Don't Just Observe Customer Pain Points; EXPERIENCE Them!

When I joined Staples as a young MBA graduate, I spent part of my first week working in one of the retail locations.  I worked in the checkout lane, unloaded shipments, stocked shelves, and answered customer questions.  Tom Stemberg, Staples' founder and CEO, believed that we had to walk in the shoes of our store associates and interact directly with customers to understand the business. He was right.  I was reminded of that experience when I read a recent Fast Company story by Christine de Wendel, CEO of sunday, a company that provides a payment platform to restaurants.  De Wendel insists that every employee must work a restaurant shift during the onboarding process. She explains why: 

Using our industry as an example, the restaurant space can’t be disrupted from a distance. It’s intensely human. A server manages six tables, remembers who wanted dressing on the side, tracks which kitchen orders are running late, and still needs to radiate warmth when checking on the anniversary couple at table twelve. When we ask them to adopt new technology, we’re not just changing their workflow, we’re asking them to trust us with their tips, their table turn times, and their relationship with guests.  You can’t design for that kind of stakes without understanding them viscerally.

De Wendel argues that there is a critical distinction between OBSERVING customer pain points and EXPERIENCING them yourself.  It is not sufficient to just interview users or watch them in action.  You have to live their experience, filled with its obstacles, emotions, and frustrations.  

Perhaps the most interesting point that De Wendel makes in her article is a statistic about employee turnover.  She explains, 

"Here’s what surprised me most: this policy has become one of our best retention and recruiting tools.  We’ve had a 94% retention rate among employees who complete the restaurant shift program, compared to 78% at my previous tech companies. Employees consistently rank it as one of their most valuable onboarding experiences." 

Rethinking the Exit Interview

We all know that employee turnover can be extremely costly for organizations.  Yet, we also recognize that many firms struggle with employee retention.  Managers sometimes cannot determine why people are leaving. They try to use exit interviews to learn about the conditions creating turnover, but they fail to arrive at concrete conclusions.  Often, departing employees hold back in those exit interviews, rather than disclosing completely the reasons for their move to a different company. 

Writing in Harvard Business Review, Ethan Bernstein, Michael B. Horn, and Bob Moesta explain a different approach to learning about what drives people to switch jobs.  They write,

As we noted earlier, exit interviews can be a bit of a joke. People usually assume it’s too late to address why they are leaving—so they say safe things and move on.  We’ve found that it’s more productive to interview employees about their previous roles soon after they’ve started something new. That’s essentially what we did in our research. By closely examining the pushes and pulls that compelled each person’s most recent job move, you can better understand what might motivate your employees to make another change soon—and, conversely, what might make them choose to stick around. You can frame these talks with employees as your way of identifying important features of their experience so that with their input you can create a workplace that they’ll want to “rehire” each day.

This strategy makes a good deal of sense to me.  These conversations can be useful in two key ways.  First, managers can get to know their new employees - what motivates and drives them, what they care deeply about, and what they love (and don't love) about their work.  Second, managers can begin to detect themes across their employee population.  What type of people are attracted to the organization?  Why are people self-selecting this company?  What, if anything, made them hesitant about taking a new job here?  The answers to these questions can shape a company's recruitment and retention strategies.  Finally, I would argue that the answers to some of these questions may emerge during the interview process.  Yet, managers are often focused on selecting the best candidate, rather than thinking about the interview process as an opportunity to learn about what motivates people to switch jobs.  Mining the interviews for this additional information could be very useful. 

The Value of Companies with Many Occupational Options for Employees

Is it valuable for an employee to seek out employers that will offer the possibility of a variety of roles that they may fill over a period of years?  New research by Professors Inês Black and Ana Figueiredo suggests that role variety boosts wages, employee retention, and job satisfaction.  Duke Fuqua Insights recently summarized their research:

• workers starting their career at firms with more occupational variety switch occupations internally more often within the first 10 years;
• as a result, workers starting their career at firms that offer more job titles tend to have higher wages in 10 years;
• independently of firm size, the more occupations a firm offers, the more likely it is to retain their employees.

Professor Black goes on to comment on the impact that role variety can have on retention: "For every one more occupation that I offer to my workers, I'm 10% more likely to retain them 10 years from now," she explained.  

