CEOs talk

From job security to youth mobility, six Canadian CEOs share their retention strategies

Where do people issues fit in a CEO’s vision? How does a credit union boss promote people without disrupting customer service? What does a consulting firm CEO think of campus recruiting? From job security to youth mobility, six Canadian CEOs share their retention strategies.

Dave Mowat
Vancouver City Savings Credit Union

VanCity is one of Canada’s largest credit unions, with 39 branches throughout Greater Vancouver, the Fraser Valley and Victoria.

As a small, niche-market player in Canada’s financial services industry, holding on to good workers has to be more than hollow rhetoric, says Dave Mowat, VanCity CEO.

Everyone is saying that these days, he says. They know keeping turnover down reduces training costs and improves efficiency and productivity, but for VanCity it is one of the most important competitive advantages the institution has, he says.

“If you measure financial institutions by their size and how many branches they have got, then the Royal Bank wins hands down. But if you measure it by the relationship that customers have and the calibre of people and the attitude of the people, that is 100 per cent within our control so we can beat them any day of the week.”

That means providing good service and keeping employees satisfied are the two closely-connected key drivers of the business. It says so right in the business plan. Mowat credits this commitment to employees for the low turnover at the organization.

Like every other organization it goes up and down, says Mowat, but in the first quarter of 2003, the rate was 1.1 per cent. “So that would be about four and a half per cent for the year.”

“We have years where we have gone up as high as 10. That is still low. Our industry tracks in the low teens. Anywhere between five and 10 per cent is where we run. And that is below average.”

However, great people want to be rewarded, which can be done, but they also want to be promoted. This is where things get difficult, says Mowat.

“If you ask the average Canadian what the number one pet peeve of their financial institution is they will say, ‘They change people every three months,’ or something like that,” he says.

“And so sometimes our customers are the victims of our employees’ success. We’ll have a manager or financial services representative who is so good at their job and they want to improve their career. Employees want to be given more responsibility and want to be promoted. That is a bit of a downer to our customers because they have built a relationship and they really don’t want that person to move along.”

The challenge is to maximize employee career development while minimizing the amount of change for the customer, says Mowat.

“If we had somebody who was doing a great job, before, the knee-jerk reaction was to promote them to a new job. Now we try to broaden their experience while they are there. We might give them special projects of some kind or a task force or added responsibilities right in that branch,” he says.

“We are looking at trying to promote people in place. Instead of having to move to that bigger branch to get to the next pay grade or the next responsibility we build that job in the location they are at.”

Another important step VanCity took to reduce turnover in recent years was to create “change specialists” at every location. These are the point people for employees to visit whenever they have fears or concerns about change. These change specialists are briefed on any initiatives going on at the organization so they can address questions employees have. And just as importantly, says Mowat, they are also charged with the task of taking any questions that can’t be answered back to head office.

Any change initiative, no matter how small, can drive up turnover, says Mowat. Any time employees are unsure about what is going on and why, they are less satisfied in their work. “The unknown can create enough dissatisfaction that you might lose somebody and you usually only lose the really mobile and the really talented ones because they are concerned that maybe something is going to happen to their jobs.”

Dean Connor
CEO in Canada
Mercer Human Resource Consulting

The Canadian arm of Mercer Human Resource Consulting employs 1,400 people across the country, with head offices in Toronto.

Some time back, leaders at Mercer Human Resource Consulting thought they were facing an impending problem with older staff nearing retirement.

The company conducted a workforce study with projections for the next 10 years. “We thought we had a problem, and in our usual style, we wanted to substitute facts for impressions,” says Dean Connor, CEO of the firm’s Canadian operations. “What we discovered was we didn’t have a problem with the aging workforce. But what we had was a hole in the 38 to 45 age band.”

This gap was caused by a lack of campus recruiting many years ago, “when we had to cut back in response to economic conditions.” As for the older workforce, it’s distributed in “a nice orderly way that doesn’t really pose us much of a problem,” says Connor.

He adds that there are two lessons to be drawn from this study.

“One is never again will we cut our campus recruiting because of economic conditions, and two is we have to go out and fill that hole.”

