BPO Attrition/Turnover 20-60%, Retention Initiatives and Recruiting Issues

A Behavioral Event Interviewing 2-Day Workshop which I held, conflicted with attending a CEO forum where the President of Asia Pacific, Mr. David Rizzo of TelePerformance, spoke. An article was written about the gist of his presentation which is at the end of this article.

It raises some troubling issues about the Outsourcing Industry and hiring in particular, and brings out a few questions about the industry and indirectly some of the same issues for other industries, assuming that the article accurately reflected his presentation.

He addresses the need to focus on retention initiatives while continuing to grow! Very commendable.

It is still surprising that he reports that retention rates range from 40-80 percent after at least 6-8 years of high growth in the Business Process Outsourcing (BPO) industry in the Philippines. This means that attrition/turnover is the reciprocal, amounting to: 20-60%. The period of time covered was not reported. But, in the past, about 3 years ago, BPA/P ( The Philippine association for BPO's) had reported turnover from 20-100 percent per year, and that many times half of these numbers were due to people leaving and the other half, people being "asked to leave." Therefore, there has been some improvement (dropping the 100% turnover down to 80%), but not great.

Mr. Rizzo mentions the reasons for the present turnover is due to several reasons:
1) Overnight hours which people are not used to working,
2) Stress caused by customers who may be too challenging to handle because they are angry,
3) Employees find the work too technical,
and
4)  the Company is unable to meet the employee's expectations.

This is amazing given today's technology and methods for Pre-hiring:

Issue #1) Overnight hours which people are not used to working: there are video introductions that can help to address this issue and can be used as "knockouts"  to prevent further interviewing and hiring these kinds of people. Granted, recent graduates and some people may not know if they handle the hours, but it is likely that most know their limitations or the candidates can talk with someone they know in the industry. Also hiring people who have already worked in the industry, these people will know if they can handle the hours.

Issue #2) Stress caused by the customers: many companies use videos to simulate real-life situations and also tests, both verbal reply and written, to find out how a candidate will handle this kind of angry customer. Again these are "knockout" issues before going any further in the pre-hire process and give the candidate a good view about what the position will entail, as well as, if the candidate will like or want to work there.

Issue #3) Employees find the work too technical: there are many skill tests to find out what the candidate may know or at the very least by using assessments, if they have technical capabilities and interests.

Issue #4) The Company is unable to meet the employee's expectations: It would be helpful to better understand exactly what kind of expectations are not being met, since this article is not specific. Once the expectations are known(as they probably vary by company), these can be covered up-front in the Pre-Hire process.

Most of these issues can be uncovered or addressed through good programs of: application and ATS(Applicant Tracking Systems), assessment and skill testing, Behavioral and Critical Incident Interviewing and good benchmarking around each job, based on top performers. These steps will help to "weed out" those that will not make it longer term, all of which should significantly help in reducing turnover, especially in the ranges mentioned as being 20-60 percent.

In past years, the BPO industry identified that one of the major problems they had was not identifying leadership in their pre-hiring process, as there was a gap between hiring good agents and their being able to handle the front-line position. Now, many times companies try to identify 10% of their incoming candidates who also have a good job fit with the front-line manager benchmark also. This process allows them to develop succession planning and training for the next level potential managers early on in the employees' career and development. [Benchmarking around top and bottom performers, can be done and takes a matter of minutes, with the right tool.]

Obviously, good "on-boarding programs" can also help to address these issues by providing a good introduction to the company and the specific requirements of the job, so that new hirees can "opt out" on their own early, saving the company training costs and more investments that will happen in the ensuing months.

Lastly, Mr. Rizzo made the statement: “We are not going to let price pressures get in the way of investing in our people. After all, happy employees translate to happy customers”. This is true to a point, especially in growing "employee engagement." But the reality also arises, in that incurring too many costs CAN affect your competitiveness globally! Hiring Right is probably be the best solution, while providing facilities and benefits, are more like the icing on the cake.

It is hoped that the industry can really address these unsupportable turnover/attrition rates, because these rates lead to extremely high costs. When you consider the rule of thumb that turnover costs run from 3 months to 2.5 years worth of a person's salary, is the company sustainable long-term?

Only time will tell!

Contact center firms urged to invest more
By Louella D. Desiderio (The Philippine Star) Updated March 17, 2012

MANILA, Philippines - Contact centers in the country will have to invest more in programs focused on their employees to encourage them to stay in the company and provide better service to customers, a top executive of a contact center service provider said.