Employee Retention: The First 90 Days

Source: Small Biz Daily

Chip Cutter of the Wall Street Journal reports today on the work being conducted at several firms to reduce new employee turnover, particularly among hourly workers.  Cutter writes:

Hold on to an employee for three months, executives and human-resources specialists say, and that person is more likely to remain employed longer-term, which they define as anywhere from a year on in today’s high-turnover environment. That has led manufacturing companies, restaurants, hotel operators and others to roll out special bonuses, stepped-up training and new programs to prevent new hires from quitting in their first three months on the job.

Cutter reports that many firms have retooled their onboarding, training, and feedback processes to focus on reducing "quick quits" - i.e., employee departures during those first ninety days.  Employers have come to understand that it takes roughly three months for new employees to build a comfortable, steady work routine.  Employers are working hard to set clear expectations, as well as to establish short-term goals for each employee.   Then, they are keeping in close touch with those employees to measure progress, listen to concerns, and provide feedback.   Firms are also providing their front-line supervisors with critical tips for how to help smooth that transition for new employees, often based on extensive research on employee retention at the companies.  The payoff is clear for these firms: employee turnover is extremely costly, particularly in this era of worker shortages.  

Of course, I'm quite sure firms need to tread carefully with these efforts.  Sometimes, a new employee is simply not a good fit.   Trying desperately to hold onto that person might, in fact, be a case of the sunk cost effect (throwing good money and effort after bad).  Determining how to let certain people walk away because they aren't likely to be engaged, satisfied, and productive team members is a key capability that firms must develop as well.  

High Status Firms: Hiring Advantage but Retention Challenge

Scholars Matthew Bidwell, Ethan Mollick, Roxana Barbulescu, and Shinjae Won have written a new paper titled, “I Used to Work at Goldman Sachs! How Firms Benefit From Organizational Status in the Market for Human Capital.” The scholars discover, unsurprisingly, that high status firms have a powerful hiring advantage. Knowledge@Wharton summarizes the key finding: 

If a firm is high status, it possesses a hiring advantage (“preferential labor market access” in the paper’s language), but the advantage is not what one might think. It isn’t better pay or more interesting or challenging work: It’s the belief that having worked for such an employer can help you get a better job later on.  “You essentially can pay people in reputation,” says Mollick. “They will take less salary early on because the reputation will result in a higher salary later.” 

How substantial was the impact of status in the employment choices made by MBA graduates in the study? According to the authors, the impact was especially critical in investment banking (shocker!), "where respondents’ odds of accepting a job offer nearly doubled with a one-unit increase in their perception of the firm’s reputation."

Interestingly, though, the hiring advantage that high-status firms possess turns into a retention disadvantage later on in people's careers.   These workers may value status over pay when they are looking for a job right out of school, but eventually, they want firms to show them the money!   The scholars found that, "Workers’ pay rises faster with seniority in high-status firms than lower-status firms."    What's going on?  Now these workers have the high-status firm on their resume.  They view themselves as highly attractive candidates on the job market.  Indeed, they probably do have many outside opportunities that are quite lucrative. Thus, they demand high wages if the firm wishes to retain them.  Of course, many of these high-status firms that recruit at top business schools understand that retention will be difficult.  They don't even mind as people leave in many cases.  They cultivate their alumni network, much as a university would.  Why?  After all, these former employees who leave a banking or consulting firm become potential clients for the firm when they move to a different company.  

Employee Loyalty at Marriott

Fortune has an in-depth look at Marriott's culture this week in its "best places to work" issue.  The magazine notes that Marriott's leadership, culture, and talent management practices have enabled it to achieve low employee turnover.  According to the article, "The average tenure for a hotel general manager at Marriott is 25 years; industrywide it’s much lower. Some 10,600 people have been there more than 20 years."  

What's the secret?  Well, it's not one thing, as you can imagine.  It's an entire system of activities that creates the type of environment in which people want to stay.  I thought one practice was particularly worth noting.  It's described here:

The second is an on-the-ground network of business councils—76 local and regional teams of general managers worldwide who meet regularly to compare notes and serve as a conduit to Bethesda, where they report to Debbie Marriott Harrison, global officer for culture and business councils (and Bill Marriott’s daughter). The councils “are one of the best tools I have,” she says.