Part of that effort is looking at other Mercer offices globally to find people willing to transfer. The other is to just “go out and talk to people and find people.”

Connor is proud of the level of representation of women in the workforce, which stands at about half. “The challenge that we’ve got is women, after they’ve become a principal, will then move on to childbearing years. So the challenge is having more women at the senior levels.”

One of ways Mercer is trying to address that is to encourage female principals to participate in the Women’s Business Network, “which we’ve created as a forum for senior women to mentor other women in business networking skills. It’s also a forum for women to introduce themselves to clients and prospects.”

Connor is looking to set up another workforce projection study to determine whether the proportion of women at senior levels will be increasing.

“We’ve got the typical array of flexible work programs, not just for women. It may be part-time work or work-sharing or sabbaticals. And the question we’re asking is, ‘Are we on the right path? Will these programs position us for the future?’”

Apart from the Women’s Business Network, Mercer doesn’t have any program to aggressively place women in senior roles, says Connor. “I think if we could find a way to keep more women attached to the workforce and bridge them through the childbearing years — if, as and when they are ready to come back — I’m absolutely convinced that their talent will make those numbers grow.”

Mercer places a lot of emphasis on numbers and metrics, he says. The company carefully tracks the turnover — currently around eight per cent to 10 per cent — for involuntary and voluntary departure. The turnover rates are broken down by performance level, says Connor, adding that the overall strategy to retain good performers is “managing non-performers.”

To do that, managers keep a close eye on the performance management system, “and if there are issues, we give them coaching and advice on how to improve. And ultimately, if they’re not meeting what we expect, we figure out a way to have them move on into a career where there’s a better fit.

“We really measure it and track it. We make sure that if there are performance problems, they’re being dealt with. It’s important because if you don’t do it, you’ll lose your good performers or they start to tune out.”

Peter Pekos
President and CEO
Dalton Chemical Laboratories Inc.

Established in 1986, Toronto-based Dalton employs 90 people and provides contract research and development services to clients in the pharmaceutical and biotechnology sectors.

Dalton Chemical Laboratories Inc. has become heavily dependent on workers from other countries in recent years. About 70 per cent of the company’s 90 employees are new Canadians, says Peter Pekos, president and CEO. “As a result of that we have over 30 different cultures represented in our company.”

Having so many new Canadians and such a diverse group presents some unique retention challenges, he says. It can be difficult for people to feel comfortable in their new setting.

“One of the things we try to do is make individuals feel comfortable within the company in expressing their own diversity,” he says. “So we have international lunches where we celebrate the different foods of the world. Everyone brings in a dish and people will talk about their foods and maybe some of the history.”

The firm also takes time to celebrate holidays from other countries, and runs English-as-a-second language training. This has really helped a lot of the new Canadians who’ve joined the company, Pekos says.

“We notice that things run smoother within the organization. There is a higher level of understanding when someone is communicating an idea to another person. They pick up the ideas faster.” Or equally important, “they recognize when they are not getting it. And in that way we get less miscommunications.

“What does that mean for retention? People feel more comfortable here. They are respected and they don’t feel as threatened by their communication skills not being at a higher level. They have a certain loyalty to us.”

Efforts to develop loyalty are paying off in a turnover rate that’s below industry standard. The company’s turnover rate is 10 to 15 per cent, whereas the industry norm is around 15 to 25 per cent, he says. But it wasn’t always that way.

“It was like a training ground,” he says of the company’s early days. “They would come and get their six months or one year and then they’d move on. What we have noticed is that if someone gets to two years in our company they are more likely to stay. So the first two years are crucial.”

Of course, people are also more likely to stay if they are a good fit in the first place, he says. And a newly acquired candidate profiling system should help the firm find the right person for the right job.

“There is a certain school of thought that says if somebody isn’t happy in their job then it is very difficult to change their sense of the job and it is better just to ease them out,” he says. “But we have had a number of examples where people haven’t performed well in a particular job function but we thought they were valuable, that they had a pretty good attitude and we have moved them into other jobs in an effort to find a more suitable position for them. With this new profiling system we will be in a much better position to see if it is a job mismatch or a company mismatch.”

