brings to the job. It can make an employee feel competent. Research has indicated the feeling of incompetence hinders creativity and productivity. Though competence can get a person hired, its effect is short lived.

In the context of career satisfaction, values refer to reward people seek. Some want money other want intellectual challenge, and still others desire prestige or a comfortable lifestyle. People with same abilities and life interests may pursue different interests based on their values. Take three people who excel at and love quantitative analysis. One might pursue as a professor of finance for the intellectual challenge. Another might straight go to Lahore Stock Exchange to reap the financial rewards. And a third might pursue whatever job track leads to the CEO's office — driven by a desire for power and influence.

Like ability values matter. In fact, people rarely take jobs that don't match their values. A person who hates to travel would not jump at an offer from a management-consulting firm. Someone who values financial security won't chase a career as an independent contractor. But people can be drawn into career paths because they have the ability and like the rewards, even though they are not interested in the work. After a short period of success, they become disenchanted, or lose interest and either quit or just work less productively. That's why life interests are the most important of the three variables of career satisfaction. You can be good at job, you may also like the rewards, but only life interests can keep most people happy and fulfilled over long term, and that is the key to retention.

Butler and Waldroop have defined eight deeply embedded life interests relevant in business and are known as Business Core Functions:

1) Application of Technology

2) Quantitative Analysis

3) Theory Development and Conceptual Thinking

4) Creative Production

5) Counselling and Mentoring

6) Managing People and Relationships

7) Enterprise Control

8) Influence through Language and Ideas

To decrease turnover rates you must first know the hearts and minds of employees and then undertake sculpting of their careers. The role of the HR manager is to find in employees, the business core function, which the employee performs with eagerness. The best way to undergo job sculpting is by bringing the process directly into the regular performance review. An effective performance review dedicates time to discussing past performance and plans for the future. In making job-sculpting part of those discussions it becomes systematic. The chances of someone's career "falling through the cracks are minimized. Once the core function is identified the next step is to change the nature of his job such that his deeply embedded core function becomes the major of area his work. The authors argue that this might be the most challenging work. More troubling could be the fact that the core function, which the employee is keen to perform, may not be available, and cannot be created. In such a case, the HR manager knows, he can't put all his eggs in one basket. It is advisable to start the search for someone who matches the core functions that go in line with organization's activities.

b) Japanese model

Literally speaking 10,000 Japanese workers die every year while on their job due to sudden heart attack. The cause of such heart seizures is attributed to the job related stress, the strong desire to excel in their work, and beat the past performance highs. Still the job loyalty reaches such extents that the average Japanese switches not more than 3 to 4 jobs in a career. Though the Japanese employee values are changing but still there are lessons to be learnt.

Japanese workers' pride in their work and loyalty to their company are reflected in their capacity to produce goods that are not only competitive in price but also reliable in quality. Some workers, especially younger workers in small plants, may be alienated from their company, but compared to Americans they are absent less, strike less, and are willing to work over time and refrain from using all their alloted vacation time without any immediate monetary benefit. Japanese companies establishing plants in America have achieved with few years of modified Japanese-style management a level of employee devotion on the average higher than in comparable American plants.

Following are the key components of Japanese-style for retaining effective workforce.

1) Traditional culture the basis for corporate culture

Japanese culture emphasizes on respect for elders. All villages have their elders, to whom the younger must turn to for guidance. The same respect is carried to the workplace. Respect for the experience of an aged employee is reflected in the salary he draws. Longer you serve the company, bigger the paycheck, unlike the American counterparts, where competency based pay-structure have rooted in. Continuous improvement in productivity also arises from the same traditional value. The peer pressure compels employees to perform better. The criterion to earn respect from co-workers is by earning it first from the peers through sheer hard work.

2) The family approach - preference to pay-cuts rather than layoffs

All employees of the organization are members of the same family consequently, the members of family are not laid off, nor are they downsized. This precisely is the reason why Japanese companies prefer to cut the salaries rather than laying-off the employees. Organization-wide salary-cut is seen as a collective sacrifice of all family members in the wake of difficult times.

3) Focus on long run profits

Most Japanese organizations show little or no attention towards short-term profits. They aim for long term competitive edge, which could ensure profits over a continuous period. They develop long-term relationship with their employees, in order to develop their skill base.

4) Job security

Because an employee knows his salary will rise with seniority, he is willing to accept moderately low wages during the first few years in the company. Also, since retirement age is normally in the late fifties, salary increments can fairly rapidly without a company's worrying about having very high-paid elderly employees for many years. This increases job security to very meaningful heights, and therefore improving the retention record of these companies.

5) The wholesomeness of the company philosophy

The major philosophy around which the Japanese company builds its employee loyalty is that working for the company means working for the country. Any improvement, which workers make can be translated directly to economic growth. If you wanted to work for the social welfare of the community the organization will see to it that some community work is granted to you. If you intend to be a good sportsman besides being the employee of the company, facilities will be provided to you for the same, even national sportsmen will be hired to provide coaching to employees for their respective sports. This again reduces the reasons why an employee may want to quit his job.

It seems there is an important similarity between the American concept of job sculpting and the Japanese Model. Japanese model emphasizes on providing the employees with more opportunities to fulfil their other desires, through the wholesomeness of their organizational culture. Similarly the deep embedded life interests hold the key for the retention of employees in American companies. How long can an employee work for an organization depends upon the ability of the organization to provide opportunities to the employee to fully pursue his embedded life interests. Japanese organizations already provide enough opportunities to its employees for the fulfilment of their other objectives in life.

The head of Mazda Motor Corporation captured the essence of retaining effective workforce when he said, "The most important element in management is the human being, whatever his or her job happens to be". Another executive went a step further, saying: "The corporation that is not in the business of human development may not be in any business. At least not for long". Technologies can be copied and moved rapidly. We can't win unless the asset of our people (employees) is fully capitalized. Companies have been investing in new machinery, it is time to start investment in the people — those who build, create, invent and reinvent machinery.

Some lessons need to be learnt from these approaches to retain effective workforce in Pakistani work environment. The ability and skill enhancement should be the mutual responsibility of the employer and employee. Using the redundancy of skills as an excuse for layoffs does not serve the desired cost-cutting goal. Similarly, rather than accusing the workforce for negative work ethics and values, let us evaluate our managing capabilities to generate positive work attitudes among the workforce. A number of case studies can be quoted where young, qualified, enthusiastic, and loyal workers were lost because of managerial negligence and professional jealousies. Therefore, we need to redefine our corporate culture where the employee needs to be focal points for all future expansions and growth of our business enterprises. Business growth and profitability must be linked with its human resource rather than machines and technologies.