The situation is this: You regularly hear that our nation’s overall unemployment rate is high, yet as a hiring manager, you also know that finding just the right person can be quite a difficult and time consuming process. You feel that the supply of candidates is mysteriously tight, but you don’t know why. You thought that the market would not get tight until unemployment went down some. Here is the news: Your supply of qualified professional candidates has already become tight for many employers in many areas.

Refer to our White Paper written in November, 2012, titled Worker Shortages ( synopsis (From recent information, the true unemployment rate for college educated workers is somewhere in the 4% range and less.) The November, 2012 paper explains the “why” we have had difficulty finding key employees. This paper starts to address the “how” we can deal with the current market.

Once you accept the fact you are dealing with a tight market for the candidates you are seeking and you need a solution, the next step is to review strategies for both improving retention amongst your existing work force, as well as improving your process to land some of the best new employees. A great place to start is to consider Why Employees Leave the jobs they are in. Ultimately, as we identify the causes, we can take steps to improve the retention by attacking the causes. We can also use that information to more effectively recruit new employees by solving their “pain.”

How do you get the best hired?Why Employees Leave

When most managers are asked why employees left them, their first answer is usually that it must have been for the money. In fact that assumption could not be more wrong. Departing employees will indicate that money is the key factor only 12% of the time. Take a look for some of the cues we can get from surveys on why employees leave. Our original source of information is a multi-year study done by the Saratoga Institute. Similar results have been reported by many of our industry companies in recent years.

The key takeaway from these studies is that much of employee turnover may be largely preventable and many of the solutions that can be deployed do not involve a substantial financial investment on the part of an employer. What they do involve is attention to a business’s internal climate or culture, specifically, how well employees and managers communicate.

Take a look at the chart depicting the study. The two largest categories to focus on are those dealing with the supervisor and limited growth. How they perceive their supervisor contributes to a huge 32% of the departures. Are the employees and the supervisors matched up well and do they communicate well? Can a business improve this by additional supervisor training?

The second most important category involves growth and development in an employee’s job, or lack thereof. We’ve often said that an employee will take a job because they need a job, but they will keep that job if the FUTURE that they see aligns well with their career objectives. How is your business doing to develop employees?

Compensation equates to 12% of the departures. A periodic review by compensation benchmarking can keep a business on par with competitors. The remaining key categories are: 10% for a work environment that is not challenging; 4% for lack of recognition, 3% for poor working conditions, and 3% for training. The end result is that at least 2/3 of the reasons employees actually leave a current employer may be preventable.

Knowing why employees leave an organization is the first step in ensuring your organization retains its valuable talent. Attracting other good employees to join is the next step. Prospective candidates will take notice on just what the current business culture is like. Take a step away from your place of business and look from the outside in, just like a prospective candidate would. What do you see? If you have taken steps in improving your retention, then it can be time to employ your new found knowledge on the new hire side.

In most traditional HR hiring processes, we can be so focused on the screening process that often it is forgotten that the candidate needs to be sold on the opportunity as well. This is particularly important when a prospect is currently employed and must make a decision on whether the opportunity is attractive enough to risk leaving their current role for the promise of something better, yet unknown. We call this creating the Value Proposition.

How do you get the best hired?The Value Proposition

From the very reasons that employees say they would leave their current job, we can create a value proposition; one that helps the prospective employee draw a conclusion based on both the current and the future value of the opportunity. For a prospect to make a decision to make a change, it must be a measurable improvement. Employers that can make a case, for example, where their supervisor is a better mentor, advisor, and in general just a great person to work for are helping to create value in the case of the Pros and Cons in the table.

This table is a simple way to calculate how the candidate will think about the new opportunity. They will mentally ADD the anticipated “Pros” value of a new position and will also then SUBTRACT the “Cons” or problems associated by making the change. Very simply, an employee knows what they already have. In order to consider other opportunities they will seek an improvement by a margin large enough to overcome any unknowns about the change, also known as a risk premium. Risk premiums will be higher for opportunities such as commission oriented jobs, remote locations, and in general where the Value Proposition was not very well sold.

By demonstrating clarity about the new opportunity, the Pros as well as the Cons, a case can then be made. Focus on the non-compensation factors first. As the unknowns are answered for the candidate, the decision to make a change becomes much easier. A well sold and well explained value proposition will, in most cases, save on the amount of “risk premium” in compensation an employer must pay to get the good prospect, because much of the added value may be seen in the non-compensation factors. In short, the solution is to remove the “unknowns” and in particular explain on what the prospect’s future might look like.

In summary, the solutions for both retention and new hires involve virtually the same list. Match up your solutions to the Reasons Why Employees Leave:

1. Improve your supervisor–employee relationships. Consider some training in management communications to help make the difference.

2. The picture of the FUTURE is a very key selling point to get a great new employee on board. Provide a clearer image on how a person will and can grow within your company, a path to their goals.

3. Keep compensation on par with competitors.

4. Offer challenging projects to employees from time to time, and if they excel, perhaps those can be good tests on the paths to a promotion.

5. Recognize employees. Certain behavioral styles respond better than others, but most all will appreciate the fact that they’ve been recognized for their contributions.

6. Improve working conditions, perhaps something as small as a fresh coat of paint on the office walls.

7. Offer targeted training.

8. The senior leadership should be the first to offer a positive attitude.

Any employer should begin by improving the value proposition with existing employees first. Try to imagine that you, as a supervisor will apply to your own company for a key position. Can you list all of the good reasons why one should join your company? If you can, then you are well on your way to creating your own good Value Proposition.