Posts filed under ‘Employee Retention’
Exit interviews are rarely an enjoyable experience – for the company, or for the employee. Now, from time-to-time “high fives” are given when sub-par, poorly producing employees resign. Or employees skip out to their car and begin gleefully singing and offering up a rapid fire of fist pumps in the air excited about moving on to a new employer. But I believe that in many cases, when someone resigns, a good, quality relationship is broken and the exit interview can be difficult. That said, resignations and layoffs are a part of life, and companies and employees live another day and continue to prosper no matter how awkward that moment in the exit interview may be. So often I hear about how exit interviews are a complete waste of time, and that they are more of a “that’s the way we’ve always done it” process and mentality, and really just a necessary evil. But WHAT IF those employees who were leaving were REALLY honest, and that leaders conducting the interview truly ENCOURAGED honesty during the interview. A true dose of honesty could make a great impact on many organizations, big and small, but a high level of commitment to the evaluation of results of exit interviews must be made. Many organizational leaders are already stretched thin as it is, I get it, and putting in the time to undertake such a task likely presents great challenges and can easily be put on the back burner as other priorities take precedence…but what if?
If honesty is encouraged where as those leaving your company would actually feel comfortable sharing their thoughts, consulting firms and organizations who employ civil engineers could truly continue to evolve and better themselves. Certainly there will be those employee experiences and comments that will be considered outliers, but if you are hearing a steady dose of what really works and what they really enjoyed, and continue to enhance that culture or those programs or those projects, you will continue to retain your top talent. Typically employees are much more inclined to share the positive than the negatives , as they do not want to burn any bridges or hurt any feelings. But by having an honest conversation with those exiting the building for the last time where they feel comfortable ALSO sharing the negatives can be of great value to an organization.
- **Maybe a manage or director who is great and widely liked by clients shows a completely different persona to his employees, which leads to resentment or diminished morale.
- **Maybe some of the systems that you have in place are antiquated and prohibiting you from keeping up or passing by the competition.
- **Or maybe a branch or satellite office is not getting the attention from corporate leadership that it so desires, and as a result the staff working there feel like the ugly duckling.
There is a saying that I have heard a couple of times recently that states, “you don’t know what you don’t know.” Try looking at exit interviews not merely as a formality when turnover occurs, but try REALLY using them as a learning tool and a way to provide future value to your organization.
This was the third entry in our HONESTY series. The first two entries in this series are as follows:
President :: Precision Executive Search, Inc.
Managing Partner :: CivilEngineeringCentral.com
Privately held civil engineering firms can attract staff by offering the benefit of ownership through Employee Stock Ownership Plans (ESOPs). Privately held firms give stock to motivate and reward employees. Companies also offer staff the chance to purchase company stock. Work hard and own a piece of the company, which translates to employees sharing in the success!
Today as firms build succession plans and transition leadership, implementation of ESOPs are increasing. Steve Gido, Principal at Rusk O’Brien Gido + Partners, says the incorporation of ESOPs into a company’s benefits plan changes upon the current financial conditions and also leadership preference. “The popularity of ESOPs waxes and wanes with economic cycles and tax laws. We have found that some leaders love them and others don’t.”
Company leaders aren’t the only ones with mixed feelings about ESOPS. In the wake of the Enron scandal in 2001, employees are hesitant to invest too much of their retirement savings in company stock. This viewpoint is understandable. If the company stock takes a beating, then so does the employee’s retirement savings. But, are there other factors contributing to employees rejecting potentially valuable company stock?
Employee loyalty is a powerful concept within any company. A loyal employee is committed to the success of the firm. This includes propelling the company ahead of the competition by doing great work, helping to recruiting top talent and championing the firm’s mission.
With mergers and acquisitions on the rise within the ENR Top 500 firms, layoffs are also on the rise. Subsequently, employee loyalty is on the decline. Industry consolidation often brings cuts of redundant staff and services. Loyal employees end up without a job and the staff who are retained tend to be less engaged. What happened to a firm’s loyalty to its staff?
If an employee was fortunate to own stock, then the individual could receive a good payout from the stock’s value. If an employee does not own stock, then that person may simply be out of a job with little to no financial compensation for their previous service.
LENGTH OF SERVICE
As a civil engineering recruiter who advises engineers on job offers, I stress the value of working for a firm with ownership potential. Most tell me if they are going to put money aside, they would rather invest in a company retirement plan, aka 401(k), rather than company stock. Many junior to mid-level civil engineers tell me that it is unimaginable to them that their length of employment at any firm would be more than five years. They are convinced that in a large A/E firm, they are just one of many engineers. Similarly, engineers employed by small to mid-size firms believe they are at the mercy of the efforts of more senior engineers and the marketing staff. Engineers ask, “Why would I care if a firm offers stock ownership when I probably won’t be there five or more years?”
LACK OF PLANNING
Another reason many employees don’t take advantage or see the value of ESOPs is because they live paycheck to paycheck. I can sympathize with this viewpoint. I also bypassed saving for retirement early in my career. As a young recruiter, I was afraid to contribute to my retirement as that money may be needed for immediate, short-term needs. Planning for retirement for wasn’t important since retirement was MANY years away. I had plenty of time to save for retirement. Although I now put money aside, retirement age approached much faster than I expected.
