Keeping employees is critical for the success of any organization. Retaining millennial employees, a group who has almost become synonymous with turnover, has become a hot topic for many of our customers and clients as our recent research shows that cost of turnover equates to about 60% of an employee’s yearly salary.
When talking with businesses about employee retention, performance management often comes up as an HR tool that sometimes helps, but often hurts millennial retention efforts. These conversations always remind me of a dinner I had a few years ago with a group of friends. During this dinner the topic of performance management came up, and the tone of the conversation quickly changed. I’ll never forget some of the quotes I heard:
“I have had the same performance rating every year, and I have no idea what I need to do to get to the next level – it’s like beating your head against a wall!”
“I haven’t had a performance conversation with my manager in years!”
“What are you guys even talking about…I just set the exact same goals every year.”
These quotes maybe shouldn’t have come as a surprise. Millennials want feedback 50% more often than other employees and they place greater emphasis on opportunities to learn and grow in their role than other generations. Moreover, an overwhelming 92% of respondents agreeing with the statement that “negative (redirecting) feedback, if delivered appropriately, is effective at improving performance.”
These quotes had my headspinning. These were some of the highest performers and highest potential young professionals I knew. They consistently outperformed their peers and took their responsibilities very seriously.
Fast forward to today and very few of those individuals are still with the same organization. As I reflect, I can’t help but notice a distinct correlation between the frustration they expressed during that conversation and the number of individuals who chose to leave.
So how does an organization effectively engage their employees (specifically millennials) to drive better retention?
Our research tells us that effective performance management is key. Willis Towers Watson’s 2016 Global Workforce Study found that supervision and clear goals and objectives are two of the top five drivers of sustainable engagement.
Organizations can make sure their performance management program is sustainably engaging their young professionals by following these 4 steps:
- Tie employee goals to organizational success Young professionals need to feel like their goals are explicitly linked to the success and the mission of the organization. Be sure to also provide guidance on how to set appropriate goals ()
- Differentiate performance and reward Be sure to differentiate between high, medium and low performers – your best employees need to know they are your best. Consider the rewards you provide for high performance and when you provide them. Are they motivating and relevant to young professionals? Learning and development opportunities are particularly enticing to this generation.
- Build manager capability. Do your managers actually know what high performance means? Has the criteria changed as the organization has evolved? Managers need to be able to identify high performers, and they need to be able to articulate what high performance looks like and how to achieve it in order to keep their teams motivated.
- Give managers time to focus on performance Open, consistent feedback will be a key to retention of this population, so encourage managers to have regular performance conversations throughout the year.
While this post is focused specifically on millennials, these tips can be used to enhance your performance management program to better retain all of your employees. Effective performance management can be used to help drive engagement for all employees, regardless of age.