Description
The general definition of an audit is an evaluation of a person, organisation, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, internal auditing, and government auditing, but similar concepts also exist in project management, quality management, water management, and energy conservation.
HOW AUDITING COMPANY X WORKS WITH RETAINING VALUABLE EMPLOYEES?
Abstract
Today, neither employees nor employers seem to take for granted that a person will stay with the same firm until retirement. Yet, keeping employees for longer periods is an important challenge for firms. One industry where retention is interesting is the auditing industry in Sweden, this because certain requirements are needed to become an auditor. Firstly, the employee needs to have a Swedish university degree, including specific courses within auditing/accounting. Furthermore, the person needs practical experience for a specific period of time. Due to these statements the challenge of retaining and motivating valuable employees is crucial for the auditing firms, which is why we have chosen to do a case study at Auditing Company X to see how they work with employee retention. We have compared the findings to our chosen theory, which consist of four categories: the hiring process, internal labor market and career, motivation and performance, and finally culture and leadership. These four categories are initially based on Leigh Branham?s book: „Keeping the people who keep you in business: 24 ways to hang on to your most valuable talent? (Branham, 2001). In our conducted case study, at Auditing Company X, we have been able to conclude that the firm?s retention practices are to a great extend in line with the theoretical framework. There are some areas that need further attention from the company, such as an individualized reward system and communication between managers and employees. Even though there are some parts to work on the most important aspects of retention, such as having a holistic and long-term orientation, Auditing Company X seems to have incorporated this into their practices successfully.
Keywords for this paper: Retention, Auditing
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Table of Contents
1 Introduction ................................................................................. 4
1.1 1.2 2.1 3.1 3.2 3.3 3.4 3.5 3.6 4.1 4.2 4.3 4.4 5.1 5.1.1 5.2 5.2.1 5.2.2 5.2.3 5.2.4 5.3 5.3.1 5.3.2 5.3.3 5.3.4 5.3.5 6.1 6.1.1 6.1.2 6.1.3 6.1.4 6.2 6.2.1 6.3 6.3.1 6.3.2 6.3.3 6.3.4 Background ..............................................................................................5 Problem....................................................................................................6 Research questions .................................................................................7 Perspective ..............................................................................................8 Research approach and strategy.............................................................8 Reviewing the literature ...........................................................................9 Data collection........................................................................................10 Qualitative data analysis ........................................................................11 Delimitation ............................................................................................12 Hiring process ........................................................................................14 Internal labor market and career............................................................14 Motivation and performance ..................................................................15 Culture and leadership...........................................................................17 Auditing Company X - One of the "Big Four"........................................18 Information from the HR manager .........................................................19 Interview with HR manager....................................................................20 Being an attractive company .................................................................20 Hiring process ........................................................................................21 Introduction of new employees ..............................................................22 Motivating and supporting employees ...................................................23 Interviews with employees.....................................................................25 Interview with E1....................................................................................25 Interview with E2....................................................................................26 Interview with E3....................................................................................26 Interview with E4....................................................................................28 Interview with E5....................................................................................29 How the HR department works compared to Branham.........................30 Hiring process ........................................................................................30 Internal labor market and career............................................................31 Motivation and performance ..................................................................32 Culture and Leadership..........................................................................34 Why the employees stay........................................................................35 In General ..............................................................................................36 Comparing the HR department, employees and the theory..................37 The hiring process .................................................................................37 Internal labor market and career............................................................37 Motivation and performance ..................................................................38 Culture and leadership...........................................................................39
2 Purpose ........................................................................................ 7 3 Method.......................................................................................... 8
4 Frame of reference.................................................................... 13
5 Empirical Findings .................................................................... 18
6 Analysis...................................................................................... 30
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7 Conclusions............................................................................... 40 8 Discussion ................................................................................. 41 List of references ........................................................................... 43 Appendix ......................................................................................... 45
Appendix 1 Branham's original four keys and practices ....................................45
Table of Figures
Figure 4-1 Maslow's Hierarchy of Needs............................................................16 Figure 5-1 Auditing Industry Market Shares.......................................................19
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1
Introduction
The reason why we are interested in human resources (HR) is that we have barely touched upon this subject during our studies. We believe that this subject is a key in real business life, especially for managers, and an important area of study concerning soft values, which have lately been attracting more attention than just the bottom line i.e. profit. Thus, we were all interested in HR and especially in what firms can do in order to retain their employees, and how they actually do it. Also, we have taken part of the debate in media, which states that there has been a major shift in how employees move from one company to another. During the last decade, there has been a shift from having a lifelong employment at one single firm, to changing employer every other year. This shift must naturally have enormous implications for the companies. Losing your employees means losing your competencies and your investments in form of education, training, recruitment costs etc. In addition, more resources must be allocated to recruiting new employees. Thus, retaining your staff is the real issue of the 2100 century. As we are soon to be done with our studies, we took the opportunity to increase our knowledge about this subject by writing our bachelor thesis within it. This bachelor thesis is the final report that the authors do before leaving Jönköping International Business School (JIBS). It is thus not a course report, neither a part of a larger research project. This is the final piece before we receive our bachelor degree within business administration. The purpose of this case study is to dig deeper into the retaining practices, and we hope to generate valuable information not only for the auditing industry, but also for other service industries. We have chosen to focus on one of the "Big Four" (Deloitte, Ernst&Young, KPMG, and Öhrlings PriceWaterhouseCoopers) large auditing firms in Sweden because they have more resources allocated to deal with this issue and thereby more extensive retention practices than a smaller auditing company. Therefore, it becomes more visible what the HR department is doing to retain the employees. In this report we started to review the literature and constructed a basis for our theoretical framework, using Branham?s four keys for retention. We then conducted an interview with the HR manager at Auditing Company X and later five employees to find out what the HR department focuses on and if the employees have the same picture. Finally, we compared this snapshot with our theoretical framework, evaluated their practices and made our interpretations. We were particularly interested in the auditing industry because we believe that they might be more vulnerable. The special rules concerning how to become an auditor limits the amount of available candidates for employment. All auditing companies need to breed auditors that in a few years hopefully become accredited. If they do not succeed with this process they will not have a sufficient amount of accredited auditors to conduct their business, and recruiting auditors from other auditing firms is not the solution, when this only happens on rare occasions. In other words, once hired, it is important for auditing companies to keep their employees. This topic is important to study because it shows how firms should work to keep their valuable employees, thus decreasing their employee turnover and thereby saving both money and time. This thesis is important because it can potentially be of assistance to the auditing industry and work as a guide in how to work with retention. On the other hand this work might prove to be interesting for other industries that also suffer from involuntary em-
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ployee turnover, but might have an easier task of finding suitable employees than auditing companies due to the fact that they are not as limited in the search of new employees. The issue of keeping the valuable employees is not only a matter of money and time, but also a social key to make your employees feel satisfied about their work, thus not only staying but also giving their best for the success of the company.
1.1
Background
Imagine yourself as an employee, perhaps you already are one. Why would you stay with the same employer for the rest of your life? Or why would you not? Today, neither employees nor employers seem to take for granted that the employees will stay with the same firm until retirement. Yet, keeping employees for longer periods is an important challenge for firms today. About 20 years ago employees were loyal to their employers and tended to stay within the same firm for life. Today the situation is different: if an employee is not satisfied with what the employer has to offer, the step to move on and find other alternatives is not very big (Peppitt, 2004). Many seem to agree that employee turnover is both time consuming and costly for organizations (Branham, 2001; Peppitt, 2004; Baron & Kreps, 1999) and that the market for talents and valuable employees has become more competitive today than it was only a few decades ago. There are many factors that have led to this change, and firms must act upon the new conditions. The strategy that the firms must take is neither easy nor the same for all firms, but the fact remains: firms must take action and work with long-term perspectives to keep their valuable resources. It is also crucial for the survival and success of firms to have long term relationships with their employees, since they are the most valuable resources the firm has and what in the end leads to the success of the firm (Branham, 2001). We can see that it is indeed important for firms to work with retention, even though this work is difficult. Especially when there is no quick fix solution. Furthermore, firms can benefit from having long term employees in the way that the costs of recruiting and training the employees can be spread out over a longer time period. Thus, when organizations realize the value that can be gained by being able to keep the valuable people within the firm, the firms will want to discourage these people to leave voluntarily. This is indeed possible and can be done by having strategies that reduce turnover (Baron &Kreps, 1999; Peppitt, 2004). However, even though many firms agree that employee retention is important and a major concern for the firm, only a fraction of these organizations make the matter a strategic priority. Also, very often firms invest more money on recruiting employees than actually keeping them (Branham, 2001). This shows that even though some firms realize that there is a problem, it cannot be taken for granted that all organizations focus on this issue and take actions to keep their employees. There are a lot of reasons for why employees leave their job, and many of these reasons are not possible for a company to have any control over. One reason, among many others, for leaving a firm could be that the employee is moving abroad. In this thesis, however, we are rather interested in, and will research, the factors that a company actually can influence when it comes to retaining their valuable employees. In this thesis valuable employees are defined as all employees except the poor performers who are ineffective, responsible for
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the majority of all errors, and who create discontent and lower the quality of work. From now on "valuable employees" will only be referred to as "employees". As previously mentioned, retention is interesting in the auditing industry (from now on only referred to as the "industry"), because certain requirements are needed to become an auditor. Firstly, the employee needs to have a Swedish university degree, including specific courses within auditing/accounting. Furthermore, to be able to take the accreditation/authorization exam the person must have practical experience for a specific period of time and preferably have worked within an auditing firm (IREV, 2007). This puts pressure on the auditing firms to find suitable employees that are willing to stay and make a career within the firm. Having employees simply working at one company to get the practical experience with intention to leave afterwards is not desirable, since the investments, training and development costs made in these employees become a loss for the company. Also, the matter of retaining employees in firms that offer services is important, as auditing firms do, because the main and most valuable resource of the firm are the employees. Naturally, without valuable employees auditing firms cannot exist and therefore they are crucial to retain.
