Talent Management Column

Creating a Performance Culture

Low wages and high turnover are common in occupations such as those found in the home-healthcare field, but Alternate Solutions Home Care found a way to counter that situation by creating a culture that focuses on retaining talent. And it paid off in both employee commitment and profits.

Monday, September 13, 2010
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If you've been reading the headlines about the labor market, you probably know that one of the big concerns seems to be that many of the new jobs are in the low-wage service sector.

One of the lowest of the low jobs has been home-healthcare work. This work is very important, of course. It provides basic care for vulnerable people who would otherwise be out of their homes and in much more expensive and stressful institutions.

But it has also been low-wage, low-status and high-turnover work that has often targeted the least employable applicants. Turnover rates of 100 percent per year, for example, are common in this industry.

It's always surprising -- and inspiring -- in contexts such as these to find organizations that have charted a different course -- creating good jobs and an effective business model. The essence of this different course is by now pretty clear: By treating employees well, we can get them to be more efficient and effective, in turn making the entire organization more effective.

A good example of that different model in this industry is Ohio-based Alternate Solutions HomeCare, a 10-year-old company that has been growing at 64-percent per year throughout that decade.

CEO David Ganzsarto explains that, when he and his wife founded the company, their big problem was retaining staff. Growth and success created its own problems. Changes that workers were not prepared for and, no doubt, management mistakes along the way led many employees to quit.

The company sought help on how to become more professional in its management, but one of the key events in the road to their different path came about somewhat by accident.

It was the requirement that the company needed to have a mission statement in order to be certified by Medicare. After cooking one up on the spot, they stopped, decided what they really did believe, and then rewrote it.

One of the central tenets of the company after going through this process was that its culture was the key to retaining talent -- and retention, in turn, would become the key to its business success.

Here's the signal event that demonstrates how this company is different. We might call this a re-employment interview, but David calls it "the core-beliefs interview." When candidates apply for a job, they are given a copy of "the culture book," which is made up of testimonials about how the company operates from clients, staff members, vendors and everyone the company touches.

Once hired, the first two weeks on the job involve exposure to different aspects of the company's operation.

Then every new hire meets with the CEO for an interview where David outlines the core beliefs of the company and asks the employees what they think and whether this list matches their beliefs. If this doesn't seem like a good match for you, he says, we'll pay you for your time so far and give you a departure bonus. No hard feelings. If you think it is a good fit, then come back the next business day, and we'll get down to work.

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Since introducing this and other new management arrangements, turnover fell from 50 percent per year to about 10 percent. Profits doubled the next year. And 90 percent of new hires now come from employee referrals.

Some of the company's other practices follow from the strong culture idea. At remote locations, they have a staff member empowered to be the "culture coordinator" to ensure that the culture there doesn't drift away from the core values.

They have a leadership-development program -- pretty unusual in itself for a traditionally low-skill and low-wage industry -- and the graduates each year select the participants for the following year.

Here's another practice that is pretty "out-of-the-box." The company does something we might call a needs assessment for each employee followed by development plans to help achieve those needs. It might be more accurate to think of this as "dream coaching," as the employee's goals can be anything, even if it doesn't relate to the workplace.

What does a company get from practices like these? A workforce that cares about the company because they believe the company cares about them. A workforce that is more willing to accept tighter performance standards and deliver higher levels of service to clients. And a business that grows faster and makes more money.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School.

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