The new system is just one indication of a greater organizational overhaul. “I call it a tightening up,” says Pekos. The org chart will be redrawn, reporting structures reviewed, new departments created and new performance management systems put in place. “We are just getting that corporate structure down so that it will improve the flow of work in the company.” And he knows from experience that change like this will test retention practices.

Three years ago when Dalton Chemical left its original York University setting, it lost nearly one-quarter of its staff. “We lost them because it was a totally new culture. Our people liked the university environment.”

But he hopes open and constant communication, as well as his own record of personal involvement with every employee, will be enough to convince people to stick around.

“I want to make sure that people know me and trust me and so by being in front of them and dealing with their issues head on, I have a very strong ability to gain their trust. When I tell them something, they are likely to believe me,” he says. “I believe I have demonstrated that they are important to us. And so by taking that approach, I believe that I’ll be able to manage this company though this change.”

Ed Lavin
Delphi Solutions

Based in Markham, Ont., telecommunications firm Delphi Solutions has 200 employees.

Two years ago, when Ed Lavin acquired the assets of Delphi Solutions, he found himself once again heading the company he started in 1980. It was much pared down from the company he had left.

But there are still a few familiar faces around from way back when. “And that’s nice to have sometimes,” says Lavin.

Lavin lead marketing and investment firm the Hawkeye Group in acquiring Delphi in 2001, returning to Delphi as its CEO.

Now, Lavin is eyeing the business telephone market in the New England states, and as Delphi Solutions prepares for an expansion, Lavin says he’s aware that he needs a committed staff more than ever. With turnover sitting at 17 per cent, improving retention is important as the firm looks to expand, Lavin says.

“What we’re bringing to the table now is a growth ethic, and a movement of the company, which will require the support and enthusiasm of the entire staff to be successful.” He’s planning for two months of touring, when he will visit Delphi Solutions’ 12 office locations in Canada and hold “Ask-me-what-I-believe” meetings.

The concern that he has heard most often is, “Is my job safe?”

“My response is this company doesn’t make things. Our assets are our customers and our employees, that’s all we have. So we make it clear to our employees how important they are to our future.”

Lavin says the next phase of expansion will depend on involvement from everyone.

As Delphi Solutions rolls out a new network services model, signing up new clients isn’t just a job for the sales team. It’s the job for everyone working with clients at any point of contact — including billing, customer service and, most importantly, technical support.

“The technical operational people are very respected as a group, because they’re almost like physicians for our clients. They go in and make things right. So we want to plant seeds of interest, communicate with them what we’re going to be doing, and allow them to register our customers and participate financially in that registration.”

David MacDonald
Softchoice Corporation

With head offices in Toronto, Softchoice provides technology solution consulting. The firm has 475 employees (288 in Canada).

With the average age of its workforce hovering around 31, there’s a heavy focus on training and development at Softchoice, says president David MacDonald.

Members of the sales team, for example, receive 43 days of training in the first two years at the company.

“We view people as a core asset of our organization because we don’t manufacture products. We manufacture customer experience, which is all about people. So we’ve really improved the kind of career path and development for people in the last little while. We’ve been creating more progression within the sales ranks and increasing the amount of people we have working with our customers.”

There are a few people 55 years old and beyond, and those people are valued for their experience and judgement. “In accounts receivable, when somebody there has experienced a challenging economic environment, they would be able to judge much better how a customer operates in that environment, and therefore how we should act.”

As the 12-year-old firm continues expansion in both Canada and the U.S., retaining the skills and knowledge of workers in acquired organizations has been important.

Softchoice recently purchased a Virginia subsidiary that sells technology products to the United States government. On the day of the acquisition, Softchoice sent three vice-presidents to the Virginia office to explain the history and the operations of the company, and to “make sure that they understood their role,” says MacDonald. The whole company was then flown to Muskoka in northern Ontario to network and immerse in the company culture.