1.2
Problem
Many companies face the problem of involuntary employee turnover. The reasons for resigning are probably as many as the number of employees that leave. Never the less, this causes several problems for the concerned companies. In the auditing industry the requirements of accreditation/authorization keep the work force limited, which increases the pressure on the industry to keep competent employees. Since the auditing industry can not hire people from other industries in the same extent due to regulations (IREV, 2007), it becomes important to keep the employees that are to become authorized auditors. This can be explained by an example: an auditor can become employed by another firm operating in another industry as a Chief Financial Officer (CFO), but a CFO that has not previously been authorized as an auditor cannot be hired as an authorized auditor. Further, as the HR manager Bolander B. at Lindebergs Grant Thornton claimed in an article in the magazine Civilekonomen „(?) accredited auditors are difficult to get hold of. The mobility in the industry is low. The auditors that quit often change line of work, not firm. This re- quires the auditing companies to have a very good long term plan to have the right amount of auditors when they are needed? (free translation from the article by Levander, 2007). Bolander further claims that about thirty auditing associates must be employed in order to have twenty finished auditors after five years (Levander, 2007). Pär Isaksson (2007) claims, in an article by Affärsvärlden, that HR commitment from the highest levels within auditing firms have always been quite lukewarm. This is mainly because the business is spread geographically, the responsibility is shared by all partners, and because of the fact that most employees spend most of the time at the customers? offices. In this way, the largest challenge right now for auditing firms are to provide themselves with competence, which is why they need to restore the old employee politics. These firms need to focus on attracting new talent, as well as keeping and developing them (Isaksson, 2007). As mentioned before, the challenge for auditing firms starts with the requirements to become an auditor. An authorized or accredited auditor in Sweden must have a Swedish university degree that corresponds with regulations of the Supervisory Board of Public Accountants (Revisorsnämnden) and is required to pass specific theoretical tests. Practical
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training is also a prerequisite, three years for authorization and five years for accreditation, but in order to become accredited one must be authorized. This practical training is preferably done within an auditing firm (IREV, 2007). During this period the firm invests a lot of money in recruitment, training and education of the beginner, thus if the firm is able to retain this employee they would spread out these costs during a longer employment period. Also, the employee can contribute to the income of the firm for a longer period of time, which leads to a reduction of total cost of employment. The costs that the industry face in recruiting and training new employees, is indeed often very high due to the characteristics of the job. Deloitte, as an example, which is one of the "Big Four", spent US $900 million in recruiting and training expenses due to involuntary employee turnover (Coster, 2007). As total revenue that year was US $12.5 billion, the expenses put on recruiting and training corresponded to 7.2% of total revenue (Deloitte, 2008). It would not be surprising if other auditing companies face similar costs due to involuntary employee turnover. Therefore, it becomes interesting to investigate how an auditing firm deals with the challenge of retaining and motivating talented employees in order to decrease the high cost involved with employee turnover.
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Purpose
The purpose of this paper is to gain a deeper understanding of employee retaining practices, which will be done through a case study at Auditing Company X. This topic is interesting because of the problem of finding and employing accredited auditors, due to the regulations and difficulty to hire employees from other industries. It will be interesting to look at the retention procedures to see how these problems are dealt with, and therefore a case study at Company X creates an appealing setting to study. By investigating what the HR department focus on, and thereafter asking a number of employees why they stay, we would gain an understanding of how Company X works with retention. The results shall thereafter be compared to the theoretical framework, which will serve as a base for evaluating the retention practices of Company X. This paper will shed light on the differences between theory and empirical findings, that will help us come to a conclusion about what can be improved to further increase retention among employees. The results of this study have the potential of making the auditing industry aware of the differences between theory and practice. If there are big differences, the firm might want to look closely at their retention practices in order to improve them. On the other hand, if there are no, or small, differences between the practice and theory it will validate the theoretical framework and enable other industries, that also need to work with employee retention, to learn from the results of this study.
2.1
Research questions
How does Auditing Company X work with retaining valuable employees? Is there a difference between retention practices of Auditing Company X and current theoretical framework within the topic? Is there any area that Company X can improve regarding their retention practices?
From our discussion above, we have decided on the following research questions:
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3.1
Method
Perspective
We are taking a company perspective on the issue because we are interested in finding out what Company X does in order to retain their employees. We will conduct an interview with the HR manager, as a representative of the firm, to see which areas they are dealing with. We are not taking an employee perspective because of time constraints that both us and employees of Company X have. Also, it would be difficult to find employees that are willing to devote much of their working time to interviews as their performance evaluation and thereby salary depends on what they put their time on. However, we will have short interview with some employees to get a picture of why these individuals stay within the firm in order to see if what is said by the HR manager is in line with the employee?s reasons to stay within the firm. Furthermore, since we focus on the fact that retention is a challenge and problem for the firms, and not for the employees, a company perspective is more suit- able. We have chosen to keep the name of the company and employees anonymous since we do not want to disclose internal information about the firm or employees, and who they are. Since we have chosen to do one case study at one firm, the firm is very much in focus which is not the focus of the thesis. We want to see how the chosen situation looks like in one auditing firm, not at a special auditing firm. Also, we believe that no additional value would be created if the name of the company would be known. The findings and results from the thesis are far more important than the name of the firm where the case study was conducted.
3.2
Research approach and strategy
Saunders, Lewis & Thornhill (2003) argue that it is important to consider research strategy and approach before you start your data collection, thus research process should be considered before data collection. They have developed a research process onion, which they claim could help the author to, in a better way, collect the needed data (Saunders et al, 2003). The first layer of this onion is the choice of research philosophy. This study will be adopting the research philosophy of interpretivism. This is according to Saunders et al. (2003) a philosophy that seeks to understand the subjective reality and meaning of participants. This is the case in our study since the purpose of this report is to look into the retaining practic- es of an auditing company. Thereby we will make an effort to understand the meaning behind the retaining practices of Company X, which inevitably is the subjective meaning and reality of a specific company. The second layer of Saunders et al.?s (2003) research process onion is the choice of research approaches. We believe that our study will be most in line with the deductive approach i.e. testing of a theoretical proposition. In our purpose we claim that the theoretical framework will serve as a base for evaluating the retention practices of Company X. This clearly indicates that we intend to compare the practices of Company X and the theoretical framework and investigate if there are differences between them. By looking at the differences of theory and practice indicates that a more deductive approach is taken.
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The third layer of the onion considers the research strategy of the report. This is according to Saunders et al. (2003) a general plan of how you will go about when answering the research questions. There are several research strategies that a researcher can use; experiments, surveys, case study, action research etc (Saunders et al., 2003). We have chosen to do a case study since this, we believe, will enable us to gain a deeper understanding and knowledge of the retaining practices in general. It would be difficult to use for example asurvey as a research strategy since a survey only gives answer to the questions "what?" and "how?". Instead, a case study enables you to get an answer on both "what?" and "how?" but also "why?" (Saunders et al., 2003). Even though we state in our research question that we are interested in "how" Company X works with employee retention, we believe that by founding out "why" employees stay we are enabled to gain a deeper understanding of the retention practices and if they are appropriate. The choice of only one company to study will enable us to focus our efforts, and thereby enable us to explore a typical and critical case. We choose to do the case study at one of the "Big Four" auditing firms in Sweden (Deloitte, Ernst&Young , KPMG or Öhrlings PricewaterhouseCoopers), since they have a large number of employees and recourses devoted to work with retention matters. By choosing one of these companies we have a large organization to explore and we thus have a possibility to produce better results, as the HR department is larger and have more recourses to deal with retention issues. The choice of firm is based on how willing they are to cooperate with us, and while we know that this could cause a bias to our findings, a company not willing to cooperate would cause an even greater bias to the results. Also, we cannot conduct a research in a firm that do not want or have time to participate in our interviews. Since these companies are relatively similar regarding size and market share, it enables us to be indifferent which company to choose among the "Big Four". The last layer of the onion deals with the time horizons of the research process. Since our study is concerned with what Company X currently is doing in terms of retaining practices we are using a cross-sectional time horizon. According to Saunders et al. (2003) this type of time horizon deals with a particular phenomenon at a particular time i.e. a snapshot. The alternative would be to use a longitudinal approach, which is a study of a particular phenomenon over an extended period of time (Saunders et al., 2003). The reason why we have not chosen this approach is due to time constraints. We are aware of that the retention practices topic could be better studied as an longitudinal study since retention of employees is a process that the company works with continuously, but the time constraints for this paper do not allow us to pursue this approach. The core of the onion is to choose a data collection method. There are several ways of collecting the necessary data; for example by sampling, secondary data, observations, interviews or questionnaires (Saunders et al., 2003). The data collection method will be addressed under a separate heading.
3.3
Reviewing the literature
Since our research approach is more of a deductive nature we have to review the literature in order to see what has been done before in order to compare it with our case study. The literature will serve as a foundation for theoretical framework that will be used to interpret the empirical findings in our case.
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According to Saunders et al. (2003) reviewing the literature enables the author to gain deeper knowledge about the research topic, and also generate and help refine the research ideas. In order to critically review the literature there is a need to look at the available sources. Saunders et al. (2003) argue that there are three sources available when reviewing the literature; primary, secondary and tertiary literature sources. Primary literature sources are the first occurrence of a work. They cover reports, emails, conference reports, unpublished manuscripts etc. and have a high level of detail and are up to date (Saunders et al., 2003). Secondary literature sources are subsequent publications of primary literature. These are easier to locate than primary literature sources but are often less detailed and not up to date as the primary literature sources are. Secondary literature sources are represented as books, journals, internet etc. (Saunders et al., 2003). Tertiary literature sources are designed either to help you to find primary or secondary literature sources or to introduce a topic. Tertiary literature sources provide the researcher with an overview of the topic by using indexes, abstracts, catalogues etc. (Saunders et al., 2003). In order to gain the knowledge needed for our research topic we will first use tertiary literature sources to get an introduction to the research topic. Thereafter we will go on to the secondary literature sources in order gain a deeper understanding of the topic and also to see more in detail what has previously been done within this research. From these literature sources we will obtain the theoretical framework that will be compared with our case study. Primary literature sources, such as company reports, are planned to be used as empirical data and will serve as a base for interpretation of the theoretical framework. When searching for literature it is vital to use key words that will enable the researcher to find relevant, up to date literature. This will find what research has been done previously within the area. The use of a funnel approach is useful since it enables you to get a broad picture of the chosen topic to later narrow it down to you specific research question. (Saunders et al, 2003). This we have considered. Even though many of our sources have been taken from an American context, we find them useful in our study. Firstly, very much of the literature about retention practices have been written by American authors, and the American and the Swedish culture do not seem to differ to a great extent. Secondly, we have not found any authors that have addressed retention practices in Swedish auditing firms, which forces us to use other sources.
