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CEOs: Employee Retention Is Your Job

Philip Betbeze, for HealthLeaders Magazine, March 8, 2010
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"We had high turnover at one time and we had to change our work environment. HR doesn't do that by themselves. You make your organization a place where people want to work."

Prairie Lakes, about 100 miles up the Interstate from Sioux Falls, a much larger city, had an unacceptably high 22% annual turnover rate in 2002.

"We just compared ourselves to our peer group in South Dakota. Our turnover was 5.8% in 2008 versus 18% for our peer group," she says. "So that tells us that our good results are not just a result from the poor economy."

Fuller credits innovations in the work environment for the lion's share of the gains but admits the hospital tries to make sure salaries are within 3% of nearby Sioux Falls. For instance, Prairie Lakes is rolling out flexible work arrangements for managers as well as directors, to help retain good people.

"The ER manager approached me about this. She wanted to go flexible. We would restructure her full-time position and reduce her total hours."

Prairie Lakes' productivity management system, another innovation, showed she could do the job under reduced hours.

"Otherwise we probably would have lost her. We did a one-time reset on her pay." Now Prairie Lakes is doing the same arrangement for one other manager, and the flexible program is available for directors as well, after an individual assessment by superiors.

What about low performers?
Focusing on retention and reduction of turnover doesn't mean that low performers should be allowed to hang around, says Studer. Quite the contrary, in fact. But how can firing low performers help with turnover? It's a hard concept to integrate into an organization.

Studer relates a story about a hospital he worked with recently where about 260 people out of 6,000 weren't meeting performance targets over a long period of time. Of those, managers had documentation regarding low performance on just half of the employees.

"They said they were confused. How do you lower turnover and also get rid of people? It's a good point. So we have them identify the people and talk about how much time to give them to meet performance expectations or have them out. "

Until then, these underperformers don't count against turnover calculations for the managers. Using this philosophy, he says, an organization can come as close as possible to ensuring that the turnover they do experience is good turnover.

"CEOs own mortality and length of stay," Studer says, "and they have to own turnover."


Philip Betbeze is senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com.

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