Thrive, Survive or Suffer the Consequences (Part 2)
(At the 8th Annual Shared Services Week in Sitges, near Barcelona, Spain, COLT Telecommunications’ Director of Shared Services, Kirk Wilkenson, hosted a seminar on "Creating a robust staffing strategy in a competitive climate". One month on, Kirk presents a report on the seminar, comprising an indispensable two-part guide to attracting and retaining the talent you need to keep your SSO flourishing. To read the first part of this article, click here.)
Part 2: Talent Retention
One truth about shared services is: if you’re in a good location for a shared service center, if you don’t already have a lot of competition for talent, you soon will. You will find the talent you have recruited, trained and developed will be targeted by new SSCs starting operations in your location. In fact, if you’re not careful you can become the local shared service center university; you’ll find that you’re bringing people in and getting them up to speed, and then they’re being hired away by other employers entering the market. If you’re in a mature shared service location, the competition for talent is probably already strong - especially the key talent, technology processes or language or whatever your needs may be. So you’ve got to have a comprehensive programme to retain the staff you have, and to manage your service levels.
When we looked at this problem, we broke it into two parts. First you have to research your local market and understand what is a reasonable level of staff retention and - the converse - staff attrition. In a lot of cases, in some Western European areas, this may be five to ten percent. In some Eastern European markets or in offshore markets fifteen to twenty percent is not uncommon; in some areas centers are suffering through thirty to forty per cent or higher. So the first half of the problem is to identify the level of retention you can reasonably achieve in your market – it's got to be a realistic target or your recruitment and backfilling will fall seriously behind and service levels will suffer. Once you have the target, you need to make sure you implement initiatives so that you can hit that target which will be the basis of your recruitment plan. The second half of the problem is: how do you manage service levels with that given level of attrition?
The approach I proposed for the group - and we discussed this at quite a bit of length – was to utilise what I would call a 360-degree strategy for staff retention. This basically means a full circle around each employee, covering them in a variety of different ways to give them every reason to stick with your firm.
Again I think this is the same as acquiring talent: it’s not one thing - not just pay, it’s not just career path, it’s not just the culture of your company - but a series of things that ‘surround’ the employee with reasons to stay, and enable you to hit your staff retention target. In your particular markets the drivers may vary, but we seem to find the solutions are fairly similar across all territories. During the session, we identified eight ideas to build a 360-degree retention strategy.
First, make sure you’ve got a good on-boarding process - that you’ve got good processes to manage the employee from recruitment on in to his first live position - and make sure you clearly align the role with the employee’s expectations from the advertising and recruitment process you have. One of the biggest reasons for staff turnover in a young shared service center is that the expectations of the employee and the actual job that they do are completely out of alignment. So make sure you’ve got a good strong process, and expectations are aligned upfront.
Second, make sure your line managers take accountability for retaining the staff. Whether it’s hiring or bringing in the employees, or keeping them onboard, it’s a big HR job - but it is clear that it is not HR’s job to manage it. You’ve got to get the line managers to own the HR agenda, to feel accountable for their own functions, processes, and staff retention - and to manage that with the support of HR.
Third, you should make sure that you can talk to employees about clear career paths, and growth opportunities. You are subject to a lot of employees trying to come in, and get a couple of years shared service experiences on their CV - you know, "tick in the box and move on from there". You want to show the employee that there is plenty of room for growth within the shared service center, and it’s not just vertical. You can’t offer vertical growth to everybody, but it can be horizontal, broadening in their skills.
In addition, something used successfully in many SSCs is using several different means for an employee to recognize his progress: to show that they are developing. It can range from varying titles, badges, certificates – but create a clear demarcation that they have moved from one step to another, added a key skill or gained subject matter expertise. While ‘flat’ organisations with few levels are the goal, you can still define multiple steps for employees. You may have only 3 or 4 levels, but you can define many more steps that employees can go through to mark progress and development. Keep the pay and structural levels distinct from the development steps. Certainly, having a clear training programme and having a calendar for development for each employee annually is another important part of their overall development to support this strategy.
Earlier while discussing recruitment we talked about compensation. The fourth point is you’ve got to keep your finger on the pulse of the market. You’ve got to understand where you are against your competitors; you will find occasionally that as newcomers come in they will bid up the market, and then you might have to make some adjustments, especially for the key skills demanded in your location – be clear on what the critical skills/roles are in your market and re-benchmark for those skills as required.
Fifth, one of the most important things that I think people forget about that is becoming more and more important today, is: what is the purpose of your organisation? What is your mission? I like to call it the "war cry": what are you striving to achieve? It is not a generic ‘be the best at x’-type statement that every company or department would have as a goal, but what differentiates what your SSC or function or process is about. A lot of the retention process is about getting employees engaged and aligned, and motivated about achieving something tangible that they can all strive for: something that you can show measurable progress versus target. As an illustration, what are your employees thinking when they go home on a Friday night, and talk to their spouse, or their friends? What do they say about their job? Do they say "Hey, another week down" or do they talk about how much progress they have made, and that "the team’s working towards this target, and you know we’re working hard to achieve this"? Does the job bring in more fulfilment than just a paycheck?