3.4
Data collection
As mentioned before, the method of data collection depends on the different research approaches and strategies. According to Saunders et al. (2003) there are several data collection methods that can be used when doing a case study. They include interviews, observations, documentary analysis, and questionnaires. We will use interviews when collecting data. By doing so we will be able to get a deeper understanding of how Company X works with this issue. According to Saunders et al. (2003) interviews enable you to reveal and understand the reasons behind the actions. This is vital when wanting to gain a deeper understanding (Sunders et al., 2003). In our research of Company X we intend to interview the HR manager to gain deeper and new insights on how they are dealing with retention of valuable employee within their company. We also intend to interview five employees in order to get their views of why they choose to work with Company X. The interviews with the employees will enable us to see if the company?s retention practices are in line with the employees reasons for staying
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in the company. This enables us to find out if the company is focusing on the issues that the employees find important in order for them to stay in the company. Our intention for the process of selecting employees for the interviews was to be as objective as possible, since it would enable us to get rid of the possible bias i.e. if the company would select only the people who would talk positively about the company. We sent instructions to Company X to ensure that the selection is made in an objective way. There, we stated that the seventh employee on each employee list in Stockholm, within the five different professional levels, should be picked to be one of the interview persons. In this way we get a random person from each of the five levels. According to Saunders et al. (2003) there are several ways of conducting interviews when doing research. You can use structured, semi-structured or unstructured (also known as indepth) interviews. Structured interviews are made by using standardized and predetermined questionnaires where the questions do not differ from one interview to another. This interview strategy is good when conducting a descriptive study, but can also be used for explanatory studies, although it is not common (Saunders et al., 2003). In semi-structured interviews there is a list of themes and questions, but they are not posed to every person interviewed as in structured interviews. Depending on the context, different questions are asked and the order of these also varies. Additional questions may be asked as well to explore the research question and the objectives (Saunders et al., 2003). Unstructured/in-depth interviews are used to gain deeper knowledge in a general area of interest. There are no prepared questions that are being asked; instead the researcher has a clear idea about the aspects that he/she wants to explore. The person being interviewed is given a chance to speak freely about events, behaviors, and believes within the topic that the researcher is interested in. According to Saunders et al. (2003) semi-structured and in-depth interviews are used in qualitative research in order to conduct discussions, and not only to reveal and understand "what" and "how", but also "why". The author also claims that for an exploratory study, indepth and semi-structured interviews are most suitable because these are helpful in find- ing out what is happening and in seeking new insights. With this in mind we will use semistructured and in-depth interviews. Our strategy is not to provide the HR manager with questions in advance. Even if the person could be better prepared when conducting the interview, there is also a risk that he/she might not answer „top-of-mind?, and that would damage the whole idea of having openended questions. However, we will conduct a pre-interview before the real interview with the HR manager to get basic information about the company in order to be prepared and be able to ask more precise questions. The interview with the HR manager will have a semi-structured nature. However, the interviews with the employees will be more in-depth since we only intend to ask one general question i.e. "Why are you working for Company X?". Depending on where the answer leads, further questions could arise. Here, the question will be provided in advance since we believe that there is a need to consider what to answer on such a question. The results of these interviews will be presented in the empirical part of this report.
3.5
Qualitative data analysis
The reason why it is important to sort your data is because you need to bring order, structure and meaning into the collected data. Unlike quantitative data analysis where there are
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established methods and procedures, qualitative data analysis is more complex, but also gives the researcher more freedom. In qualitative data analysis there are no rigid stages or rules for undertaking this process (Holland cited in Daymon & Holloway, 2003). The general process that Holland presents when dealing with qualitative data is to first sort the data. This will enable you to get an overview of the collected data. This also helps to keep the data intact, complete, organized and retrievable (Daymon & Holloway, 2003). Secondly, Holland claims that coding and categorizing the data will further help you to make sense of the data. Codes or categories serve as labels that enable you to tag segments of interests in the data, which later helps you to reduce and simplify the evidence in order to make sense of it (Daymon & Holloway, 2003). According to Daymon and Holloway (2003), unstructured interviews provide the researcher with the richest data and often uncover surprising evidence. They also argue that this kind of interviews generate the highest dross rate (the amount of data that is of no particular use for the study). This is also the case in semi-structured interviews, although not to the same degree (Daymon & Holloway, 2003). To have the data more structured we will transcribe recordings from the interviews into written words to decrease the risk of misinterpretation. This transcript will not be presented in the report due to the large amount of dross rate present in it. Rather, we will include shorter versions of the interviews with relevant information. With these arguments in mind we have decided, when presenting the empirical evidence, to sort the data into a couple of categories or codes. This will make the data more comprehensible and manageable to analyze and thereby get rid of the dross rate. Our intention is to categorize the data that we have received from the interviews into several categories in order for it to become more manageable. These categories will enable us to better understand how the auditing company works with the retention issues. Categorizing will also enable us to get the data more structured, which later will be useful when making comparison to the theoretical framework.
3.6
Delimitation
As we have a company perspective and focus on how Company X works with retention, we will touch upon why employees stay, but it will not be our focus. The reason why we chose to incorporate employees in the paper is because we want to get a sense of if the work of the HR department is reaching down to the employees. We do not intend to find out why former employees have left the company, as our focus is on what can be made to make employees stay. Of course it can be interesting to see why former employees have left the firm, since it can say something about what Company X does "wrong" in their reten- tion efforts. However this is not our focus and goes beyond of this papers scope, thus we rather recommend this for future research. Concerning the employee interviews in this study, even though we gave instructions for the selection process of employees we cannot guarantee that it was done accordingly and therefore this should be seen as a delimitation of this study. Further, it is important to bear in mind that employees resign for a lot of different reasons, many of which a company has no influence over. Perhaps the family of the employee is moving to another town or a child needs more care at home, which could prevent both parents working. However, reasons such as these are not within the scope of our research as we are only interested in the factors that a company actually can influence.
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Also, we have chosen to focus on the auditing department within Company X even though they have other business areas. The reason for this is that we are concerned specifically with the retention of auditors within this company, because of the constraints of this profession mentioned in the problem.
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Frame of reference
We have chosen to use the four keys model developed by Branham (2001) since it gives an overview of the whole subject in matter. It gives a good comprehensive picture that deals with many issues and retention actions that firms can take. There are numerous researchers that have dealt with the same topic, but few of them have dealt with the complete strategy of retention and rather focused on a single aspect within it. Even though Branham is not a researcher at a university, his model deals with a range of issues that have been validated by academic researchers. In a way the model is a "smorgasbord" containing different aspects and comments of authors and researchers. In this way the model will be reviewed and supported by the current research in order to justify it as a legitimate model. We are aware that there are negative aspects of using a more consultative model, as it has not been fully verified. However, Branham is not a beginner within the area of retention and he has personal experience within the field. He has gathered experience from business and management for more than 30 years (Branham, 2001). Branham was Vice President at one of the world?s premier consultancy firms within HR, Organizational Consulting with Right Management Consultants, and he has helped firms in a variety of industries to develop their employee retention practices (Keeping the People, 2007). We have however changed the model in a few places and left out some parts taken up in Branham?s model (which is commented in the text blow) to make it more useable in our work. The four categories described below will serve as a theoretical base or outlining when looking at the reality in Company X, thus giving us a deeper understanding of the retentions practices. According to Branham (2001) there are four main keys that a firm can use to keep the right employees in the organization. Within these four keys the author presents twenty-four retention practices that help the firm to take action and work towards the goal of retaining the most valuable employees. We will however not use or list all twenty-four practices, rather tie them up together. These practices guide actions that in the long run enhance performance, motivation and job satisfaction. The work of retaining the valuable human resources is in other words not something the firm can do overnight, as it involves many different stages of the employees life cycle. Therefore, the firm cannot just focus on one aspect if it wants to retain its employees (Branham, 2001; O?Malley, 2000). Because we feel that the four keys are very tied together and in many aspects overlap, we have chosen to categorize the twenty four practices into four new categories to make them clearer and more usable in our work. The four new categories are: the hiring process, internal labor market and career, motivation and performance, and culture and leadership. The practices are the same as in the original model, but we have categorized them to make them less overlapping and to fit better together. We have also included other sources that support or contradict the theory to make it even clearer and show that Branham is not the only one to believe these aspects are important in the work of retaining the employees. The outlining of Branham?s original four keys and twenty four retention practices can be found in the appendix.
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The four categories are explained below.
4.1
Hiring process
To be able to keep valuable employees it is crucial that the recruitment process is done properly. During the presentation of the company and the interviews it is important to give a realistic job preview, so that the future employees understand where they are heading and what they can expect the job to be like (Branham, 2001). PhD Robert Sniderman, president of HRFocus USA, argues that employers that want to see high performance must realize that clear visions, purpose, goals, and expectations should be expressed when hiring a new person. „Employees need to be able to see the big picture, especially when it comes to how their contributions work toward accomplishing the greater goal.? (Robert Sniderman cited in Leheney, 2007). This statement goes in line with Branham?s (2001) argument to give a realistic job preview. The process of finding new recruits should not stop when the interviews are over, rather the introduction of the new employees should be invested in: the first impression lasts (Branham, 2001). This is supported by Leta Beam (2006) who suggests that you must begin to think about retention straight away. Beam suggests that the first 90 days of employment are critical for the future of that workplace relationship and that firms must create mentoring programs with organizational ambassadors (Beam, 2006). Fran Parrish (2006) claims that by ensuring that the new employee is provided with a good orientation and necessary training, retention is begun. The employer should set targets and deadlines and clearly explain what is expected from the new employee (Parrish, 2006). The first encounter with a new workplace is crucial. Since changing employer often is a big step for the employee, he/she will often look for reassurance of this decision. If the employee finds no such clues he/she might get the feeling of having made the wrong decision (Branham, 2001).
4.2
Internal labor market and career
Another issue the firm must deal with is to make the job challenging from the beginning to the end. Top performers can be especially difficult to find new challenges for, but the solution is to listen to the needs and requirements of the employees, since they are the ones that best know what they want to do and accomplish. It is important to match the ability of the employee to a challenge, since neither a too difficult nor a too easy task is promoting job satisfaction. Independence is also important for employees and initiatives should be rewarded by the firm since this creates job satisfaction, which can lead to a decreased employee turnover (Branham, 2001). Furthermore, the job should fit the future employee and provide personal satisfaction. Even if some jobs might have less of these characters, the job can actually be redesigned to make it more rewarding (Branham, 2001). According to Cappelli (2000) redesigning the job itself would reduce turnover and improve retention of employees. He states that thinking carefully about which tasks to include in the job influences the retention rates. By concentrating on employees with the important skills, and redesigning the job to suit their preferences, it would decrease turnover of these valuable employees. This would reduce overall costs of finding, screening and training new employees to fill the previous positions (Cappelli, 2000). Cappelli also claims that customizing jobs to suit individual employees is a way to further increase retention rates. Individual arrangements such as part-time employment,
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tuition reimbursements, and flexible working hours are examples of how this can be done (Cappelli, 2000). In line with Branham, Butler and Waldroop (1999) argue that job sculpting is the solution for having satisfied employees. In order for an employee to be satisfied with their job, the job has to match the employees deeply embedded life interest. These deeply embedded life interests are according to Butler and Waldroop (1999) „long-held, emotionally driven passions, intricately entwined with personality and thus born of an indeterminate mix of nature and nurture?. Therefore the job should be sculpted to suit the person?s deeply embedded interest. This should be kept in mind when hiring a new employee (Butler & Waldroop, 1999). To have an internal labor market where the employees can develop and grow within the firm also facilitate the work of retaining the employees as they can see their opportunities and get introduced to more challenging and interesting tasks in time (Branham, 2001).
