1. New Hire
Retention
Minimizing New Hire Attrition
Rates
Douglas Radoye
Old Dominion University
Engineering Management and
Systems Engineering Department
Midterm Research Paper
Radoye, Douglas
drado002@odu.edu
ENMA 601
Fall 2016

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Douglas Radoye
Dr. Pilar Pazos
ENMA 604 - Analysis of Complex Organizations
4 September 2016
Companies that survived hard economic times of the early 2000s are no longer in
hiring freezes. In fact, there is a great demand for engineers across the information
technology services industry. Just search “engineering” on any job search site. Recent
graduates with technical degrees and backgrounds have their choice of cities and
opportunities both across the country and around the world. Many companies are even
offering referral programs and hiring bonuses. With so many opportunities and a
growing industry it would appear nothing could stop tech giants from incentivizing and
retaining their employees.
The current problem is job longevity. With so many job opportunities where each
company offers a slightly different package of benefits, salary, and additional incentives,
new hires are not likely to stay at a job for very long. In fact, according to surveys 21%
of millennials have changed jobs in the last year, 60% are open to new jobs, 50% plan
to stay at their current place of employment longer than 1 year, and 50% would switch
jobs if offered less than a 20% raise (Rigoni & Nelson, 2016). Additionally, 50% of
employees between ages 20 and 24 have been with their current employer for less than
1 year, 13% have been with their current employer for up to 23 months and 10% have
been with their employer for 2 years (Testa, 2008). These two sets of numbers indicate
employees, specifically millennials, are not settling down. The days of employer loyalty
are long gone. The trust between employer and employee is not where it was twenty
years ago before slashing tiers of management and dropping inessential positions.
What are employers, specifically in the information technology services industry, to do in
order to retain their new hires? Through research and analysis this paper will outline a
set of guidelines for managers to follow in order to decrease the rate of new hire attrition
and the churning affect in the information technology services industry.

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Traditional monetary incentives may not always be necessary in retaining new
hires. Alternative methods have proven successful when managing engineers.
Companies like IBM invest earlier in a new hire’s training and development instead of
solely focusing on monetary incentives (Wichert, 2015). By using a combination of the
guidelines mentioned in this paper, a manager can be well along in their journey to
decrease their turnover rate.
Research Objective
This paper will outline through research and analysis the steps a manager can
take to decrease their new hire turnover rates. The goal of this research is not to find a
“one size fits all” solution, but rather to present tools that can be customized to aide any
manager in retaining their new hires. Additionally, this paper will answer the question:
Can anything be done to decrease new hire attrition rates, and if so, what can be done?
Recognize Performers and Deal with Underperformers
It is easy to recognize a performer. Someone who shows up on time every day,
works hard, stays late if necessary, and gets the job done. These employees keep
projects afloat and are easily motivated. A manager can stick them on any task and
know it will get done. Then there is the alternative employee. This employee shows up
late, consistently underperforms, and is first to leave. They not only cause trouble for
the project and the manager, but they drag their colleagues down. This is dangerous.
As mentioned before there is a surplus of new opportunities for those who want them.
Top performers see tolerance of underperformers as more than a nuisance. These top
performers see the tolerance as an inadequate working environment. They want a work
flow that is changing and where their colleagues are also performing (Morgan, 2008).
When an employee who performs works alongside an equally compensated
employee who underperforms they expect change. Either they are promoted or better
compensated, or the underperformer is removed. If neither of these happens and the
manager does nothing, the performer will become frustrated (Morgan, 2008). While the
situation persists, the performer will begin looking for alternative employment in order to
work with peers who value hard work and put the effort in themselves.

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Lead
Easier done than said, managers need to see their employees as employees, not
just metrics or resources but people. By doing this managers will be able to more easily
engage with their employees who perform. It is easy to get caught up in the big picture
view. Managers should take the time to tell their invaluable employees that they are
invaluable. What’s the difference between managing and leading? Managing is
coordinating stakeholders and project teams towards completing goals and deadlines.
Leading is taking the time to know individuals and encourage employees to continue
high levels of performance. No employee is the same, so their treatment should also
not be the same. Top performers should be treated as top performers (Morgan, 2008).
From a different perspective, managers must be composed of multiple qualities.
They must be competent (technically and managerially), courageous, full of character
and composure, as well as care for their employees (Morgan, 2008). An employee
should see their manager as an asset, not a liability. There must be a confidence from
a new hire’s perspective that their manager is looking out for them and is a resource
available to them as they grow. The manager must have confidence to lead and
interact with the stakeholders. It is not the job of the employee to worry if their manager
is sure of themselves or not. While the manager must stay composed and consistent,
they must also be relatable and approachable. This means each employee should feel
their manager is on their side, not in a desk lording over them.
Move New Hires to the Forefront
To retain new employees companies need to put young talent at the forefront of
emerging technology. Companies like Lockheed Martin put young talent on high-profile
projects to give new hires a sense of purpose (Putre, 2016). Tradition normally has new
hires start from the bottom and work their way up. They get stuck with grunt or
mundane work. New hires are more likely to stay if they get to apply skills they have
recently developed to something they see as meaningful or purposeful. FLEXcon states
that 60% of their new hires under this concept are still working at their company (Putre,
2016). This also keeps new hires engaged.