ESOPs are an important component to retirement planning and one civil engineers should embrace when presented. Various studies have demonstrated plan benefits of participation. Companies that utilize ESOPs grow approximately 10 percent faster than companies that do have employee ownership. Subsequently, ESOP participants receive salaries that are up to 12 percent higher and have retirement packages valued as much as three times higher compared to those similar companies that do not offer ESOPs. Since diversification is also important, approximately 60 percent of ESOP firms offer at least one additional retirement plan option.
So while detractors present strong points as to why they do or will not participate, ESOPs provide demonstrated results for better company performance, which in turn leads to higher wages and increased retirement savings.
Carol Metzner President, The MetznerGroup Managing Partner, CivilEngineeringCentral.com View Carol’s profile & connect with her on LinkedIn civil engineering jobs :: civil engineering resumes :: civil engineering blog :: civil engineering discussion
As a search consultant I have the opportunity to speak with dozens of civil engineering professionals across the country on a daily basis. I speak with key executives in the C-Suite, Project Engineers, and to every level of civil engineering professional in between. After learning about their skill set and their contribution to their organization and to our nation’s infrastructure I always ask the following question:
“What would be a motivating factor that would prompt you to explore a new opportunity?”
Most of the time I get responses that include phrases like:
⇒“Larger, more challenging projects”
⇒“Smaller company” / “Larger company”
But every so often I will connect with a candidate who is working for a firm where the existing leadership has the ol’ “if it ain’t broke don’t fix it mentality.”
Over the past few months I have run into a number of firms who just cannot get out of their own way as a result of their “we’ve always done it this way” point of view.
⇒I recently heard of a firm that was poised for growth and had determined that they had to make some changes by creating a couple of new positions that would really help take them to the next level. One of these positions was Chief Operating Officer. The Board of Directors developed a detailed job description that outlined a plan moving forward and the positive impact that the addition of a COO would make. At the end of the day they decided to put the role on the back-burner for no other reason than the company ownership, all of whom have been with the company for 35+ years, felt that what they were doing has worked for the past twenty five years and there was no sense changing things up. The younger generation of engineers and future leaders of this organization are unsettled by all of this and will likely be future leaders somewhere else.
⇒Another firm that has a strong tradition of excellence within the Mid-Atlantic region is unwilling to budge on their vacation policy. Not one single person they say, from the CEO on down, receives more than three weeks of vacation. It is non-negotiable. I am all about hard work, trust me, I am typing this on a Saturday. But to remain competitive in the marketplace you need to be able to do better than three weeks vacation, especially for senior level professionals who have certainly earned four weeks anyway. This is another example of an existing ownership with an “old school” mentality that is not able to see the forest through the trees, in my opinion.
⇒These are just a few examples; there are plenty of companies out there who lag behind in technology, training, and who preach a culture and a philosophy of innovation but whose actions show otherwise.
On the other hand, I have had some first hand experience working with clients who understand the importance of change, organizational evolution, and constant re-evaluation.
⇒I recently worked with a client who saw an enormous amount of opportunity in the marketplace, but just could not break free from their 30 employee shell. The CEO of the company reached out to me and shared with me his vision to become an ENR Top 500 firm, and he was ready to invest in the right people to make that happen. He was acting as CEO, COO, Director of Business Development and Director of Engineering, and as you can imagine, could barely see one step ahead of himself. We successfully conducted a search for him and he now has in place a Director of Engineering and an Executive Vice President who has actively taken on the operations element of the firm and is contributing to business development and strategy. As a result of investing in these two key hires they are looking to double in size in the next 18 months.
⇒Another client has been in business for nearly 40 years and is in its second generation of ownership, currently working towards the third generation. The company ownership is split between five or six shareholders, but they have limited the length of time that shareholders can be shareholders. This allows for the semi-regular turnover of ownership which leads to the replenishment of fresh and innovative ideas.
⇒Another firm not only encourages its employees to think “outside-the-box,” but they actually allow for those ideas to be implemented. As traditional and conservative as civil engineers traditionally are, the willingness to try something new may seem a little risky, but their clients REALLY enjoy their willingness to present innovative approaches and concepts to many age old problems. This type of mentality and philosophy is attractive to many people and as a result helps them bring top talent in the door, and it excites the clients and keeps them coming back for more.
Change can often be scary, but it is necessary. History shows that those firms who are satisfied with the status quo, and who drown themselves in “we’ve always done it this way” mentality will eventually be left in the dust.
May you not be left in the dust!
Salary compression has several definitions. It can be described as a pay inequity when new employees receive salaries higher than those salaries being paid to the current employees in similar jobs. Whether at an Executive Vice President level or Project Manager role, it can be demotivating to an existing employee. As we all know, salaries are supposed to be confidential, but most people know what their colleagues take home. One candidate who has been with his current firm for 20 years, told me he was rewarded for his loyalty with a much lower salary than a newly hired colleague. “I have warded off recruiter calls, direct invites from competitors at business meetings only to find out that new staff are receiving $10K more a year AND a signing bonus? I refuse to resort to threatening to leave to have the company equalize my pay.”