Speaking at the Asia CEO Forum held on Thursday, David Rizzo, president for Asia Pacific of Teleperformance said that investing in retention activities need to be done by contact center firms that intend to continue to grow their business given the number of employees choosing to leave the industry and the high competition among firms in finding workers.

 “It is very critical to focus on retention initiatives to ensure not having to replace the employment pool while growing at the same time,” he said.

He said that employees in contact centers leave for reasons often related to the job.
He cited that some employees opt to leave the business due to the overnight work hours which they may not be used to or the stress caused by customers who may be challenging to handle.
He said that customers who receive an incorrect bill, for instance, may be hard to deal with particularly when they start complaining and taking their anger on the call center agent.
Some employees, he also said, leave the job because they find the work too technical or unable to meet their expectations.

He noted that in the industry, the employee retention rate ranges from 40 to 80 percent.

Given the limited supply of talent available in the market and the high competition among contact center firms for supply of workers, he said, investing in programs that keep employees satisfied with their job becomes even more important.

He said that contact center firms can for instance, provide spaces for recreation in the workplace such as gym, sports facilities and karaoke rooms, which their employees can use.
Contact center firms, he also said, can offer employees who cannot work overnight a daytime shift.
Career management programs, he said, may also be developed by contact centers for their employees.
He said that while investing more in employee-engagement programs may mean additional costs for the company, it is expected to yield results favorable to the company since its workforce is its main asset.

 “We are not going to let price pressures get in the way of investing in our people. After all, happy employees translate to happy customers,” he said.

Contact Center Firms Urged to Invest More - by Louella Desiderio 

ETHICS, Drugs and Morality: How they affect Communication, Productivity and Everyday Life- Part IV

The recent study about Ethics (Higher social class predicts increased unethical behavior-from the Proceedings of the National Academy of Science of the United States) was mentioned in yesterday's posting, but it merits greater attention, as it is as recent as January 2012. Also, many times, higher social class people tend to be in higher positions, for a variety of reasons, some warranted and some not. This study was mentioned in a recent Canadian TV newscast also.

The importance of this study is of interest because it states that the higher the social class, the greater the increase in unethical behavior. So, this supports why both pre-hire assessments should be used to help screen and identify these behaviors before hiring certain individuals, or at the vary least, the need to validate the results. Establishing benchmarks can be easily done around these issues. For non-profits these behaviors may be even more critical.

Even if these people are hired, then the company should use this information as Training Needs Analysis and possibly implement more frequent reinforcement in the beginning years of employment for these individuals. Or during the onboarding process, highlighting sections in the employee manuals, and if ethics is part of core values, then highlighting this also.

The significance of the study is important as it may also be a partial explanation as to why recently there have been so many abuses of fraud, stealing and and deception in high profile news stories. Only through Board oversight can the C-Suite and senior level employees be supervised. The rest of the organization should be supervised by watch-dog employees and HR scrutiny.

Below is the abstract from the above mentioned study. The link is in the first sentence above.

Higher social class predicts increased unethical behavior

1      Paul K. Piffa,1,

2      Daniel M. Stancatoa,

3      Stéphane Côtéb,

4      Rodolfo Mendoza-Dentona, and

5      Dacher Keltnera

+ Author Affiliations

1      aDepartment of Psychology, University of California, Berkeley, CA 94720; and

2      bRotman School of Management, University of Toronto, Toronto, ON, Canada M5S 3E6

3      Edited* by Richard E. Nisbett, University of Michigan, Ann Arbor, MI, and approved January 26, 2012 (received for review November 8, 2011)

Abstract

Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals’ unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.

ETHICS, Drugs and Morality: How they affect Communication, Productivity and Everyday Life- Part III

When asked WHY, after conducting pre-hire assessments of candidates, and drug screening prior to hire,  the client still has issues with employees who have been long term employees in the areas of ethics, drugs and morality...

The reason is relatively simple…

These are issues that need to be re-enforced over the years regardless of how we have been raised, taught and/or shown. Our personal situations change over time, and there are temptations and challenges that we are confronted with that test our resolve in these areas. Personally, I have observed that mid-life crisis years (male and female) increase the pressures on individuals and a number of people have changed or relinquished their values to regain where they had envisioned themselves to be at this stage in their career or life. Many times, this is because they possibly have felt that they have not attained the success they had expected to achieve at this stage of their life, or financial challenges have arisen at a stressful period of time, and many other reasons.