4.3
Motivation and performance
Branham (2001) proclaims that regular attention should be given to employee performance and that behavior should be praised, and corrected when needed, to give them timely feedback and chance to develop. Recognition plays a huge part here and should not be neglected (Branham, 2001). According to Mindy Chapman, at the law firm Mindy Chapman &Associates, successful firms are using both tangibles and intangibles to recognize and reward employees. At a human resource conference, Chapman emphasized the importance of not delaying recognition because it decreases the significance of it. Further, she states that recognition should be kept separate from feedback to not mix appreciation with advice or recommendations for the future (Law Office Management and Administration Report, 2007). On the contrary, Noelle Nelson (2006) suggests that when giving feedback on poor performance, you should start out soft with appreciation and then follow with a turn to the focus area on which you first ask the employee on his/her thoughts. However, according to Branham (2001) feedback shall never be solely negative and the person should not be criticized, since this pushes the employee away. Rather, the consequences of the action should be criticized instead (Peppitt, 2004). The firm must deploy a culture of both giving and taking. By giving the firm sends a signal to the employees that they are worth investing in and that the firm relies on them. Howev- er, there are different kinds of rewards the firm can give, and the firm must understand that the employees have different needs. Therefore it is crucial to be flexible. Some might want more money while others want more time off. Here good management is important in or- der to give the employees what they treasure, since intangible rewards, like showing respect and appreciation, also matter (Branham, 2001). However, when it comes to compensation, the firm should not just give away rewards randomly (Branham, 2001; O?Malley, 2000). The employees should feel that they are paid according to their efforts and performance, which in return require that the firm has a clear and communicated pay plan etc. and that the efforts are measured correctly. The desired behavior of the employees should in this way be clear, rewarded and reinforced (Branham, 2001). Horowitz, Teng Heng & Quazi (2003) recognized that compensation is one of the most effective retention strategies. Performance incentives/bonuses ranked third, on highly effective retention strategies. Even though this study was made in a Singaporean context,
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where the culture differs from the western, it still sheds light on the compensation issue as an important factor when attracting, motivating and retaining employees (Horowithz et al. 2003). Horowitz et al.?s study supports the arguments made by Branham that performance based compensation is a good strategy. Compensation may be an important issue for attracting and retaining employees but there are others as well. Branham (2001) claims that people want more than just material rewards when their work is contributing to the success of the company. This is also recognized by Cappelli (2000) who argues that when people have control over what they are doing they are more committed to the task. Cappelli (2000) further claims that factors such job design, customization, social ties, and location are important factors to consider when wanting to retain valuable employees. Furthermore, the firm should communicate that both the employees and their work is indeed very important for the success of the firm. All jobs have meaning, but the difficult part is to communicate it correctly and give the employees a good reason to be dedicated to the firm (Branham, 2001). Harry Wallaesa former CEO at Campbell Soup supports this; „you need to make people feel like they're truly making a contribution to the organization???In some cases, people value that more than they value money? (Tynan, 2006, p. 42). We find Maslow?s famous theory, the „Hierarchy of Needs?, to be highly relevant in our discussion of what factors that motivates people and why. We therefore include it in this section. According to the theory, there are several needs that drive motivation - these are shortly described below.
Figure 4-1 Maslow's Hierarchy of Needs
Psychological needs are fulfilled by things that all people require to survive, such as food and vitamins. Safety needs are fulfilled by feelings like stability and security. Belongingness and love needs are fulfilled by things such as friends, a mate, affection. Esteem needs are satisfied by things like achievement, competence, recognition and appreciation. Self actualization are what we feel when doing what we are fitted best for and when we are true to our own nature. This is very individual and commonly rest upon other needs, such as belongingness (Maslow, 1987; Huitt, 2004).
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If a person lacks everything in life, it is more likely that he/she will be motivated by the lower needs in the hierarchy, such as psychological needs. When the lower needs are fulfilled it is more likely that the person gets motivated by the higher needs in the hierarchy (Maslow, 1987; Huitt, 2004). From this we make the interpretation that different rewards can be categorized on different levels in the Hierarchy of Needs. Money could be interpreted as a safety need and recognition could be interpreted as an esteem need. This supports Braham?s theory that different persons need, and are thus motivated by, different rewards.
4.4
Culture and leadership
According to Branham, being a company that people want to work for involves creating a culture of commitment, which means that the company „treats their employees like family and with respect, with an attitude and philosophy of nurturing and caring? (Branham, p.23, 2001). The rewards do not necessarily have to be monetary when simple praise and appreciation can lead to a huge difference (Branham, 2001). Brendan Courtney, vice president of the recruiting firm Spherion, claims that today?s employees are willing to trade money and bene- fits for flexible hours, training or exciting projects (Dan Tynan, 2006). And the 2007 Job Satisfaction Survey Report made by Society for Human Resource Management (SHRM), the world?s largest association committed to HRM, shows that communication between employees and senior management is one of the top five most important factors for employee satisfaction. Another is to be able to balance work and social life in a flexible way (SHRM, 2007), which confirms Branham?s suggestion that monetary rewards are far from the only tool to use in satisfying employees. The U.S. Department of Labor further strengthen this by stating that the number-one reason employees resign is that they do not get enough appreciation (Nelson, 2006). Since different persons have different preferences, the rewards should be given according to what kind of rewards the individual wants and what efforts he/she wants to be appreciated for. It is not impossible to include the employee in the discussion and actually ask what is appreciated (Branham, 2001). 90% of all problems that employees perceive are related to the feeling that they are not being listened to (Beam, 2006). In a workforce study at Spherion conducted by Harris Conductive it was evident that there were big differences in what employees want and what companies are prepared to provide. This study also showed that what was done to retain employees, were not actually what employees considered key for staying in their positions. In other words, if the rewards that the company pay to retain their personnel, are not set after the personnel?s preferences, it is wasted money (Tynan, 2006). In the efforts to create job satisfaction, another important factor is to train the managers in coaching, since these persons can make a huge difference with small gestures (Branham, 2001). Likewise, Beam (2006) claims that coaching is one of the small things that make a major difference, and especially coaching skills like active listening and problem resolving. Also, it is important that the managers have career development discussions and communicate what paths are available for the employee within the firm. However, it is crucial to give the employees the tools for taking charge of their own careers and communicate that it is up to them to make a career even though the firm gives the opportunities (Branham, 2001).
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Lastly, since job satisfaction is very much connected to if the workers enjoy their work and have fun, a culture within the firm that promotes a balance between work and spare time can indeed become a competitive advantage, especially in industries where stress is common (Branham, 2001). Erik Dorr, from The Hackett Group, agrees that to keep your employees „it s essential to make your workplace an exciting place to be??„Creating that kind of culture will help attract top talent and keep them there? (Tynan, 2006 p.42). However, culture is very difficult to change and it takes a very long time to do it (Peppitt, 2004).
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5.1
Empirical Findings
Auditing Company X - One of the "Big Four"
There are four large auditing firms in Sweden, therefore they are nicknamed the "Big Four". These four; Deloitte, KPMG, Öhrlings PriceWaterhouseCoopers and Ernst&Young, are active in many different professional areas, of which auditing is one. Other services they provide are accounting, corporate finance, tax, risk advisory, consulting and financial advisory. The "Big Four" work with all company sizes; small, medium and large customers, many of which are listed on the stock exchanges. These customers work in all sorts of industries, like aviation, real estate, public sector, consumer business etc. (The Big Four - Deloitte, 2007a; Deloitte, 2007b; Ernst&Young, 2007; KPMG, 2007a; KPMG, 2007b; Öhrlings PricewaterhouseCoopers 2006)1. Each auditing company employs between 1000-3000 persons in Sweden at a total of 30125 different locations. Thus they are all large organizations and they all put a lot of effort into human resources. Last year they recruited 44-472 new persons each in Sweden. They are all active internationally with 110.000-150.000 co-workers and they are present in 140150 countries each. All four work actively to create exiting career possibilities by using development programs and they market themselves to reach out to new possible employees, such as students. Focus is on personal and professional development with education as a prerequisite, but also as a benefit for work progress (The Big Four, 2007). All "Big Four" use different career steps to define how far an employee has developed and what kind of responsibility he/she has. These professional levels are shaped like a stairway in which one enter as a freshman (associate) from below and then work upwards to senior associate, manager, senior manager and finally partner. These titles differ somewhat between the companies, and some have more or fewer steps than the others. Still the principle is the same (The Big Four, 2007). The turnover for last fiscal year was for each of the companies between MSEK 1,9003,318, and they earned revenue of between 169-378 MSEK. Regarding market share Öhrlings PriceWaterhouseCoopers is the leader with 34%, followed by Ernst&Young and KPMG at around 20%, and Deloitte at 13% (see figure 5-1). As we can see, these "Big Four" are relatively similar regarding both turnover, employee capacity and distribution and market shares (The Big Four, 2007).
1
Since the name of Company X is to remain undisclosed, the information and sourcing on the "Big Four" is cluster from now on, so that it cannot be traced which company we are investigating.
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Figure 5-1 Auditing Industry Market Shares (Konsultguiden (2005) cited by Öhrlings PricewaterhouseCoopers, 2006)
5.1.1
Information from the HR manager
Before we conducted any interviews, we had a short informal meeting with the HR manager at Company X to gather information about the firm and the HR department. This we did in order to be prepared and to be able to ask better questions at the following interview with the HR manager. Since the HR manager?s time is limited, we did not want to waste any time asking fact questions, but rather concentrate on the topic. During our visit at Company X, we also got the chance to look at their intranet. What we fist noticed was that it was quite comprehensive, including headlines like "For you who are newly employed", "Guide for personnel" and "Career program". Under these headlines we found detailed and general information about administrative routines and policies, ranging from IT-intro guides to insurance policies, from work ethics to work tasks. The "Guide for personnel" was very practical and informed on matters such as overtime and the compensation for it. There were also headings about health, working environment and information for global exchange between countries. We found keywords that Company X used as reasons why to join their organization; Career, Work Task, Possibilities, Knowledge and because you have certain personal characteristics. These are all very specific reasons why to explore the company, however there are some softer values mentioned too, such as „Go your own way and dare to do what you believe in, be curious, have fun and make your dream come true? (free translation from Company X?s intranet). Company X has a separate and general division for Human Resources serving and supporting the whole company. The division is divided into several focus areas such as compensation, recruitment and policy issues. These focus areas concentrate only on their specific area and have some personnel to develop and communicate it to the rest of the organization. There are also human resource personnel working close to the professionals out in the separate business departments, who help out with the more hands on issues of daily business. The focus areas are thus setting rules for how HR matters are handled in the company and are acting as support for the HR-personnel working in the professional departments (HR manager, personal communication, 2007-10-15).