Sixth, one we can’t forget: employees always like to hear a "thank you" more often; they like to interact with senior levels of management and know they are being appreciated. So develop recognition through awards. It doesn’t have to be expensive; it can be as simple as holding a town hall meeting once a month and pointing out the people who have done an excellent job. Again, it depends on the culture and location you are in, but awards and recognition are certainly an important part.
Seventh, for any organisation, at any point in time, there will be leaders - critical subject-matter experts - that are absolutely vital to your organisation over a period of time and you clearly need to understand who they are and consider a variety of special programmes to ensure they feel valued. You may need to consider special retention programmes, longer term incentives, etc.
Eighth, you can get employees involved in projects that teach them new skills, or gives them the opportunity broaden their experience through travel, working in the business unit, or otherwise, this provides an incentive to stay. For instance, you can second employees to internal audit for short intervals to broaden their perspective. This adds value to their career while build your staff capabilities and experience.
What I would like to re-emphasise, though, is that it’s down to the leadership shown by the management. If managers own up to the problem of retaining employees and making sure that they are engaged, then you will probably hit your target. Again, it is important to set up a reasonable target for your marketplace, and what’s appropriate there. If you do have a reasonable target, if you follow the 360-degree model you should be able to tackle the retention issue.
Maintaining service levels
The final topic that the group discussed was that, given that you have a level of attrition in your staff (you are clearly not going to have zero: in fact zero attrition is probably a bad idea) how do you manage to maintain the service levels? Here again, some of the same things came up in discussion.
First, in the design of your shared service center, be careful not to take on too many small-scale activities. Obviously these will be much more sensitive to attrition: if you have an activity that you have only three or four people engaged in, and one of those people leaves, activity suffers by twenty-five percent. So, make sure you don’t have too many small-scale activities, and for any of your activities make sure you cross-train, so that for a temporary period you can absorb the staff leaving.
The most important thing is to 1) understand your attrition, understand when it happens; and 2) forecast it, and – just as when we talked about talent acquisition - to operate a management recruitment process in such a way that that you can get close to just in time staffing. To do this, you need to plot out how long a typical notice period is, how long it takes for a person to get up to speed on a job, and recruit in advance, understanding that you will have attrition.
In order to shorten that cycle of getting people up to speed, obviously knowledge management is critical. That starts with good documentation, good work instructions and training manuals for each position. You also want to back that up with good testing, strong quality assurance processes and clear gates to test whether an individual is ready to ‘go live’ in a particular role. You need to segment the learning curves by the position - some will be longer than others - and you want to set clear targets. In some cases you find that you can keep the learning curve to a matter of weeks; in other cases it will be a matter of months. So you need to align your recruitment processes with that.
Obviously as I mentioned before you need to plan and budget for attrition: it is not just the recruiting fees, you need to consider the costs of getting the new person trained, learning curve productivity impact, etc. You want to make sure that you are able to fill most positions before the incumbent leaves. And if at all possible, you should try and target having a bench.
Essentially what I mean when I say having a bench is, trying to overstaff continuously. For instance if you have one hundred roles, you might want to have a hundred and five employees onboard at any one time. In that way you have always got people working on projects, or other activities, ready to step in as the attrition occurs. It is certainly a common practice in BPO organisations offshore; in high cost locations, it may not be as economically feasible. However, to assure your service, I strongly recommend that you reinvest some of your savings in at least some level of bench. At least set that as the hiring target, so that if you are constantly recruiting to a target of 105, you likely can at least always maintain a staff of 100.
Again I can’t emphasise enough: plan, do the math, understand where your attrition comes from, and make sure you’re recruiting in advance of it so that you minimise the amount of days absent on any live role. In fact, that’s one key metric you may want to track: the number of man-days or man-weeks vacant in any live position. Obviously your target should be zero - and you want to factor learning-curve out of that measure, so it’s when the quality gates are passed, and the person goes live, that is when the job is filled, not when somebody is on and learning.
Overall quality assurance measures on the process are important to make sure that when you do have attrition you are maintaining your customer’s requirements, and your service level agreements, and the quality metrics are being maintained. If not, that becomes a business case for changing the way you are managing, for recruiting better skill sets upfront when you do bring in people to replace, or for going back to the attrition target that you are trying to improve on.
That covers most of what we talked about in trying to make the organisation insulated from the attrition, and maintaining the service levels throughout. That wrapped up our conversation; it was a great session. Our objective for the session was for everybody to walk away with at least one new idea from the group they could take home and apply in their SSC; most said that they had achieved that, so we thought it was a successful couple of hours well spent in Barcelona.
About the Author
Kirk Wilkenson is Director of Shared Services for COLT Telecommunications, a leading European provider of business communications. Kirk is leading key transformation initiatives for COLT to improve service, efficiency and control in back office functions. He recently led COLT’s programme to establish a captive Finance SSC in India and is currently leading COLT’s Next Generation Billing Initiative.