A consulting firm is only as good as its people. And as the economy continues to improve, and job opportunities emerge inside and outside the profession, voluntary attrition will become a paramount concern. To help firm leaders deal with this challenge, Consulting's One-on-One sat down with Dick Finnegan, president of Finnegan Mackenzie, a leading adviser on staff retention issues to professional service firms. In this edition, we focus on the common misconceptions firm leaders have regarding voluntary attrition. In the next edition we'll focus on specific action steps firm leaders should take.
Consulting: At this point in the economic recovery, what misconceptions about staff retention are common in the minds of consulting firm leaders?
Finnegan: There's this broad brush thinking that during a recession no one leaves, but we know that's not true. According to the U.S. Bureau of Labor Statistics, there was only an 11 percent drop in the number of people who left their jobs voluntarily between 2007, when the market was on fire, and 2009, when the bottom fell out. So, it's important to realize that you're always at risk of losing your top talent—and there's almost as good a chance of losing good people in good years as in bad years. Good workers can find good jobs in any economy.
Consulting: But given the improving economy, voluntary attrition is a bigger issue now than it was six months ago, right?
Finnegan: Yes, but not necessarily for the reasons you assume. Of course, as the economy gets stronger, there will be more opportunities at other firms and in industry. But there's a bigger factor at play: the aftereffect of last year's layoffs. A University of Wisconsin professor tracked 1,000 companies that had applied to Fortune magazine's Best Places to Work rankings. He found that for every 1 percent of staff that is laid off, voluntary attrition increases 31% over historical levels in the following 12 months. In other words, if voluntary attrition had usually been about 10 percent, in the year following a 1 percent layoff voluntary attrition would be expected to jump to 13.1 percent. If the first round of involuntary staff cuts is fat, the voluntary attrition loses muscle.
Consulting: The unemployment rate is so high, are there really enough new jobs to accommodate all of those wanting to leave their current firm?
Finnegan: There's another misconception. While the overall rate is about 10 percent, the unemployment rate for those with a college degree is only 5.1 percent. And the unemployment rate for those with strong, proven skill sets is even lower. The truth is that most consultants that are unhappy with where they are aren't stuck. You can find a job; it just may not be the one you want. And in some industries, like healthcare, you can find jobs anytime you want. I think firm leaders are missing the boat if they believe that in this economy their best people are locked in.
Consulting: Are there any other common misconceptions?
Finnegan: We've found that there isn't as much of a connection between employee engagement and employee loyalty as you'd think. We recently conducted a survey with ExecuNet that found that those employees that are highly engaged are still highly at risk to leave. Of the overall sample, 70 percent said they were highly engaged, but 90 percent said they'd take a call from a headhunter. And an even higher percentage said they'd leave for a better offer.
Consulting: While specifics vary from firm to firm, and employee to employee, what big picture things should firm leaders start doing immediately to retain their top talent?
Finnegan: The most important thing they should do is not taking their performers for granted. One of the best ways of doing this is to physically sit down, one-on-one, with your top performers and conduct stay interviews. The supervisor/manager should begin the conversation by saying 'We want you to stay, what would it take to keep you? What things are you learning and what do you want to learn? What can we offer to make you feel more comfortable in staying with us long-term?'
Consulting: What's the biggest obstacle to these 'stay interviews'?
Finnegan: We've found that people fear the answers. What I hear over and over is 'They are just going to want more money.' My answer is that there should be compensation plans in place anyway. If someone wants to earn more money, it should be easy to point to higher goals they need to achieve. By fearing the money conversation, you miss out on the other things that are leading staff to think they need to look for another employer to: get more input into decision-making, more time with family, the ability to own or manage bigger project, etc. It's just about having a dialogue about what turns people on and deciding what's within my reach to help them want to stay.
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