Incentives in the Age of Attrition
On any given day, a visit to the Ventura, Calif., headquarters of Patagonia Inc. could yield a bustling center of activity or a ghost town of empty work spaces. The irreverent outdoor clothing and gear manufacturer prides itself on giving employees the freedom to engage in those activities that make them an asset to the admittedly unconventional company. Visitors may encounter a bevy of wetsuits strewn across the parking lot, drying in the California sun, because the surf was up and employees took advantage of Patagonia’s Let My People Go Surfing policy. Other workers may have been drawn to the mountains by reports of fresh powder and taken the day off to go skiing.
Inside Patagonia’s headquarters—which bears the appearance and feel of a ski lodge—women can be found discreetly breastfeeding their babies in meetings or designated rooms, while other employees suddenly break from their work stations and dash to the company’s on-site child-care center to see their son or daughter walking for the first time. Some employees may not be there at all because they’re participating in Patagonia’s Environmental Internship program, which provides up to two months of paid leave to those who volunteer with a grassroots environmental group anywhere in the world. They may be saving sea turtles in Hawaii, working on the restoration of wild lands in Chile, volunteering at the Marine Mammal Sanctuary on the Channel Islands or engaging in other vetted activities. In addition to providing full pay and benefits, Patagonia gives the 100 to 150 employees who participate in the program each year a small stipend to offset travel expenses.
Deeply dedicated to civil activism, Patagonia bails employees out of jail if they’re arrested for peaceful protesting. The only requirement is they complete the company’s peaceful-protest training and let management know of their planned actions in advance. It’s all part of the company’s unconventional approach to doing business, one that centers on running a sustainable company while empowering employees to lead full, active lives, engaging as often as possible in the activities that fulfill them.
While Vice President of Human Resources Dean Carter says, “Everyone is here because they want to save the planet,” there’s little doubt these unique offerings play a significant role in incenting employees to stay with the company. Patagonia is consistently ranked near the top of multiple best place to work lists, and 96 percent of employees say they’re proud to tell people they work there, according to the Great Place to Work Institute. Even in this current era of full employment, Carter says, Patagonia is experiencing “ridiculously low rates of turnover”—averaging 4 percent at the corporate office and half the industry norm in its warehouse and retail stores.
“We’ve had zero change in our ability to recruit or retain great talent,” says Carter. “I joke about it being the ‘Hotel California’—once they check in, people do not leave.”
Of course, not every company is so fortunate. With unemployment at record lows and workers having plentiful opportunities to seek greener pastures, many organizations are struggling to keep employees from jumping ship.
“Never before have we had a workforce with such access to the world of information, access to other opportunities and access to a large network of people working at other organizations,” says Ryan Jenkins, an Atlanta-based generations expert and frequent speaker on millennials and Generation Z. He is also the author of The Millennial Manual: The Complete How-To Guide to Manage, Develop and Engage Millennials at Work. “If they are disengaged or dissatisfied at work or with their employer,” Jenkins says, “they are literally a finger swipe away from going somewhere else.”
Putting People First
While a certain amount of ebb and flow in attrition is natural, Chris Dornfeld, vice president and head of employee experience at Maritz Motivation Solutions in Fenton, Mo., says diverging factors have made the problem more acute, particularly in the technology sector, where turnover rates average in the 20 percent to 25 percent range.
That reality is all too clear for Ultimate Software, a Weston, Fla.-based maker of cloud-based HCM solutions. The company competes head-to-head with Silicon Valley for talent, but Ultimate Software has managed to keep turnover consistently in the 5 percent range. Vice President of Human Resources Kathleen Pai credits an assortment of innovative perks and programs built around the company’s founding principle of “People First” for making that remarkable figure possible.
At the heart of “People First” is a commitment to the community that is woven throughout the culture at Ultimate Software. All of its 4,200 employees are given three “Ulti Service” days per year, during which they’re encouraged to volunteer with their choice of dozens of partner organizations. Employees sign up as individuals or teams and spend their day rebuilding or painting a home, working at a homeless shelter, pitching in at a local school, helping out at a food bank or engaging in any number of other charitable activities. The program is a “huge motivator” for the company’s valued employees, says Pai.
According to Jenkins, such opportunities are of particular interest to younger employees, who are looking for more of the “human element” at work.
“When employers can present opportunities for folks to connect with each other at a very human level and do something that’s meaningful to the community,” he says, “that speaks volumes for the organization and can do wonders as it relates to engaging and retaining the next generation.”