This is why it is essential that companies have reinforcement programs to remind existing employees of policies and standards that need to be followed. In a fortune 100 where I worked, after a several hour session of re-enforcement each year, we had to sign anti-trust and ethics standards each year.

These kinds of programs need to be implemented yearly as they can then communicate changes in existing  programs, or address questions that employees might have encountered through the course of the year.

In January of this year, at the National Academy of Sciences of the United States, a paper was included with the title of:  Higher social class predicts increased unethical behavior . Maybe this is ONE reason why so many recent instances of CEO and Senior Executives violating laws or absconding with money, in one way or another.

Ethics in particular is a major problem. Obviously, the well publicized cases in the past of Bendix’s

Agee, Enron, and what you can find in this article: The Corporate Scandal Sheet

And a recent Wall Street Journal article: Behind a CEO's Departure: An Ouster or Resignation?

Best Buy: Best Buy Probes CEO Relationship

MF Global : Fast, Furious at MF Global

Allan Stanford: Prosecutor Sums Up: Stanford Lied for Decades

AIJ Investment Advisors (Japan): Japan launches probe of all advisory firms in wake of AIJ case

Russell Wasendorf of Peregrine said in a statement that he forged documents and lied to regulators.

Hong Kong Billionaires Charged With Bribery

If you are not addressing these regularly, then do not be surprised when employees "fall off the wagon"….so to speak. These examples above, are the high profile ones, imagine the lower level employees and the numbers that exist there. The retail industry is well aware of the theft and losses involved. Does your Employee Manual address these issues? Are they not part of your core values? Is this not a key element to building human asset value and sustainability? So if you are not doing assessments during pre-hire, don't you think you should? Once people are on-board, re-enforcement programs are required. 

So the question is: What are you and your company doing to address these issues on a regular basis?

Ethics, DRUGS and Morality: How they affect Communication, Productivity and Everyday Life- Part II

Drugs in their many varied forms (alcohol, hard drugs, amphetamines and even tobacco) have a myriad of effects on our employees and companies. As mentioned in Part I of this series, 31% admit using drugs or alcohol, and these are for people who admit it. The percentage is most likely much higher.

At a business conference several years ago, a breakout session about the 12 Steps of AA (Alcoholics Anonymous) was held. Originally, I had envisioned this to be how to use the process in other ways within a company. No, it was about actual AA, and it was attended by those who either had been on drugs of some form, or had direct family members who were on drugs. The statistic presented there was 40%. This was a major revelation at the time, because I had never seen this statistic before and it impacted me as to the ramifications that this holds for, CEOs, senior managers and C-Suite professionals and HR departments, which should be staggering if viewed from the proper perspective.

We always are wondering why our people may not be as engaged as we would like, or why our communication messages held with auditoriums of employees, or even chats at the water cooler, seem not to be as impactful as we would expect, and like them to be.

Possibly this statistic and topic may be part of the reason. Of course, some of the problem can be our delivery of the topics or making them relevant to those we are speaking to and/or with. However, if we take this drug statistic and also look at other distractions at work, such as illnesses of parents, children, relatives or even the general health of our employees, not to mention the medication being taken by employees at work, can we begin to see why people may not be as engaged as we like, or as productive as we expect? Might this figure of distracted, low engaged people be as high as 70%?

How much are the various drug forms affecting organizations and corporations? Significantly more than we probably care to know, if we acknowledge this statistic and the implications on productivity! Everything from absences, distractions, worry, stress, and general illness, impacts corporate sustainability, profitability and productivity. Government regulations in many countries now required companies to provide benefits for medical care, in various forms, for existing employees, including mental and support-group coverage for “illnesses.”

So this affects a company financially, from the FIRST day a new employee joins the company!

How do we address this issue from corporate communications, to employee manuals and benefits, and even more importantly assessing this in the pre-hire phase, before even bringing a person into our organization? Is this being done in your company? Is it being regularly communicated into the organization? Is it being reinforced with Mandatory Training Programs?

What do we discuss during the onboarding process? What procedures do we have in place to monitor compliance to existing drug policies and excessive absences? Are these in place within your company? If not why not? Can you afford NOT to address this issue on a regular basis?

Ethics, Drugs and Morality: How they affect Communication, Productivity and everyday life Part I.

This is a broad but critical and essential topic(s) for the C-Suite, Board of Directors, and HR Heads. Why? Because, these impact almost every corporation at some point in time and on multiple levels. This costs trillions, not just billions of dollars/local currency on a global basis. The retail sector probably recognizes and deals with these issues the most often, however we are all confronted with them, and it is on a large scale.