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5.2
Interview with HR manager
We have interviewed the HR manager who works at Company X. The interview was conducted and recorded on November 5th, 2007 at Company X. In order to get rid of the large amount of dross rate and to make the interview more structured and comprehensive we have categorized it. It is important to point out that the following text is a summary of the interview and all statements that have been made are statements of the HR manager of Company X. The interview was held in Swedish and has been translated by us. 5.2.1 Being an attractive company
Company X is working with this issue by taking every opportunity to promote the company and talk about the special benefits and development opportunities that they offer to their employees. Since they are mostly recruiting fresh graduates from the universities in Sweden, promotion is usually done by being involved in activities at these universities. Company X does not think that it is wise to promote the firm only to the students who are on their last term. Instead they believe that it is important to create a good relationship with students by being involved from the beginning of their education. This enables the students to gain knowledge about Company X, and it also shows that Company X is a serious employer that wants to create long term relationships with its future employees (HR manager, personal communication, 2007-11-05). When promoting itself, Company X stresses the special benefits and development opportunities that are available in the company. These benefits involve individually based wages, private health insurance, food coupons (rikskuponger), maternity leave compensation (förstärkt föräldrapenning), etc. This package has been developed by the HR department and gained approval from the senior management (HR manager, personal communication, 2007-11-05). According to the HR manager, there is no general bonus system for the whole company, although there are bonus systems defined depending on what service line you work for. The terms for receiving a bonus look different for example in Advisory than it does in Local Business. Customers are different and therefore the willingness to pay varies, which affects the opportunity to have a bonus system for the whole company (HR manager, personal communication, 2007-11-05). When it comes to the development opportunities in Company X, each employee has an individual development plan. The development plan is built in consent with the employee, which enables the employee to have a say in the matter. Personal development is not something that is used as a reward for employees that are doing well, instead all employees are expected to develop personally. According to the HR manager at Company X, it is expected that the employee develops and goes on to the next professional level. It should be in the interest of the employee to develop, and the company can not force anyone to do it, but the company is encouraging the employees to do so. The responsibility for this is shared between the employee and the closest manager. The HR department is only used as a support function for the manager (HR manager, personal communication, 2007-11-05). The HR manager at Company X states that there is an opportunity for the employees to change position within the company if they feel that they are not pleased with the current job. There is an opportunity to not only change both within the four service lines but also geographically i.e. to stay within the same service line but switch to another office. By being
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flexible when it comes to switching, the company is able to keep employees that otherwise would leave (HR manager, personal communication, 2007-11-05). In some of the service lines it is also possible to customize the job so that the employee can work part time. This might be a good solution for people who have families or are in a life stage where they find that work is not the highest priority. Often these employees are the ones that are most valuable to the organization since they have been working for six, seven years and have extensive experience. Replacing them is very difficult because other companies in the industry face the same problems. Company X is giving these employees the opportunity to work part time or to only work with a few customers and thereby gives them a possibility to stay. Even though there is a possibility of customizing in some cases, Company X has had the problem of not communicating this opportunity to the employees in a sufficient matter (HR manager, personal communication, 2007-11-05). The HR manager claims that another aspect enabling the company to improve their practices, is that they find it important to learn from the employees that leave the organization. This is done with the help of a system called "Learning from Leavers" where the employee that leaves comment and answer a number of questions. They also have interviews with individuals of certain interest, the HR manager claims that it would be desirable to have interviews with all leavers, but it is not practically possible since a large number of employees leave each year (the turnover is about 10% per year). By having these interviews and using the system "Learning from Leavers", Company X is able to find out why people leave. According to the HR manger, the latest investigation showed that the number one reason for why people leave is that they are feeling that their manager is not providing them with the development opportunities that they strive for (HR manager, personal communication, 2007-11-05). Company X has struggled with the problem of poor communication between managers and employees that are doing well and have a positive development curve. Managers are far better at communicating with those who are not able to meet the demands. This is something that needs to be improved and is currently being worked on, by for example having small feedback sessions directly after a customer visit. There are also personal development meetings twice a year where the development plan is discussed to a greater extend, but the HR manager does not think this is enough and therefore they have started with the feedback sessions. The goal that they are striving for at HR, is to be an attractive employer, both for the existing employees and externally i.e. to their major focus group; university students (HR manager, personal communication, 2007-11-05). 5.2.2 Hiring process
When a position opens up in the company, the first thing that Company X does is to evaluate if this position can be filled by someone that already works in the team. They also look at the possibility of rearranging the working team so that the job that the previous person did could be taken care of by others in the team (HR manager, personal communication, 2007-11-05). If they come to the conclusion that they need to recruit, the first thing that is done is to put out an internal ad about the position which is visible to all employees within the organization. Since all employees, no matter what branch they work at, are able to see this ad, the company gives everybody a chance to move geographically as well as between business lines (HR manager, personal communication, 2007-11-05).
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If the position in not filled internally, then some form of external advertising is done, preferably in a magazine of interest, but also on the company?s internet page where available positions are advertised. Company X seldom puts out an ad for just one position. The reason for this is that there is often a need to fill several positions at the same time and therefore a joint effort is made to advertise all positions at the same time (HR manager, personal communication, 2007-11-05). When it comes to recruiting specialists, the company often turns to head-hunters for help. The company hire these head-hunters to find the specific competences that they are searching for. According to the HR manager, Company X is able to attract these specialists by informing them about the job, making sure that they know what kind of opportunities they have if they take the job, informing them about the degree of freedom associated with the job, etc. This is believed to be the best way to attract these kinds of employees since they are often interested in how they can develop individually. By giving the potential employees the specified description of the position, it enables them to see if the position is something for them (HR manager, personal communication, 2007-11-05). Since the organization is built upon that most of the new employees come directly from universities, the recruitment activities are concentrated to this target. Company X is making large efforts on being involved in different student activities where they promote themselves by talking to students about the company and the benefits of working with Company X. This is believed to establish a reputation as being an attractive and serious employer and leads to that Company X receives a large number of applications for their positions. The company strives for having approximately 50 applicants for 10 available positions. This enables them to find the individuals that are best suited for the organization. As the situation is today they are able to attract the right amount of candidates (HR manager, personal communication, 2007-11-05). 5.2.3 Introduction of new employees
The day a new employee starts working for Company X, he/she is picked up at the reception together with the rest of the employees that will start working the same day. New employees often start at the same time, since the company has two major starting periods, one in September and one in January. The first thing that they do is to take a tour around the office to familiarize themselves with the surroundings. After that, they are taken to the IT department where they receive a computer and information about other practical issues concerning IT. This is followed by an introduction of their working area. The secretary or the administrative personal then explains the prerequisites for the job and also introduces the new employee to the rest of the team that they will be working with (HR manager, personal communication, 2007-11-05). Within the first week of employment the new employee has to attend a mandatory introduction day, where he/she receives information about the company in general. During this day, the CEO of Company X visits and talks about the goals of the organization and how they are to be achieved. There are also other speakers that inform the employees about different aspects of the organization. Soon after the introduction day, new employees are sent away for the first mandatory course. This is the first and basic audit course and a foundation for all employees working at Company X. After some time the newly employed get to meet their coaches. Here, the new employee gets a chance to talk about his/hers expectations and ask questions (HR manager, personal communication, 2007-11-05).
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When the new employees come back from the training they take part in different activities within the firm e.g. client meetings, where the new employee observes and learns how things are done in Company X. During this first time they are also given smaller assignments within their area (HR manager, personal communication, 2007-11-05). There are some differences in how new employees are dealt with depending what professional level they are expected to work at or if they are hired as some kind of specialist. A new employee with a more senior position does not need the same training as the newly graduated associates, since he/she already has some kind of background in the industry. This means that he/she attends the introduction day to learn about the company, after that the employee is introduced to his/hers co-workers and work place. These employees are soon able to start contributing to the organization. They are given an introduction as the others, but since they do not need any training they are expected to start working with customers sooner than e.g. new associates (HR manager, personal communication, 2007-1105). When it comes to familiarizing the new employee with the senior co-workers there are no special activities. Some units have activities like "Friday coffee", where there is a chance for the new employee to be introduced to the senior co-workers. Getting to know people is something that is done in time, and since there are many new faces in the beginning, it might be difficult to remember all. Therefore the new employee is only introduced to the people closest to them (HR manager, personal communication, 2007-11-05). 5.2.4 Motivating and supporting employees
As previously mentioned, Company X supports their employees with help of coaches. These coaches are basically other more senior employees. The purpose of having coaches is that new employees should have a person to help them in their personal development and be available for questions. Basically someone that is there in case you need to talk about something concerning your situation (HR manager, personal communication, 2007-11-05). The coach must have been working within the organizations for about three years and often does not have any formal managerial responsibility such as negotiating wages, leading and distributing the work etc. It is more of a support function for the new employee. When selected to become a coach, the employee receives training which is provided by Company X, this is to ensure that he/she has some tools to work with when coaching (HR manager, personal communication, 2007-11-05). Other ways of making sure that the employees are being supported in their development is to have so called development meetings twice a year. During these meetings the manager and the employee discuss the development plan of that person, both in the short and long run. Here, they also talk about strengths and weaknesses of the employee and how the employee should go forward in the career. The manager is also expected to evaluate if there are any problems with the employee?s development plan. Emphasis is put on "why" this is the case. If there are problems, the manager is expected to be clear, and should therefore have a discussion with the effected employee. The HR department is there to help the manager with these issues. The individual manager is like a customer to the HR department. One reason for not performing as expected, according to the HR manager, is that the employee might not know what expectations the company has on him/her. Another reason might be that the employee feels that he/she does not fit in that specific service line. If the latter is the case, an alternative career within another service line in the organization can be a solution (HR manager, personal communication, 2007-11-05).
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Another activity arranged to support the employees in their development is daily feedback. This is done for example after a customer visit. The team leader or the person responsible for the account is expected to give feedback to the employees. Emphasis is put on what was good and what can be developed. This instant feedback is much better than waiting for the next development meeting where some of the details might be forgotten and thereby never discussed (HR manager, personal communication, 2007-11-05). In order to improve practices, Company X is offering employees to fill out different surveys. By seeing what the employees are unsatisfied with the company can focus on these areas and hopefully improve them. One system that is used for this purpose is called "Upward Feedback", here the employees are offered to evaluate their closest manager. There are a couple of parameters that the employee fills out, then the system generates a report that the manager can take part of to become aware of what he/she could improve. This al- so enables the employee to express his/hers thought about the manager. The report later serves as a part in that manager?s development meeting (HR manager, personal communication, 2007-11-05). Another survey that Company X uses for the purpose of finding out what the employees are dissatisfied with is the "Net Service" survey. This survey was developed for the entire organization and the employees answer questions about the organization in general. Even though the survey is not compulsory, the last "Net Service" survey had a response rate of 83%. This indicates that the employees are aware of why the survey is being done and by doing the survey they see a chance to influence the organization. There is also a third survey, done once a year, for the global organization called "People Service". This gives Company X a chance to compare the Swedish organizations with other countries? organizations. Depending on the outcome of these surveys, together with other forms of evaluations such as interviews with people that leave the organization, the company is able to form an opinion of whether or not the employees are satisfied with their situation. If not, then emphasis is put on improving the issues that employees are dissatisfied with, and thereby improving their motivation and engagement (HR manager, personal communication, 2007-11-05). When it comes to increasing motivation and engagement in other ways, the organization allows it to be handled at a local level. HR believes that it is difficult to give directives on how people are to be motivated and engaged. According to the HR manager, this is something that is best dealt with on a local level together with closest management and team members. But Company X also increases motivation and engagement by for example social activities on the national level, which enables them to work with the culture and values. This consist, among other things, of a weekend composed of different activities such as cultural events, parties etc. The company encourages employees to socialize and spend time together, for example during coffee breaks etc. There are of course guidelines when it comes to behavior and values in Company X that each employee receives in their introduction package, called the "Code of Conduct". This serves as a base for how a representative of Company X should behave in different contexts (HR manager, personal communica- tion, 2007-11-05). As previously mentioned, there is no bonus system for the entire organization, although there are bonus solutions defined in the different service lines. Prerequisites for a bonus system look a bit different between the service lines. The customer?s willingness to pay varies and thereby affects the possibility to have a general bonus system for everybody. The HR manager believes that they are offering the employees an extensive benefit package from the beginning and also the development opportunities that Company X offers are
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looked at positively from the employees? side (HR manager, personal communication, 2007-11-05).