Pay inequity happens more than employers would like to admit and it is a difficult task to control. Engineering salaries continue to increase specifically for executives and those practice builders who can increase sales. New hires can only be recruited by offering them as much or more than existing senior professionals. Career employees with 20, 30 or more years of dedicated service often suffer the most under salary compression. Are they being penalized monetarily for their loyalty?
This is a nightmare topic for human resources executives. Many experts have written on this topic and even more human resources leaders have urged their CEO’s to address this issue. Here are some confidential comments from HR Execs on this topic:
“This phenomena is not unique to our industry. In my 30 + years across several industries, this is a very common dynamic across all professions and in all industries. My message to managers is to never try to go cheap when hiring someone because it will catch up to you quickly and you will not likely have the salary budget later to correct inequities.
We see it as a particular issue in our employees with shorter tenure as recent grads quickly are making more than those who graduated just a couple of years earlier. We programmatically review salaries of our young professionals each year to address compression issues.
All can see how free agency works in sports. Testing the market and going to the highest bidder is not difficult. The same applies to smart and capable professionals. The answer is to deal with the whole employment equation – provide competitive salaries, interesting and challenging work, in a good environment and you will be able to retain talent.”
“This is an ongoing issue, particularly within the oil & gas and mining sectors. We addressed this issue in a few ways; for long term key employees we instituted a deferred compensation program where they would vest over a three year period. Providing eligibility for stock grants was also put in place however this became an issue as well when hiring from other firms who had robust plans in place and expected to be compensated for what he/she may be leaving on the table. This is an ongoing challenge. The other reality is maintaining margins when increasing rates what is the appetite of the client? The other area where this occurs frequently is through the integration of acquisitions where there is potentially great inequity amongst the same roles and levels. “
“Unfortunately we see this all the time. Unless you are in the very top ranks, employees are needing move to a new company every 3-5 years to ensure their salary keeps pace with the cost of living. Staying at their current employer may offer a 2-3% merit increase or none at all. Taking the call from a recruiter and making the move to another firm, often results in a 10% or more increase. And in the current market, for highly sought after talent, the increase for engineering talent is warranted. Unfortunately, the loss to the company is far greater than paying a more substantial increase to keep top talent, cost to recruit, onboard, client relations, just to name a few.”
Have you experienced this yourself as an employee or manager? If so, how did you handle it?
As I was perusing the different headlines at CNN.com the other today a headline grabbed my attention:
And as I leaned back in my chair for a moment reading this piece, I began to wonder, “is it time for civil engineering firms to adjust the notches on their belt and loosen up a little?”
Take a look at what the commentary’s author, Paul La Monica noted:
“Bob Baur, chief global economist for Principal Global Investors in Des Moines, Iowa, noted that U.S. workers may be reaching the point where they are stretched too thin…at some point, U.S. corporations need to recognize that they can’t keep trying to do more with less…”
The idea of “doing more with less” is nothing new, but if I had a dime for each time I heard this phrase as a result of the recession I could retire…today! The concept is not a bad idea, but at some point you have to draw the line. Seriously. Remember the days when your Land Development or Highway group was made up of a Vice President who was mainly responsible for business development; a Department Head who assisted with business development but also managed the Project Managers and kept their finger on the pulse of all the projects and clients; Project Managers managing projects making sure they got out the door within schedule and within budget; a Project Engineer; a designer and a cad tech? As civil engineering consulting firms have been fighting to stay afloat many of them have slimmed down their business structures where a department now may be made up of a “Seller-Doer” and Project Engineer where the “Seller-Doer” is a Vice President/Department Manager/Project Manager all rolled up into one, and the Project Engineer is the Project Engineer/Designer/Cad Tech all rolled up into one. So now you have two professionals scrambling to handle the responsibilities of what was previously in the laps of six. They are doing more with less. But it may be time to loosen up the purse strings a little and invest in some new help.
We recently completed a search for a client of ours, a local consulting engineering firm, who was looking for a Project Manager for their Land Development group. The local market was improving and development was beginning to pick up. The President was still struggling with some of the uncertainty in the air and quite frankly, found it difficult to be optimistic after being in the dumps for so long. But he listened to his employees. They were becoming overwhelmed with hours, they were stretched thin, and stress was beginning to set in. The “doing more with less” mentality was beginning to take its toll, but he recognized that and made the decision to bring on another Project Manager…a decision that was welcomed by his staff, in turn easing the burden on them, resulting in a happier group of campers.
So you adjusted to the economy and have implemented the “do-more-with-less” philosophy, but as the economy begins to improve, is that same philosophy beginning to take its toll? Is it now time to re-adjust your philosophy?
If you are a business owner or executive and can relate, or an employee who has been in the trenches with this philosophy in place, please let us know and share your experience with our audience on this topic.