In my many years in business, there has been some discussion about this topic but normally in general terms, and not with the URGENCY it deserves. It has been dealt with in a spotty manner at best, and non-existent during many others. This is not to say that the “sky is falling” but we need to address this and hear the drum beat.

You don’t hear the drums and cadence? Well let’s just mention a few instances: Bernie Maddoff and multiple ponzi schemes recently in the news running into the billions of dollars, WaMu, the Catholic Church’s issues with sexual abuse, Enron, Fannie Mae, Freddie Mac, Solyndra,…the list is endless, unfortunately.

A recent replay of an interview with David Millar, a professional cyclist who was found to be doping and now openly admits it, brought this topic into sharp focus at this time and provides an excellent reference point. This interview provides the essence of what we are confronted with, not only in professional and amateur sports, but in our day-to-day business and management lives as leaders. To ignore it, or down play it, is at our company’s risk.

Recently, a couple of companies have asked in our discussions, why, after conducting assessment screening around these topics during the pre-hire, they have still found a few people stealing? The answer to the question is because at different points in our lives, we are challenged by circumstances that may dislodge us from our values, depending on how deeply they are ingrained within us and this is so frankly discussed by David Millar.

It is David Millar’s interview which so clearly addresses this issue. He had rejected doping for 7 years of his career and had no intention to ever dope. However, when he fell on a tough period, when he was no longer performing at the level of before, he decided he would and he did Dope!

He says that he didn’t do it so much for the money, but for his ego and to regain his reputation in the sport (the irony was lost on him at the time: that by doping and getting caught it had an even a greater negative effect on his reputation, than if he had just retired from the sport when he was no longer competing at the level of before).

Each of us is confronted with similar issues at various times in our lives and career. However, it is our ethics, view of drugs (and this takes many forms) and morality, and the depth we are inculcated with these values that provides the guidance for us to avoid these issues….. or, we surrender to the issue at hand.

A way to help provide the foundation for a company and it’s employees, is through reinforcement with written policies that need to be signed by each employee each year, regular training, and corporate communication around these values on an ongoing basis.

Some statistics that may be eye opening (from SHRM and other sources):

31 % admit to abusing drugs or alcohol

41 % say they falsified records

56 % of working people admit they lied to their supervisors

64 % use the Internet for personal use while at work

80% of computer crime is committed by company insiders

A majority of applicants stretch the truth on resumes!

  More than half, 55%, lied about the length of past employment.

  Past salaries, 52%

Criminal records, 45%

  Former job titles, 44%

Former employers, 34%

 Driving records, 33%

Degrees, 28%

Schools attended, 22%.

 Some 15% percent even falsify their social security numbers!

So, if you are not convinced by these statistics, then look around you at work. How many people do not show up to work on time? How many feel that if they work 7-8 hours a day, that is all that they need to do because that is what they are getting paid for? How many really understand where their salaries, commissions and bonuses come from? How many have a basic understanding of profit and loss?  Just because it is clear to you, is it really clear to others?

It is every employee’s responsibility to help articulate and support these issues. Only through vigilance can the theft of time, property, and erosion of values be prevented!

The challenges are for the C-Suite and Human Resources:

1)      Are pre-hire techniques being used to help avoid bringing in future employees with the wrong values?

2)      Once onboard, how much corporate communication and time is spent around core values, and especially these particular issues? Are policies in place in Employee Manuals?

3)      Are they reinforced and training provided, regularly? Are the investments being made? This affects all shareholders in one form or another.

Values come from the top down, but can be supported by all employees! These can clearly be shown to impact sustainability, survivability and profitability, as well as personal success, individual health and life issues and values.


Link to the interview:

David Millar, Cyclist, Drugs, BBC Interview

BEI (Behavioral Event Interview) Training - Public Seminar Sept. 6, and Private training Sept. 22, 2011

On these two dates, I held Behavioral Event Interview training.

Interviewing has been around since 1911, or even well before then. However, from this date, it was the start of more structured interviews and then arose psychological studies about people to help develop more systematic interviews. Before and during WWII, psychology began to be used in many different applications, from production line layouts and employee encouragement, to actual theories about people. In the 1960's Theory X and then Theory Y were developed, culminating in Theory X&Y...the beginning of structured motivation in the workplace. Career ladders were more refined and developed during this time.