5.3
Interviews with employees
We have, as mentioned before, also interviewed five people employed by Company X. We will call the employees "E1" to "E5" to keep them anonymous and to minimize the bias. We interviewed the employees one by one in person and only asked them one single question "why do you work at Company X?", thereafter we let them answer what they wanted. The questions were in this sense very open and unstructured. All of the employees work in Stockholm but are located at different offices around the city. Only E2 and E5 work at the same office, which is the largest of them all. The interviews were held in Swedish and translated by us. E1 has worked at the company for five years and is a partner, which is the highest position within the professional stages, since about four years back. E1 is an accredited auditor. E2 has worked for the firm for a little more than one and a half year and holds the title senior associate. Since E2 was out working at a customer?s office, we held the interview at lunch and could therefore not record the interview, thus notes were taken instead. E3 has worked one and a half year (as long as E2) and holds the title associate. E4 has worked at the firm for about seven years, but has been working in the auditing industry since 1985. The firm E4 worked at before starting at Company X was acquired by Company X seven years ago. E4 holds the title senior manager. E5 has worked for seven years at the firm, but been away a couple of times when children came in to the picture. E5 holds the title manager and is not an accredited auditor. 5.3.1 Interview with E1
E1 starts by telling the story of his/hers 18 year long employment within Company X. It has not been an obvious choice to stay within the firm and it has not always been so easy either. When first starting in the firm, in another city in Sweden, E1 confesses that the original plan was to stay within the firm for a couple of years and thereafter move on. This, however, never happened since E1 realized that the alternative job would be in small economy department with similar tasks year after year, which would get boring. Staying in Company X, the opportunities to grow and develop are much larger. Since E1 has worked intensively for many years, it has eventually led to that E1 more or less "is" the firm, as the same values are shared by E1 and the firm (E1, personal communication, 2007-11-23). E1 feels that the work is varied and that he/she has a chance of developing further. E1 also, points out that he/she did what felt fun and that new tasks can be found. For E1 it is more important to get seen and appreciated, rather than stress the climbing further within the firm (E1, personal communication, 2007-11-23). In time E1 got more responsibility and own clients and in the year of 2000 he/she shared the responsibility of the office together with another manager. This was rekindling for E1 when he/she got the opportunity to do what he/she was most appreciated for, work wise: work more with people and relations. This was personally very developing for E1 (E1, personal communication, 2007-11-23).
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The work carried on and E1 finally realized that he/she wanted to become a partner, and also made this known since he/she realized that no one will come and ask who wants to do what. The opportunities must be taken by yourself. E1 later became a partner and by the year of 2007 became the office manager in one the Company X?s offices in Stockholm. The current work is a new challenge and a chance for further personal development (E1, personal communication, 2007-11-23). 5.3.2 Interview with E2
When we ask for the reason why E2 stays within the firm, E2 starts by telling us that working for the employer is a good investment. One constantly gets the chance to develop and gain a good knowledgebase. Examples are that employees get experience in giving presentations, an insight into many industries is gained as well as education and training in leadership and responsibility sharing. In the end, all that is taught is useful in everyday work (E2, personal communication, 2007-11-23). E2 continued explaining why the search of employers ended with Company X. E2 had a lot of contact with Company X during the years of studying, as well as with other auditing firms. All of the "Big Four" were active at the university and it was natural to have the most contact with these firms. E2 was the sponsor coordinator and this further expanded his/hers contacts with the auditing industry. Eventually E2 chose Company X over another firm, when he/she found out that the other firm did not pay any overtime compensation. Also, the office manager at Company X gave a good impression (E2, personal communication, 2007-11-23). The office that E2 works at is smaller and therefore E2 feels that it is easier to get heard, in comparison to a larger office. But everything is your own responsibility and you totally depend on yourself. This may, however, take some time to realize. Also, there are several younger employees at the office where E2 works, which contributes to a great atmosphere (E2, personal communication, 2007-11-23). However, E2 claims that the question in his/her case is not whether to stay or not, since E2 already has made the choice of Company X. If the case would be that E2 he/she hated the working place, he/she would quit. But the plan is to give the profession a chance and stay at least three years and thereafter evaluate whether he/she wants to continue within the auditing industry or not. When we ask if E2 has the goal of becoming a partner in the future, the answer is negative, since E2 feels that this would demand too many sacrifices since the work demands too much effort and long hours. Balance is more important such as spare time and time with family etc. Furthermore, the hierarchy is clear and it is more or less expected that you climb. The steps are clear and the question is only how fast one will climb further. As far as E2 has seen, those that leave do it because they can get paid more at some other place, if they do not want to follow the professional steps. Also, senior em- ployees who do not climb further feel outrun by more junior employees and therefore chose to leave (E2, personal communication, 2007-11-23). 5.3.3 Interview with E3
E3 emphasizes several times that no day is like the next and that the work varies a lot. It is not like sitting in a finance department for years, doing the same thing. One example of this variation is that there are many internal projects to participate in if you like. Another reason is that even if you work on the same customer for some years, you get a different
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function in the team every year as your knowledge expands. A third reason for great variety is that the employees are free to distribute their time as they please, as long as they do the specific tasks in due time. E3 claims to be in charge of his/her own time, something that is not very common for comparable firms. E3 also values being able to influence the pace of his/her career and though there is a path to walk, you can still go your own ways (E3, personal communication, 2007-11-23). E3 believes that in working for a smaller firm, the work will be quite narrow in the sense that you have certain customers and only work with them. At a big company like Company X, E3 claims that there are possibilities to work with many different types of customers and in different teams. Within these teams there are people to learn from, which E3 feels is valuable in order to gain a toolbox of his/her own for the future. As the firm is large and has different departments one can always ask for advice from other employees and departments, which E3 claims to be a great asset. Also, there is a possibility to change department and work with a different area or to go abroad and work for a branch in a different country. This is something that E3 is considering, but regardless if he/she goes, E3 values that the possibility is there (E3, personal communication, 2007-11-23). E3 also talks a lot about education and how that is a true benefit of working at this company. „You raise your knowledge-level and your value constantly? (E3, Personal communication 2007-11-23). You receive an education within the frames of your work duties, and of course you want to finish the education for both personal and professional reasons. One learns new things all the time, new knowledge that can be used in the daily work (E3, personal communication, 2007-11-23). E3 also feels that his/her working day is really fun. He/She feels that you do not disappear in the great number of employees even if the office is big. This is because many departments stick together like small offices within the big office which makes it more personal. Since there are many young people working in the office, there are social activities outside of work too, which E3 really appreciates. Many of them you get to know well outside of work, and some you know from the university (E3, personal communication, 2007-11-23). E3 enjoys the work within the bureau right now and wants to stay. „You really have a future within the company (?) there are endless development possibilities? (E3, Personal Com- munication 2007-11-23). Since the variation of tasks is so large, E3 likes to work in the firm. This is enhanced by working in good teams, where friends also work, and by having fun at work. In conclusion E3 values continuous learning, having fun co-workers and to continuously develop. However education, freedom and variation exists at all the "Big Four", thus the crucial thing is how you connect socially (E3, personal communication, 2007-11-23). We must point out that E3 used "one" during the whole interview rather than "I", and E3 also said that „one become a senior associate after two years? (E3, Personal Communication 2007-11-23). This is interesting for us since it tells something about how E3 sees him/herself and if E3 stands for the statements personally. E3 further claims that the professional steps are to be followed and that he/she will probably do so as well (E3, personal communication, 2007-11-23). Finally, directly after the interview when we had just turned the recorder off and got up from the chairs, E3 said that "one" gets experience and education "if nothing else". Even though this was not a part of the official interview, this notion is interesting and worth involving in the actual findings (E3, personal communication, 2007-11-23).
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5.3.4
Interview with E4
E4 has worked in a smaller auditing firm earlier and make comparisons between that former employment and Company X. At a certain stage E4 felt that he/she had to move on from the small firm to either start working for one of the "Big Four" or to start an own business. What in the end decided was his/her curiosity of how it could be to work for a bigger firm and to try out a different way of thinking (E4, personal communication, 200711-23). When E4 met with Company X, they were the one of the "Big Four" that seemed most alike a small firm in their way of working and concept wise. This is the reason why E4 chose them without hesitation. The other auditing firms were a bit stiff and had difficulties to adapt, while Company X was more open. As a younger person E4 remembers that Company X lured with possibilities that a small firm did not have, like becoming Director or Partner. „You don?t want to end up in an organization that does not offer any possibili- ties for advancement and not get any rewards for the work you do?, E4 claims (E4, Person- al Communication 2007-11-23). The reason why E4 did not start a bureau of his/her own, is that he/she thinks that it is very tough. E4 does not find it desirable to put much effort into hiring and taking care of personnel. Also, a small auditing firm is very sensitive and there could easily be situations in which there is to much administration. However, at a small bureau you could easily see the direct effects of your work, which E4 thinks is a big plus (E4, personal communication, 2007-11-23). At the head office of Company X, were E4 worked for some years, it became too impersonal and messy, departments are very alienated from one another. When E4 was asked to move to a smaller office he/she was very happy. It was more entrepreneurial, more personal and closer to the market - much like the small firm E4 once worked for. An office that is more market and customer oriented meant that you had to sell the company and the ideas to the customer (E4, personal communication, 2007-11-23). Sometimes E4 can wish for more things, like a better salary, but E4 feels that most things are really good at Company X; for example the flexibility in scheduling you own times. Also, in such a big organization as this, you have all the help you could ever need; all personnel and all knowledge. Plus it is a risk-reducer. If you should be questioned by the Supervisory Board of Public Accountants (Revisorsnämnden), you have a big organization to back you up, which is a great relief, says E4 (E4, personal communication, 2007-11-23). One of the most important things is the continuous education but also benefits like health insurance and pensions. Also, the company puts a lot of effort in social activities and care for their personnel. E4 admits that even he/she gets surprised sometimes of this, but that it is really needed because it can go weeks before you meet your colleagues as you are out working on different projects (E4, personal communication, 2007-11-23). In conclusion E4 claims that when he/she compares with what other jobs has to offer, the most important things for staying is education, pension and freedom, even if it probably pays better to work as some sort of Finance Director in a "regular" company (E4, personal communication, 2007-11-23).