“We’re not just buying a competitor to get scale or size, we’re buying a specific capability to get at the government of the United States. We just gave them a heavy dose of engagement and support, and made sure they realized they’re important to where we’re going.”

The firm has been able to build and retain ethnic and gender diversity within its workforce. Women make up 44 per cent of the staff, and 34 per cent of the managers. Visible minorities make up 36 per cent of the Softchoice workforce and 27 per cent of the managers.

“What we think is really integral to the growth of this organization is freedom. So while we think it’s important to do the job right and to be accountable, how you do it and the way you approach it, and the diversity in your thought process is a welcome addition.”

The turnover rate at 30 per cent reflects the company’s youthful workforce, says MacDonald. Exit interviews show that many of the people leaving go back to school or pursue another career, he added. “We have a funny approach to that in the sense that we’re supportive of them. We’re sad to see them go but in a lot of ways, we prefer people pursuing what makes them happy.”

Richard Manning
President and CEO
Hanson Brick & Tile

Hanson Brick & Tile was formed earlier this year from the merger of seven North American brick companies, including Canada Brick (Ontario) and Briqueterie St. Laurent (Quebec). The company now employs more than 2,000 employees with Canadian head offices in Mississauga, Ont.

Richard Manning remembers well what it feels like to be a front-line employee left in the dark.

“When I was a forklift truck driver, it was my job, it was my livelihood. My family depended on all of that and yet there were people in the company who just didn’t bother to come and tell us what was going on,” he says. “I always said to myself that if I ever reached a position of some sort of authority that I would always remember not knowing what was going on.”

And he did remember that feeling as he led the merger of seven separate North American brick companies (two of which were based in Canada) into one single operation based in Charlotte, N.C.

“From the point of view of retention, if you change anything then people become nervous, they are looking over their shoulder. I was determined to saturate these people with information about what we were doing. And not just what we were doing but why we were doing it, and how it would benefit them and the customer and the company,” he says.

“I had people from a corporate point of view chomping at the bit to get a lot of P.R. done and a lot of advertising and pushing this thing out to the market. And my stance was, ‘Look, this company belongs to the people who work in it.’ They have a right to know what is going on before we launch this to everyone else,” he says.

They only way the merger was going to work was if employees had a clear understanding of what was being done and why. “And so what we did was set up a series of road shows which I did with a small team. I put myself in front of every single employee in the company.”

This was a new approach for many of the employees. In fact, a lack of communication in one of the Canadian operations was causing considerable problems.

“This got to a stage where there was a question as to whether the employees in this particular factory were going to join a union or not. I said, ‘If these guys want to join a union that is fine. That is their right to be able to do that. But let’s just analyze why they want to do it.’”

It became clear many employees felt they weren’t being heard by their leaders. “So I said, ‘Okay, let’s book some tickets and let’s go and see them.’ We actually went up to one of our factories and we shut the factory down and we called all the guys together from every shift and I just stood in front of them and I said, ‘Look, I don’t know what this is all about but if you want to tell me what this all about, I’ll listen and if there is anything I can do to help you then I will.’”

He explained his new vision for the organization and pledged to set up new communication vehicles immediately and to return one year later to stand before them once again. “What actually happened is they voted against joining the union.”

Inevitably, as he met with his employees, he was asked about job security.

“The question of layoffs always comes up,” he says. “You can’t promise that there won’t be layoffs and the reason for that is an economic one.” War in Iraq seemed inevitable and the economy was still shaky. But, he told them, the intention of the merger was not to cut operations. It would not be easy reshaping the company, he admitted, and in some areas people will lose their jobs as overhead is reduced but in the long run, for the people working on the front lines actually making bricks, the upshot would be more job security not less.

“Look,” he told them, “I have been brought over here from England to run this company. Do you honestly believe that I brought a wife, two dogs and two cats over here in order to start closing factories and shrinking the business because that is not the case. I wouldn’t have done that. We are committed to growing the business.”

This honest approach and constant communication has resulted in little change in turnover rates at the Canadian organizations as they were moved under the Hanson banner, says Manning, with turnover in the Toronto-area operations staying in the one to two-per-cent range.

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