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With projects that are new and emerging, new hires get to use cutting edge
technology which keeps them engaged. By keeping a new hire engaged, a manager
insures the new hire is not bored or idle. When given engaging work, a performer will
be more likely to appreciate tasking and build loyalty to a company. A loyal, engaged,
appreciated employee does not easily leave a company.
Always Suggest Room for Improvement
Regular performance reviews can be seen as mundane, time consuming, and
potentially detrimental. Alternatively, conducting performance reviews and evaluating
employees conveys care and support by focusing on strengths and ways to improve
(Selden, Schimmoeller, & Thomson, 2013). With something to work towards, new hires
have an interest, a goal to obtain. Additionally, by taking time out of their schedule to
look at goals and ways to obtain them, managers help cast a vision where the employee
reaches their goals at the company. Managers can even help their employees through
training and development to obtain their goals.
The goal of performance reviews is not just to focus on strengths, but to point out
weaknesses or places that need improvement. Idle new hires are not good from a
management and retention perspective. Workplace training and development are
essential to employee retention (Seldon, 2013). An employee without a goal will begin
to slack off and fall behind. By giving a new hire something to work for a manager helps
set goals and keeps these new hires engaged. Additionally new tasks and assignments
push new hires to grow and be the best they can be (Morgan, 2008).
Promote from within
New hires want opportunities to grow. When they are given or see a peer given
an opportunity to work on a new assignment or take a new direction with a project they
are more likely to see opportunities for growth. Existing employees, even if they are
relatively new to the company, have a proven track record. Managers already know
their strengths and weaknesses. They know that the employee fits into the work culture
and environment. This alleviates unknowns when hiring from outside (Morgan, 2008).

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When looking to encourage employee loyalty, manager company loyalty also
needs to be monitored. Hiring from outside when there is a mostly qualified candidate
inside the company can be seen as a betrayal. New hires are always watching and
making decisions about whether or not they will stay at the company. A few wrong
moves and the employee will leave; too many cautious moves and the company will
lose money. It is a careful balance, but it is something important to always keep in
consideration. When talking about new hires, loyalty and opportunity are key. MBX
Systems, a network server appliance manufacturer, allows employees with new ideas
the opportunity to interact and discuss their ideas with executives (Putre, 2016).
Keep Engaged
New hires need something to be busy. Managers should get to know their new
employees’ interests in order to provide interesting tasks and learning opportunities
(Rigoni & Nelson, 2016). An uninterested or unengaged employee is more likely to
leave the company. They feel that they don’t fit into the company or that there are no
opportunities within the company to pursue their interests. It is up to the manager to
target these interests and task appropriately. Idle employees are more likely to pursue
more interesting work at another company. With so many opportunities in the job
market to move on to something that appears more interesting, new hires are yet again
at risk of flight.
Tasking and development both must interest the employee. Managers should
provide training and learning opportunities that interest the employee and keep them
engaged. A manager directly provides opportunities to develop an employee. If the
employee is not being provided opportunities to develop their skills, they are likely to
see this as a lack of care or interest on the part of their manager. A perceived lack of
care can send a new hire running within a year of employment.
If an employee gets to do what they are interested in, they are more likely to stay.
By letting an employee learn and do what they find interesting a manager will ensure
the employee enjoys their job (Govaerts, Kyndt, Dochy & Baert, 2011). An employee
that enjoys their work and is excited to come in every day is hard to come by no matter

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the length of employment. Apply this to the rates of new hire turnover and a manager
might be on their way to keeping a new hire longer than the two to three year maximum.
Pay a Little More
While paying a new hire, especially one right out of college, more money sounds
like a poor idea, but it can pay off in the long run. Estimations say that it can cost as
much as 150% of an employee’s salary to replace that employee (Rigoni, 2016). At this
rate companies cannot afford to keep refilling a position year after year. If a slightly
higher salary will give a greater sense of worth to an employee, then the cost may be
worth it. Also, it could keep the employee from heading elsewhere if they can’t find an
alternative that matches or beats their current salary.
Another option is small but frequent incentives. Nortel, a network and
telecommunications company, uses a gift certificate program to incentivize employees.
Specifically, they engage new hires early on to train them from the start (Testa, 2008).
These incentives are more organic and spontaneous. A manager can issue a gift card
anytime and however frequently they would like. With small regular rewards a new hire
is trained for good behavior and taught loyalty. They are being rewarded for making a
good choice of companies for whom to work. Since the new hires are regularly
incentivized from the beginning, the system is engrained. They don’t have to wait to be
engaged. With the problem lying in the first year of employment, quick engagement is
key.
Invest in Training
Beyond a form of compensation, paying for or offering in-house training can
show an employee, specifically a new hire, that the company cares. Research shows
that employees are more likely to stay at a company if they feel that they are growing or
learning (Govaerts, Kyndt, Dochy & Baert, 2011). If an employee feels that their
manager or employer cares about their development, they are more likely to stay. It
gives the employee a sense of commitment from their employer. Their employer is
saying that they want them to learn and grow into their current position or future
potential.