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5.3.5
Interview with E5
There are several reasons as to why E5 continues to work for Company X, reasons that have changed over time. E5 started to work for the company because they had a wide range of opportunities. According to E5, starting work for Company X is like starting a trainee program. The beginners get an intensive training program where they learn a lot from a number of different areas. A newly employed person is given the opportunity to work with many things. The focus lies on auditing but lately the new employees are also given the opportunity to work with other areas, such as marketing (E5, personal communication, 2007-11-26). Another positive aspect is that you are able to work with many companies that are active in different industries. The size of these companies varies, some are small while others are large. When working like this you are able to learn and develop your knowledge about different companies. E5 claims that it is challenging to work under these conditions, but also emphasizes that this is one of the reasons why he/she is satisfied with the job (E5, personal communication, 2007-11-26). According to E5, this wide range of opportunities gives the employees options to specialize within a certain field. E5 started to work within the auditing part of the organization as he/she found this field to be most interesting at the time. Lately, E5 has switched directions and the focus does not lay on auditing as much as before. He/she has been involved in creating and planning a tax-course that all new employees take part in. E5 is also lectur- ing within this course. If you feel that you do not wish to work within, for example audit- ing, there are other career paths that you can follow. Even though E5 is working with the tax course, he/she has not abandoned the auditing part completely. Today, E5 is a group leader within the local business area and has the responsibility for task distribution, which takes most of the working time. According to E5, he/she is able to steer the direction and be involved in deciding how thing should be done. The opportunity to influence as a group leader is something that he/she finds rewarding and fun (E5, personal communication, 2007-11-26). Another aspect of why E5 chooses to stay with Company X is the colleagues. E5 finds it important to have somebody to talk to when having questions concerning the job. This is not possible when sitting in a small company as head of finance or accounting. E5 claims that it is a relief that there is so much knowledge in the organization. It feels good to have the comfort of being able to ask somebody about an issue (E5, personal communication, 2007-11-26). E5 also claims that the management encourages employees to take their own initiative. If there is something that you have a passion for but is not within your line, for example marketing, you are able to devote some of your time for working with marketing activities. In this sense management is very flexible (E5, personal communication, 2007-11-26). E5 finishes off the interview by saying that the main reason why choosing to stay is that he/she is able to find new challenges every day, which enables further development of his/her abilities (E5, personal communication, 2007-11-26).
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6
6.1
6.1.1
Analysis
How the HR department works compared to Branham.
Hiring process
According to Branham it is important that the recruitment process is done properly. He claims that giving a realistic job preview will enable this process to be done successfully. Branham argues that the future employee should understand where the company is heading, but also to know what it would be like to work in that company (Branham, 2001). This statement is supported by Robert Sniderman, president of HRFocus USA, who claims that to be able to get employees to become high-performers the company needs to communicate clear visions, goals, expectations and a purpose (Robert Sniderman cited in Leheney, 2007) When looking at how Company X deals with the recruitment process, it is clear that they have taken this into consideration. When it comes to the recruitment process, which Branham claims to be important, Company X is involved in activities to ensure that they find and attract suitable employees. This is done in a variety of ways. Students at Swedish universities are the main focus of Compa- ny X when promoting themselves to find suitable employees. The reason for this focus, according to the HR manager, is that this is the place where the organization finds most of their new employees. Company X believes that being involved from the beginning of a student?s education is crucial. This way, the organization is able to establish a reputation as an attractive and serious employer. Presently, the organization is able to attract enough people when recruiting (HR manager, personal communication, 2007-11-05). Students are, however, not the only target group for auditing firms. When a position that requires special competences opens up, and the company is not able to find anyone that is suited internally, they use head hunters to find and recruit specialists. The HR manager claims that Company X is able to attract specialists by informing them about the job in detail, what opportunities they will have, and the degree of freedom that is associated with the job. (HR manager, personal communication, 2007-11-05). Branham claims that the hiring process should not stop after the interviews are over. Introducing the new employees is an important factor, since the first impressions last (Branham, 2001). Beam argues that the first 90 days of employment are critical, therefore the organization needs to start thinking of retention straight away (Beam, 2006). In this case, Company X places great efforts on making sure that the new employees are given the necessary information about their working place. According to the HR manager, the following takes place on an employee?s first period at Company X. As the new employee comes to the office, he/she is picked up at the reception and gets a tour around the office, thereafter the employee is taken to the IT department where he/she receives a computer. The new employee is introduced to the closest colleagues and to his/her working area. Shortly after the first day the new employee attend the introduction day as mentioned previously. Soon after this, he/she attends an auditing course that is given to all junior employees. Once back at the office, he/she attends activities to get a grip of how the daily work progresses at Company X. At this time, each employee has received a personal coach to help out if they have any questions concerning their job etc. (HR manager, personal communication, 2007-11-05).
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The activities that a new employee participates in indicates that Company X does not simply show the employee to their desk and expects them to start working, as might be the case in many other companies. Company X first makes sure that the employee gets all the information and training necessary to do a good job. And after all the training and information, they are given a coach which assists them in case they have any question or thoughts that they want to share. This provides a comfort to the new employee and enables him/her to feel as he/she has made the right choice. Making the employees feel as they have had the right choice is important since that is the beginning of the retention process. What Company X does when a new employee starts working goes in line with the thoughts of Fran Parrish, who claims that retention starts with giving a good orientation of the organization and necessary training for the employee (Parrish, 2006). Since starting to work in a new organization is a beg step for a person, he/she will search for reassurance that they made the right choice (Branham, 2001). The empirical findings show that Company X has in a good way ensured that the employee is given a good orientation and the necessary training, as argued by Parrish (2006) and Branham (2001). 6.1.2 Internal labor market and career
When a position opens up at Company X, an ad is placed internally to find someone that already is familiar with the organization, according to the HR manager. This gives the employees a chance to apply for a job that they might want, but have not been able to get since the position was not previously available. The employees are also given the opportunity to change within the four service lines but also geographically i.e. change to another office (HR manager, personal communication, 2007-11-05). By doing this, the company is creating an internal labor market where the employees feel that they are given the opportunity to develop and grow. This according to Branham (2001), facilitates the work of retaining employees. It also sends out signals that the company is willing to give the already existing employees a chance to apply for the position. This is an excellent way in which the company shows that they value their employees and believe in them. Researchers within the field, such as Cappelli (2000), Butler and Waldroop, (1999) argue that redesigning and customizing the job to suit individual needs and wants is something that firms should focus on, to improve their retention rates. Branham also claims that redesigning the job is a way to get satisfied employees, which leads to decreased employee turnover (Branham, 2001). When looking at how Company X works with redesigning and customizing jobs, it can be seen that they are taking a slightly different approach. Instead of customizing or redesigning each individual job they focus on customizing an employee?s career. According to the HR manager, each employee at Company X has an individual development plan. This plan is developed in consent with the employee, and it is a way for management to give the employee an opportunity to influence their own development. Person- al development is something that Company X encourages, but also expects from their employees. The responsibility for this development is shared between the employee and the closest manager (HR manager, personal communication, 2007-11-05). As previously mentioned, the employees are able to apply when a position open up. This is also a way of customizing the job or the career, since you can change position within the firm, without taking the risk of changing employer. You might not like the job itself, but you are satisfied with the rest of the situation, such as managers, colleagues and corporate culture. Customizing a specific job to suit personal preferences can be hard to do for a company, even if
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desirable. Therefore enabling the employee to change position might be an alternative solution. Company X has realized that some employees at a certain stage in their life do not prioritize the work, thus it is great to have the possibility to customize the job in some service lines so that employees can work part time. This is the case especially among those who have worked with the company for six, seven years and are the one that are most valuable to the organization. This is because they have extended experience and the rest of the auditing industry faces the same problems with employees that do not put the career as highest priority. Therefore, Company X is giving these employees the opportunity to work part time and work with a limited number of clients instead of leaving the company completely (HR manager, personal communication, 2007-11-05). The HR manager claims that even though it is possible to redesign and customize the job in some cases, Company X has not in a sufficient way been able to communicate this to the employees (HR manager, personal communication, 2007-11-05). It seems like the employees are not aware of the possibilities to redesign or customize their jobs, why the company needs to communicate this in order to increase retention rates. Thus, communication is something that Company X needs to focus on. Especially for those that are most valua- ble i.e. the specialists who have worked for six, seven years and possesses valuable know- ledge and competencies. 6.1.3 Motivation and performance
It is clear that researchers agree on one aspect; in order to get satisfied employees and increase retention rates, managers need to motivate their employees. When looking at our frame of reference at the section „motivation and performance?, it is clear the opinions about motivation differ to some extend. Branham talks about feedback and development opportunities as important motivational factors. He also argues that the company should deploy a culture of giving and taking. By giving or rewarding the employees for desirable behavior the company sends out messages that the employees are worth investing in and that the firm relies on them. Branham argues that the company needs to understand that different employees are motivated by different thing. One employee might want more money, while the other want more time off (Branham, 2001). Although there are many ways to motivate your employees, Company X has chosen to approach this issue by offering employees development opportunities. But the company also offers a special benefit package that involves individually based wage system, private health insurance, maternity leave compensation, food coupons, etc. As previously mentioned, all employees have development opportunities and they are able to influence their career and place focus on what they find important, fun, and motivating. By involving the employees, Company X is showing that they are empowering the employees, and thereby creating a culture of giving, which is important according to Branham. When it comes to compensation, employees at Company X are receiving individually based wages. These are set according to the professional level of the employee, e.g. a manager is paid more than an associate. The HR manager claims that other factors such as performance also are taken into account, and proclaims that bonuses are given but not in all service lines (HR manager, personal communication, 2007-11-05). By having individually based wages (and in some cases bonus systems), Company X is making sure that they pay for performance and not just giving away monetary rewards random-
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ly. This is something that Branham stresses as important. Horowitz et al. (2003) supports the claim that compensation is an important retention factor. They also claim that performance incentives/bonuses are a highly effective retention strategy. Even though the HR manager claims that company X has a special benefit package, it would be a good idea to further individualize this package. The manager should be given freedom to, together with the employee, create a benefit package that goes in line with the employee?s preferences. As it is today, most employees receive the same benefit package, except from an individualized wage. When it comes to the intangible activities to motivate and engage the employees, the company is letting most of these activities be handled at the local level. The HR manager claims that giving directives on how to motivate and engage is hard to do on a national level. Therefore, this is best dealt with on a local level, by local management and team members. Something that is done on the national level is a weekend consisting of social events where the company is able to work on their culture and values. Here, all employees are taking part in different activities such as cultural events, parties etc. Company X also encourages employees to spend time together and socialize with one another (HR manager, personal communication, 2007-11-05). Branham (2001) claims that by having these kinds of activities, social bonds are created between employees which leads to a more effective retention since people that have some kind of social connection between them are more reluctant to break that tie by changing job. Feedback is also something that is argued to be important for ensuring motivation (Branham, 2001, Nelson, 2006, Chapman, 2007). Even though some researchers agree that feedback is important for motivating employees, their opinions differ when it comes to how this should be given. Nelson (2006) claims that you should start out soft with appreciation, Chapman (2007) argues that appreciation should be held separate from feedback in order not to mix appreciation with advice and recommendations. Branham (2001) states that feedback shall never be solely negative since this pushes the employee away. Even in this area Company X has developed their own way of dealing with this issue. According to the HR manager, feedback at Company X is mainly given after a customer visit. The manager, or the team leader, is supposed to have a small feedback session with the group were they talk about what was done in a good way and what can be improved. Another way to receive feedback is through the development meetings that are held twice a year. Here, the manger is expected to be clear and discuss problems with the employee. Comparing these practices to Branham, Chapman and Nelson, it is clear that Company X has developed their own way of giving feedback to their employees. Even though feedback sessions and development meetings are held, the company need to improve their way of giving positive feedback. According to the HR manager, management is doing a god job when it comes to communicating unmet expectations. But, when an employee has done a good job it is not always communicated and the appreciation they deserve are not always given (HR manager, personal communication, 2007-11-05). Even though the need for positive feedback has been identified, Company X needs to put more effort into improving this kind of feedback. This is important since those who are doing a good job are the ones contributing to the success of the firm, and therefore needs to be appreciated for it. Giving them praise and recognizing their work will motivate these employees and help the company retaining them.
