How to Increase Employee Retention Using the “30% Solution”

October 31, 2018

I just read a post about how Facebook executives recently found the answer to increasing employee satisfaction and retention among their employees. Google discovered the same answer about 10 years ago after reviewing 10 years of quarterly performance reviews as part of their Project Oxygen.

The answer? Great managers.

But even before Facebook and Google’s research, some people thought this was the case. Marcus Buckingham and Curt Coffman of the Gallup Group discovered this same answer in 1997 with their landmark book, First, Break All of the Rules - What the World’s Best Managers Do Differently, after surveying 80 thousand managers from 400 different companies.

I personally first learned that this was the answer to retention 45 years ago when I was in the cafeteria at the Automotive Group of Rockwell International in Troy, Michigan. I had just been promoted into my first management role (manager of capital budgeting) and was immediately put on the company’s MBA college recruitment team. Here’s the secret three of us were told over a lunch of tomato soup, grilled cheese sandwiches and cold fries:

You’ll be able to hire, motivate and retain the best talent from the best B-schools by offering them the best job. And the best job is the one that offers these MBAs the biggest impact; a mix of work they find most intrinsically motivating; one that offers more continuous learning, stretch and growth; and one where the hiring manager is the catalyst for making this happen. As important, you’ll be able to do this even if the competitors offer more money, more prestige and a sexier company name.

What this means for recruiters and hiring managers

Over the years as a hiring manager and executive recruiter, I converted this knowledge into the “30% Solution.” Simply put, this concept proposes that in order to attract, hire and retain the strongest and most diverse talent, you need to offer candidates at least a 30% non-monetary increase. This 30% is the combination of job stretch (a bigger job), a job with more impact, a mix of more satisfying work, faster and more continuous growth and an opportunity to work with equally talented people. As important is the chance to work with a hiring manager who has a track record of selecting and developing people of all shapes, sizes, ages and colors.

The 30% Solution turns out to be a good career decision-making rule to follow for both company and candidate alike.

As part of our hiring training programs, we tell recruiters, sourcers and hiring managers that when first contacting potential candidates for new opportunities, advise these people not to make long-term career decisions using short-term information. In this case, the short term consists of the compensation package, the job title, the company name and the job location. Instead suggest they use the 30% solution as a guide to gather the long-term information. This is a great shift in approach since too many recruiters oversell the short-term rewards coupled with some generic hyperbole in order to make faster hiring decisions.

In my opinion it’s this lack of a balanced long- and short-term decision-making process that causes new hires to feel they were misled right after starting a new job causing underperformance, dissatisfaction and unnecessary turnover.

Over the past 40+ years I’ve given this tip to more than 30 thousand recruiters and hiring managers. Those who have used it have experienced these remarkable rewards:

  1. Attracted stronger and more diverse talent in tight labor conditions by offering and delivering the best career opportunities among all competing opportunities.
  2. Have been able to negotiate equitable compensation packages by ensuring their candidates have a complete understanding of the real job and its growth potential.
  3. Have improved on-the-job performance and job satisfaction by matching the person’s intrinsic career motivators with real job needs.
  4. Increased retention by continuing to provide the 30% Solution as part of the person’s ongoing personal development program.

To me, this is common sense. Just ask any 20 people in your company what drives their personal satisfaction and motivates them to excel. You’ll likely discover it’s the 30% Solution.

*Photo by Jungwoo Hong on Unsplash

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