I found this network quite interesting, because it creates the opportunity for information sharing and best practice transfer across the organization.  Moreover, it enables important information to flow to the corporate office.  It gives people voice and enables senior management to keep the finger on the pulse of the organization.  Of course, the key to making these types of councils successful is what senior management does with what they hear from the field.  I assume that Marriott demonstrates how they are truly listening to this input, and they act on the information and suggestions provided to top management.  People want a voice, but they also want to be sure that they are actually being heard. 

Unconventional Ways to Retain Talented Workers

Chris Ostoich has written an interesting article for Fast Company regarding how to retain talented employees using some rather unconventional approaches.  Ostoich is the founder of a software company named BlackbookHR.   I especially liked this point excerpted below:

Keep An Inventory Of Employees’ Skills And Interests

You may know what your employee Andy does in his job—he’s a front-end web developer and designer—but do you know he’s also a self-taught guitarist, a video editor, a painter, and has a variety of other talents? All employees have skills and interests they don’t use in their day-to-day work. If you can tap into those outside talents, you can benefit your company and better engage your employees. Make a place on your company’s intranet, in a Google doc, or anywhere people can share or search for skills. Look for opportunities to tap into this knowledge network whenever possible.

Onboarding Employees the Whirlpool Way: "Real Whirled"

Companies are experimenting with many new ways to onboard young employees.   Whirlpool has one of the more novel systems.   They have run a program called "Real Whirled" for 15 years.  A group of new young employees live together for 10 weeks in a two-story condo in Michigan.  According to this article in Fast Company, "For those 10 weeks you're spending most of your waking hours using their products in the kitchen and laundry room and comparing them with competitors, hosting dinners for executives, going to product testing labs—essentially becoming one with the appliances you will eventually sell on the sales floor."  Nearly 400 people have gone through this program at Whirlpool.   Not everyone thrives in this environment.  However, Fast Company reports that, "Since 2009, Whirlpool has retained 80% of everyone who has participated. There is also an extensive alumni network, filled with people in all parts of the company..."  

The Stay Interview: Retaining Top Talent

The Wall Street Journal has a great how-to guide regarding employee retention.  I especially liked the tactic of a "stay interview."  Here's a description:

– Conduct “stay” interviews. In addition to performing exit interviews to learn why employees are leaving, consider asking longer-tenured employees why they stay. Ask questions such as: Why did you come to work here? Why have you stayed? What would make you leave? And what are your nonnegotiable issues? What about your managers? What would you change or improve? Then use that information to strengthen your employee-retention st

How PWC Engages Millennials

Bob Moritz, the U.S. Chairman of PWC, has written an article for Harvard Business Review regarding his firm's efforts to attract, engage, and retain millennials.  Moritz and his firm collaborated with researchers from USC and LBS to understand key generational differences.  From that work, PWC began to develop initiatives to foster higher levels of engagement and retention among millennials.  They have tracked the effectiveness of various efforts.  Moritz cites four major areas of emphasis:

1. Give them voice. Millennials want to have input regarding the future direction of the organization.  Therefore, PWC gave them voice in several powerful ways.  They asked millennials to offer ideas regarding the most effective methods for talent development in the firm.  In addition, they asked people for suggestions regarding the next $100 million opportunity for PWC.  More than 70% of the employees offered suggestions.  
2. Provide flexible career paths.   Millennials do not want to stay in the same role for a lengthy period of time.  They want to shift positions and roles, try new things, and embrace different opportunities.  Moreover, they want greater flexibility in their careers.  PWC has created several programs that enable talented employees to take time off or to work part-time for the firm while pursuing other opportunities (such as graduate school). 
3. Recognize them often and in multiple ways.  Millennials want to be recognized, and that does not mean only monetary awards.  PWC implemented more frequent recognition, and they began to offer a host of non-monetary rewards.   For instance, PWC created a sabbatical program as a reward for millennials who perform well and stay at the firm for a certain period of time.
4. Give them a chance to give back.  Millennials want to make a broader impact, and they want to work for a firm that has that same aspiration.  PWC found that employees who participate in a corporate responsibility initiative tend to stay at the firm for a longer period of time.  For example, participants in one program to enhance students' financial literacy tended to exhibit much less turnover than those who did not participate (only 8% of participants had left PWC a year later, while 16% of non-participants had left the firm).