Managing Talent Retention: An ROI Approach

Citation

Alagaraja, M. (2010), "Managing Talent Retention: An ROI Approach", Journal of European Industrial Training, Vol. 34 No. 3, pp. 289-292. https://doi.org/10.1108/03090591011031764

Book synopsis

The authors present a systemic approach towards managing turnover and retention. In doing so, they extend research and practice in furthering the adoption of Return on Investment (ROI) in organisations. A compelling rationale for adopting the ROI approach as the best approach for managing talent in organisations is presented. Chapters 1‐3 lay out issues and challenges facing talent management. Employee turnover, layoffs, economic recession and other environmental factors are discussed. Employee turnover and retention linkage is strongly emphasized; both internal and external drivers impacting these linkages are listed.

Chapters 4‐6 go in depth on the ROI approach for measuring and monitoring turnover and retention data. The authors highlight the oft forgotten need for scanning environmental and economic climate indicators and collecting national level turnover data, specific industry trends, as well as regional and local turnover data to get an accurate picture of the actual talent pool available to companies. Additional monitoring criteria can also provide important insights into assessing turnover data as well as highlighting exciting opportunities for future research. This is a useful section that helps in identifying sources of costs and examining systemic issues that lead to them. Supporting exhibits provide detailed measures to capture various HRD program costs. Several tools and methods are offered to identify the causes for employee exit from organisations. Questionnaire survey designs; interviews and focus groups; idea generation and other tools are presented.

Chapters 7‐10 discuss organisational solutions for talent acquisition, sustaining an appropriate work environment; providing a perfect introduction and a “how to” for companies desiring to focus on one or many of the work environment factors that support retention of top talent and enhance performance management. Other organisational solutions are developed based on selected employee needs as identified by the authors. Building employee commitment and measurement of these initiatives (e.g., Q12) is important in understanding the pulse of employees which in turn strengthens productivity, profitability, retention and customer satisfaction.

Chapters 11‐14 offer solutions for turnover and retention issues. The authors suggest prioritization of solutions based on maximum returns in a rather short chapter. Chapter 12 illustrates a method for developing a ROI forecast. The use of pilot programs is helpful for organisations who may want to proceed in a step by step manner evidenced from a case example. Chapter 13 measures ROI for a retention solution plan. Serious consideration of senior executive concerns, identifying different audiences (researchers, practitioners and senior executives) in order to gain support for implementing the ROI plan are stressed. An ROI process model is presented using the five levels of evaluation (Phillips, 1991) approach to assess measurement of retention solutions during different stages of implementation. These five levels: reaction, learning, application and implementation, business impact and ROI help to holistically assess the impact of retention programs. Converting data into monetary values and tabulating the costs are demonstrated in a case example. The ROI process model developed here has tremendous potential to meet the demands of different and often competing stakeholders.

Chapters 15‐17 offer case studies that enable readers to see application of the methods and tools presented in the book. These three chapters capture the utility, usefulness and support the methodologies described in the earlier sections of the book. For skilled, experienced scholars and practitioners, I would recommend that these chapters be reviewed first as they provide a comprehensive snapshot of ROI application for selected HR related interventions. In each case, turnover is the major driver that triggers the choice and selection of ROI approach for developing retention solutions.

Throughout the book the authors work hard in establishing the fact that it is possible to develop potentially outstanding ROI results within a reasonable amount of time. They highlight the importance of communicating ROI results and gaining the confidence of senior management to move forward. Softer issues such as handling reluctance from senior managers in accepting major issues such as turnover and retention are also presented thus providing valuable information for readers.

Evaluation

The organisation of chapters and content provides easy understanding for the reader. The book provides tools, techniques, approaches that are ready to use, and amenable to inexpensive trial and error for all types of organisations. The initial chapters (1‐3) make a compelling case for adopting an ROI approach and are a must read for any executive invested in improving organisational performance.

Chapter five – “Developing fully loaded costs of talent departure” is very important and forms the core of the book. Using turnover as an example, the authors' factor in related HR initiatives such as employee benefits, exit costs, replacement costs, new hire orientation and training costs to surface the significant contribution these programmes have on turnover. The first category of HR initiatives: exit costs includes “those costs connected with leaving the organisation” (p. 89); replacement costs are linked with overhead and administrative costs are involved with “replacing the individual and includes recruitment, selection, and employment” (p. 90). Therefore to assess the full loading of turnover costs, each of these categories needs to be identified and monitored. Each category is investigated in detail, and the costs presented in this chapter are world class in terms of the thoroughness with which they have been examined. I believe there are not many publications that comes as close as this chapter in providing a compendium of HR related costs.

The structure and organisation of Chapters 7‐10 are presented very well. Each chapter begins with an introduction of the topic followed by a table listing essential factors/components that together contribute to the overall chapter concept. Both needs and solutions are listed side by side with each component enabling the reader to quickly go through the contents and make appropriate choices that best add value to their situation. For scholars and practitioners this is an efficient tool for conducting rapid searches on topics of interest.

Case study examples are provided in Chapters 15‐17. A detailed description of a career development intervention implemented through a master's programme is provided in the first case. However it would have been a great support for readers if an equal if not greater emphasis had been placed on the process of problem identification, and the final selection of the solution. In Chapter 16, a “Lessons learned” section provides a more rounded perspective from different stakeholders on the effectiveness of the program. This section offers a realistic outlook that enhances programme improvement. The final case examines a new hire orientation pilot study designed to include individual and group coaching. The final results helped HR gain initial organisational support for the full implementation of the ROI approach.

Additional case studies would have been useful especially if they were organized within earlier sections/chapters of the book. For example chapter six discusses various methods and tools for diagnosing solutions to HR dilemmas such as talent departure. A useful case study that examines the pros and cons of using the methods, in the context of addressing HR initiatives would have provided an invaluable guide for readers.

Although chapter 10 discusses different elements of leadership development, and the topic of retention is discussed in depth throughout the book, retaining the “right” talent in companies is a critical aspect requiring attention today. Developing a ROI approach that also captures hidden costs of incivility at the workplace, dysfunctional management and supervision would make this already valuable book invaluable for any working professional!

In the authors' own words

This study is a good example of how to implement a pilot study in an organisation that may not yet be ready to take on a full ROI study. By conducting a smaller study and demonstrating to management how an ROI study may be useful, individuals may be able to garner greater support for conducting a full‐scale ROI study in the future. Had the organisation been in greater support of an ROI study, several elements would have been conducted differently. For example, the cause of turnover would have been more thoroughly investigated. While the programme was effective in reducing turnover, it is likely that there are other causes and perhaps better solutions that would have had a more significant and broader impact. Additionally, the effects of the programme could have been isolated by asking for participant's estimation of the impact, or better yet, running a control group that received the pre‐ and post assessment, but not the solution. In conclusion, this pilot study did positively demonstrate the impact of coaching on new‐hire retention, and the organisation was satisfied with the result (p. 378).

About the reviewer

Meera Alagaraja is a Doctoral Student in Human Resource Development at Texas A&M University. She is an active practitioner‐scholar with a successful research and consulting practice in human resources strategy and planning through to extended integration with operations and organisation development. Meera's research interests include training and development, employee engagement and impact of modern working practices on the HR function. She volunteers with the International Association for Human Values, delivering empowerment solutions for the local community, high school, university and other educational settings in the USA. Meera Alagaraja can be contacted at: meera@tamu.edu