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This becomes a cycle. The employer gains an employee with a higher skill set.
The employee gets a higher skill set and could become an asset to the employer. With
this cycle both the employee and the employer win. More importantly, the employee is
more likely to remain at their place of employment as they gain new skills and feel that
their manager cares.
Job Rotation
Job rotations allow new hires to see where their interests lie. New to an industry
and company, most new hires just want to find the right fit. In the U.S. government,
setting more opportunities for new hires to rotate positions lowered voluntary turnover
rates (Selden, Schimmoeller & Thomson, 2013). The employees get to rotate around
through different projects in order to find if they like something better. Instead of getting
hired for a specific department and making that the only option, the U.S. government
expects new hires to rotate through different projects to find the right fit.
In some cases the employee finds the right fit, and permanently transfers to that
department. Now the U.S. government has not lost an employee, but found the best fit
for that employee. This encourages the new hire to remain with their employer for
longer. This can work at larger companies with multiple interests and projects, but in
cases where the company does not have enough projects to let employees rotate it
would not work.
Summary
In conclusion, managers have the ability to lower the new hire attrition rate.
Millennials are a new workforce, and they cannot be managed in the same manner as
their predecessors. The current job longevity rates indicate that current management
styles are not adequate in dealing with the new job force. Managers must adjust.
They can weed out underperformers to protect performers. Performers will not
sit around while they watch their peers slack off without repercussion. Leading new
hires goes beyond papers and numbers. Employers need to create positive
relationships and meet regularly with their new hires. New hires should be put on the
newest assignments and at the forefront of technology. Not only do they potentially

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possess knowledge of the new technology if they attended some sort of training or
education previous to being hired, but emerging technology will keep them interested
and engaged. If a new hire thinks they are doing everything right, they will not develop
new skills or work on their weaknesses. It is the job of the manager to help set goals
and encourage development. Managers should always consider the opportunity to
promote from within. New hires will see opportunities for growth and realistic goals they
can obtain. It is difficult, but a manager must keep a new hire engaged. The new hire
must always have a task on their plate and feel they have a place in the company. By
paying a little upfront in terms of starting salary or offering small rewards throughout the
first few years or employment an employer helps send a message that the company
was the right choice. The new hire is being rewarded.
Conclusion
There exist methods for a manager to decrease new hire attrition rates. Those
methods can be customized to accommodate different companies and management
styles.
Implications and Limitations
Some of the research presented in this paper is tailored to specific industries,
work cultures, companies, or management styles. Additionally, an analysis of the cost
to implement these points is essential. In some cases the suggestions may be more
cost efficient than the current program, but in other cases the suggestions may be more
expensive than the current program. As previously mentioned, it should be noted that it
can cost up to 150% of a yearly employee’s salary to replace that employee (Rigoni,
2016).

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Works Cited
Govaerts, N., Kyndt, E., Dochy, F., & Baert, H. (2011). Influence of learning and working
climate on the retention of talented employees. Journal of Workplace Learning,
23(1), 35–55.
Morgan, H. J. (2008). I hired you, you’re perfect … now stay! (the top ten list for
retaining top talent). Business Strategy Series, 9(3), 119–125.
N. Forhad, M. S. Hussain and R. M. Rahman, "Churn analysis: Predicting churners,"
Digital Information Management (ICDIM), 2014 Ninth International Conference
on, Phitsanulok, 2014, pp. 237-241.
Putre, L. (2016). Millennial Retention Needs More Attention. Industry Week/IW, 265(4),
22-24.
Rigoni, B., & Nelson, B. (2016). Many Millennials are Job-Hoppers -- but not all. Gallop.
Selden, S., Schimmoeller, L., & Thompson, R. (2013). The influence of high
performance work systems on voluntary turnover of new hires in US state
governments. Personnel Review, 42(3), 300–323.
Testa, B. M. (2008). Early Engagement, Long Relationship?. Workforce Management,
87(15), 27-31.
Wichert, I. (2015). Helping New Hires on Board. Recruiter, 1