For the 300 employees of Palram Americas Inc., a Kutztown, Pa.-based manufacturer of polycarbonate and PVC products, opportunities to connect with each other’s families go a long way toward creating a sense of community. Each year, the company buys out a section of the ballpark and treats its entire workforce, along with their families, to a Lehigh Valley IronPigs Minor League Baseball game. Employees are also encouraged to bring their spouses and children to Palram’s annual holiday party and to other on-site celebrations.
“It’s a really great way to connect outside of work with your home family and your work family and draw that connection,” says Vicki Feller, senior HR business partner at Palram. “When [employees] get home [from work each day], the kids can say, ‘Hey, how’s that guy you introduced us to?’ ”
At Patagonia, the company’s on-site child-care center helps create such strong bonds among employees and their families, Carter believes it gives workers second thoughts about leaving.
“It’s really difficult to leave a company when you are not only leaving your friends, but you are pulling your children away from their friends, too,” he says. “Of all the things we do, on-site child care is the one that most impacts retention, engagement and even health because parents are less stressed out when their kids are nearby.”
Health and wellness remain a strong focus for many companies, with a number moving way beyond standard offerings into more innovative programs. Palram sponsors an annual wellness day, with vendors coming on-site to educate employees on health-related matters, give flu shots or back massages, or perform biometric testing, such as blood glucose and cholesterol. Each year’s program is structured around a chosen theme—the most recent was “superheroes”—and employees who visit all the stations are eligible to win a prize.
While she concedes that traditional pay and benefits will always be important motivators, Feller is confident such extras can help convince employees to stay the course with Palram, rather than giving in to the lure of a competitor.
“It’s still important to remain competitive from a compensation perspective because, at the end of the day, bills need to be paid, but concentrating on unwritten benefits is important as well,” she says. “Across the street might be paying 25 to 50 cents more an hour, but you are getting so much more here.”
At Ultimate Software, a wellness coach provides one-on-one consultations, along with group activities and lunch-and-learn sessions, all focused on helping employees achieve overall wellbeing. Those who demonstrate they’ve made healthy lifestyle choices earn $300 per year to be used for “whatever they feel makes them be a well person,” such as massages or gym memberships.
Meanwhile, League, a Toronto-based benefits-management-platform provider, gives each of its 200 employees a lifestyle spending account that can be applied to an array of health-related expenses, such as yoga classes, workout gear, nutrition counseling, art therapy, gym memberships or ergonomic chairs. The company also offers weekly yoga and fitness classes and has a designated room for on-site massage therapy. It’s all a matter of demonstrating to employees that League is different by providing opportunities to “take a moment for themselves and their health and wellness,” says Swati Matta, director of health and member engagement.
Another area employers are turning to in order to incentivize employees is peer recognition. With millennials and Generation Z accounting for an ever-increasing percentage of the workforce, peer recognition has become a “table stake,” according to Christina Zurek, insights and strategy leader at ITA Group in West Des Moines, Iowa. In fact, the practice is so ubiquitous, Zurek says, she would be “hard-pressed to find a company that doesn’t have some version of a peer-recognition program.”
The approach is a powerful means of recognizing those employees who might be doing great work, but flying under the radar, says Derek Irvine, senior vice president of client strategy and consulting for Framingham, Mass.-based Globoforce. As it’s virtually impossible for managers to see “everything good being done in the organization,” Irvine says, one’s colleagues become the eyes and ears “for when great things are being done,” for which they then nominate each other to be recognized. This strategy has the potential to deliver “real ROI,” he says, yet it’s not without challenges.
“It’s an old-fashioned, cost-effective but powerful incentive, as long as it’s managed properly,” says Tina Hamilton, CEO of myHR Partner in Allentown, Pa. “Companies have to be careful with those kinds of things so they don’t leave people out, like the person picked last in gym class.”
Regardless of which incentives or perks a company ultimately decides to offer, it’s crucial that the organization keeps its finger on the pulse of the workforce to determine what will deliver the desired impact. When turnover became an issue among employees with skiing in their blood, for example, Patagonia adopted a new policy of nine-hour workdays and every other Friday off, thus giving those valued workers more opportunities to hit the slopes.
At Ultimate Software, Pai’s team evaluates its programs “constantly,” examining metrics to determine engagement and participation and asking employees for feedback. Likewise, Palram strives to ensure its offerings remain effective by soliciting employee input through suggestion boxes and team meetings, something Feller says the company has no qualms about providing.
“We’ve created a culture where employees have no problem giving us their ideas and feedback,” she says. “It can’t just be HR in the ivory tower, dictating what we are going to do to be a team.”