In the 1980's with advent of matrixed organizations and the rise of many more diversified conglomerates, the rise of Human Resource Departments had a need for more sophisticated methods, tools and employee training programs for advancement. By the 1990's it started becoming evident that people/employees could drastically affect the success of a corporation, and it was the start of a recognition that employees were truly a company asset and that there was need to better manage this portion of the company. Global management began to significantly emerge as a necessary component, within many companies. In selected instances, HR personnel held a position on the Board or in the C-Suite, at least they participated in ManCom and Strategic Planning meetings.

Behavior was identified as being a key to success and there was a need to better determine behavior in the workplace to predict success and to build more cooperative and effective teams. Therefore, BEI emerged to become the best interview method for pre-hire. Past behavior is a good indicator to present and future behavior and performance.

More recently, "Critical Incident" Interviewing, a sub-set of BEI, has significantly come to help in providing a win-win view of the candidate and for the candidate. It helps the candidate "experience" in one form or another, what the challenges she/he will face in the position, and for the interviewer to gain a much better understanding about the candidate in how they may perform in the position, based on similar past experiences the candidate may have had, or how they handle the simulated situation. This also helps in validating assessment data and predicting success.

As a result of BEI, turnover decreases, which reduces the cost of attrition which ranges from a minimum of 3 months of a new hired's salary and benefits, to as much as 2.5 years of longer employed individuals. These are good rules of thumb for Return On Investment (ROI) calculations.

Of course BEI can also be used for promotion selection and advancement, in certain cases. If your recruiting department or people do not use BEI, they should seriously consider taking training or learning the techniques, as this is a much more effective interview technique, compared to the traditional interview.

Please feel free to contact me for more information if interested.

Interpersonal skills, Adaptability, Team leadership and bottom-line results drive personal success

The attached article does a nice job of summarizing middle management and senior management required skills, and needs for personal success.

Adjusting to change, which each and every person, company and organization faces regularly, especially if they are looking to grow and remain dynamic in the ever changing economic climates within countries and even local regional economies, is a key component to organizational and personal success. The reference to Organizational Culture in the article, indirectly relates to Pre-Hire competencies before On-Boarding, and Competencies for a specific position, especially as it relates to "Job Fit and Company Fit." If assessments and succession planning tools and systems do not have the ability to identify competencies for good job fit, then filling positions and promotion, is mostly based on "gut instinct," some past performance criteria, and arbitrary factors,which are not necessarily the strongest ways to build a business in today's world.

As has been well documented in the past couple of decades, about 90% of a person's Thinking Style, Behaviors and Interests are hidden from immediate view and only become partially visible over time. Today's assessments can help to identify this "submerged/hidden" portion, subject of course to validation, making it much easier to identify competencies of success along with "Benchmarking/Job Pattern/Competency Models" for that position and thus people who are more likely to succeed in a given position. Why place a person in a situation with a high probability of failure because they may lack the correct interpersonal skills or adaptability that may be needed? Normally there are many other opportunities within an organization, regardless of size, where the person can thrive and contribute, but the right tools are needed to help HR, management and organizations to identify the right Job Fit or Job Match and to establish a good succession plan.

Leadership and Communication skills can also be identified through 360 Reviews and assessments, and should be used at least yearly if not more often. 360 Reviews properly done, can clearly target competencies and skills, while identifying developmental areas for individuals, as well as for organizations. These skills can be learned, hence training can be effective where and when needed.

All of this leads to bottom-line results; and, where proper KRA's are established, these results can be tracked to individual performance and personal success.
Wall Street Journal Article:
Interpersonal skills, Adaptability, Team Leadership and bottom-line results.

Analyze, Decide, Lead says Columbia's Business Dean

It is interesting that even Columbia's Business School is talking about "...weaving topics such as decision-making and ethics into classes across all disciplines." Assessments can help along these lines, and in pre-hire, ethics can be assessed, and of course a good background check will help validate the results.

Both good decision-making and ethics can help drive engagement  in an organization. The reverse can have detrimental effects on an organization's engagement from entry level, to Front-Line managers and to all management levels in an organization. This effects motivation, morale, and indirectly profitability and retention.It is the responsibility of HR and Senior Management to ensure that people with good ethics and with good common sense/decision-making abilities, are brought into the organization, as this helps to increase the asset value of the company, short and especially long term.

The question is, is your organization and HR focused on these issues, from Pre-Hire, On-Boarding, Training and Promotion? Don't you think that they should be? Shouldn't they be part of your Core Values? The decisions made today lead to the sustainability over time.

http://online.wsj.com/article/SB10001424052702303365804576429974256934518.html