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6.1.4
Culture and Leadership
In order to attract and retain talent, the company needs to develop and communicate a culture of commitment. A culture of commitment, according to Branham (2001), involves treating your employees as family and with respect. There are several ways of working with the corporate culture. Company X has among other things developed a "Code of Conduct" where they have stated how an employee should behave when representing the company. In order to learn from mistakes and improve their practices, the company is using surveys to get feedback from their employees. One system that is used at Company X is the "Upward Feedback".(HR manager, personal communication, 2007-11-05). The HR manager claims that by doing surveys and collect data they are able to form an opinion on what can be done in order to improve practices. If the results from the surveys are not satisfying, the company is putting emphasis on improving the things that the employees are dissatisfied with (HR manager, personal communication, 2007-11-05). This also contributes to a culture of commitment, which Branham (2001) claims is important, since Company X is striving to learn from their mistakes and improve their practices. By asking the employees different questions about what they believe, Company X is incorporating the employees in shaping the organization. This can lead to a feeling of employees being able to influence their situation and therefore becoming more satisfied with their situation. According to Branham (2001), coaching is another way of make sure that job satisfaction is increased. Beam (2006) also stressed the importance of coaches in an organization. Coaching according to Beam (2006) is a small thing that makes a major difference. In line with both Branham (2001) and Beam (2006), Company X uses coaches to support and help their employees. A coach is there for the employee so that he/she can get support in the personal development process, but also to answer questions regarding situations that the employee might face. Beam (2006) argues that skills such as active listening and problem resolving abilities are especially important for a coach. According to the HR manager, when selected to become a coach at Company X, the coach receives training which is provided by the organization. This is done to ensure that he/she receives the necessary tools needed for coaching (HR manager, personal communication, 2007-11-05). In this way Company X ensures that the selected employees receive formal training before becoming coaches, which goes in line with the thoughts of Beam (2006) who claims that certain abilities are needed for a coach. The development meetings, that all employees attend twice a year, is a leadership issue that is being dealt with at Company X. The HR manager claims that during these meetings the employee and the manager discuss the development plan, strengths and weaknesses of the employee and what he/she needs to do in order to advance in the corporate professional levels. Management is also expected to evaluate if there are any problems (HR manager, personal communication, 2007-11-05). This sends out the signal to the employee that the management is concerned with the development of their employees and want to help the employees to develop, both on the personal and corporate level. This serves as a motivational factor for the employee as well, which in the long run can contribute to increased retention rates. As can be seen by the actions of Company X, they are trying to incorporate their employees when shaping the corporate culture. Peppitt (2004) claims that culture is something very difficult to change and that it takes a long time to do so. By incorporating their employees, Company X is giving the employees a chance to influence the process. This can
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make the employees feel trusted and respected, which is a part of creating a culture of commitment.
6.2
Why the employees stay
When starting to look at the employees we find that personal development and challenges seem to be most important for E1. He/she also seem to have realized that the opportunities need be taken by oneself, since nobody will come and ask. This shows that E1 recognize that it is up to the individual to take charge of the own career. Also, it looks like the different professional stages do not have to be followed exactly in order to climb up the career ladder as fast as possible and since we got the feeling that E1 climbed in the own pace. E1 also took the chances given and did what felt most fun at the job, which had more to do with personal relations rather than numbers. This makes us wonder if the reason for why E1 stays is more his/her personality and determination rather than actions made by the firm? Furthermore, the opportunities in the career are not as important as the opportunities for personal development. It was also interesting to see that the leaders were actual- ly not perceived as very good by E1, and that the supporting fellow employees became more important when this was the case. E2 was very honest during the interview and felt comfortable with the job or position at the moment. He/she was similar to E1 in the sense that both realized that it is up to themselves to climb and make career. Further, both seem to believe that the career is not the most important aspect of life. But contrary to E1, E2 does not have the goal of becoming a partner since E2 feel that too much would have to be sacrificed. This opinion that E2 has is very much based on the observation of the fellow colleagues at the firm who are part- ners. Maybe if E2 would meet E1, the thought could be changed, since we did not get the feeling from E1 that too much was sacrificed. Further, E2 felt that there is a pressure to climb further or quit otherwise. We wonder if the focus on the career and the different opportunities within the firm can have the effect of creating too much pressure on some and demand that one should climb? Compared to the view of the more senior employees, E1 and E4 have different believes. Both seem to take it more relaxed and do not have the focus solely on constantly going forward. Can this difference be because the focus of Company X has shifted from offering a static career to offering more opportunities and being more career focused when recruit- ing new employees? The case could be that Company X put too much focus and pressure on the opportunities and the career, and by this demanding to much from the employees. One of the reasons E2 chose Company X was because another auditing firm did not offer compensation for overtime, which was not perceived as good. This makes us wonder if E2 works much overtime and if more wage is wanted, which can be done by working overtime at Company X? E3 on the other hand, used "one" instead of "I" during the whole interview. This could indicate that E2 does not see themselves in the centre and as responsible for what happens. Maybe he/she was afraid that the answers would scare us off of or maybe he/she wanted to protect the firm. Also, E3 has only worked for less than two years at the firm, thus he/she is probably not as secure as the more senior employees. We felt like the most of the phrases could have been found in a brochure from the firm, written to students to make them want to work for the firm, which could indicate that this was what he/she has heard many times in the recruitment process or within the firm.
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We also got the impression that E3 believed more in the career stages and that the different titles/positions were automatically given, rather than taken on your own (as E1 and E2 believed). It was very difficult to get personal opinions, which could be caused by that the interview was short, we had never met in person before and that E3 had not been working at the firm for that long. E3 had no direct plans for the future and believed time would tell whether to stay or not in the company. However, the fact that E3 directly after the interview said that "one" gets experience and education "if nothing else", which was very interesting since E3 has said nothing about this during the interview. This last phrase says quite a lot about what E3 believe is most important in the work, and the reason for why E3 stays within the firm. We felt that the main reason for why E4 stay, or prefers to be employed by the firm, is the security a large firm can offer. This might not be so surprising when E4 has been working as an auditor for a reasonably long time and is older than E2 and E3. The alternative for E4 could be to start an own firm, but since E4 has been employed (and owned a small part of) the firm that was acquired by Company X, he/she does not want to try that again. It is more difficult to run an own smaller business that does not have the monetary strength or the wide knowledge as a large firm. When comparing to the more junior employees, E4 seem to have a more traditional view when it comes to staying within one firm for life (E4 did not leave the first firm until it was acquired by Company X). E4 also seems to like the work itself and feels that the firm invests and cares about the employees, by constantly educating them as an example. Furthermore, E4 is more tied to the city of Stockholm after years of having lived there, which in a sense prevents him/her from leaving the city. Even though this does not prevent him/her from leaving the firm, it somewhat limits the oppor- tunities of working elsewhere. E5 was very prepared for the interview and had thought about the answers in before hand. This is good since time was devoted to the thoughts, but on the other hand the answers were not as spontaneous. We got the feeling that E5 stays within the firm or enjoys the work since it is flexible as the employees are given the chance to run own projects etc. Also, E5 was the only one to mention that the organization is flat and that response is received from the top but the initiatives are often coming from the bottom up. We also saw similarities between E5 and E1 when none of them seem to believe that the career and the actual climbing is the most important in the work. E5 is not accredited, even though one can take the exam after five years experience, which also was the case with E1 as it took more than five years before he/she took the test. Also, similar to E1, the focus seems to be on new challenges and the opportunity to develop as a person, even though this is not done by receiving another title. 6.2.1 In General
None of the employees mentioned that money was the most important factor that made them stay, even though it might have been important. Further, none spoke about culture, but the most surprising fact is that none spoke about leadership or that they had good leaders. Actually the opposite was the case when E1 told that the former leaders were not giving recognition. We can also question how good role models E2 has at the office when the title partner is not desirable as it seem to include to much sacrifices for the individual. The more senior employees E2 and E3 seem to agree on that Company X has a lot of student activities in the universities to communicate that they invest a lot in the employees, by education and offering experience in many areas. E2 and E3 also seem to agree that the job
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actually is a great experience but none were sure about (or convinced) that they will stay within the firm for life. Do they reason like other students that this might be a good career step, with potential of helping them in the career? This thought is not surprising since E1 confess that the first idea was to stay within the firm for a couple of years and thereafter move on, which although never happened. The key to keep the employees seem to be the internal labor market in the way that there is space to develop and grow within the firm, which would maybe be more difficult in other industries or firms of smaller size. However, the challenge is to communicate this in the same time that the pressure to climb should be minimized. Emphasis should lie on the individual and involve them in their advancement and career. The advancement or development does not have to be vertical, which E5 show by being a manager with other tasks that just accounting without being an accredited auditor.
6.3
6.3.1
Comparing the HR department, employees and the theory
The hiring process
When it comes to the hiring process, Company X seems to do a very good job. The recruitment process seems to be invested a lot in and the introduction of the newly employed seems to be done according to the theory we have chosen. None of the employees mentioned anything about their introduction, which makes us believe that HR does a good job. However, E2 talked some about the hiring process indirectly, when mentioning why choosing Company X. The firm seemed attractive and introduced itself at the university where E2 studied. This strengthens our belief that the recruitment process is done properly. Further, the fact that none of the employees talked about that the recruitment or introduction makes us draw the conclusion that Company X and the HR department makes a good job regarding this issue. 6.3.2 Internal labor market and career
How the firm is organized with many opportunities for the individual seems to be the real strength of Company X. The employees talked about the different opportunities and possibilities for development within the firm. Our chosen theory emphasize that the job should be challenging from the very begging to the end and here Company X seem to have done a great job. Even the partner, E1, who has worked for the company many years sees the job as challenging and as a source for personal development. Also, the more junior employees, E2 and E3, have realized the opportunities. Here can be given credit to the communication work of the firm since even thought there are opportunities within the firm it cannot be taken for granted that it has been communicated to the employees. In many aspects the company has been able to communicate the development opportunities but in others, like being able to cut done on work when for example being on maternity leave, communication needs to be improved. When comparing this to the chosen theory, we can see that the career opportunities are one of the main advantages that Company X has when it comes to retaining their employees. Furthermore, the structure of the auditing department, that there are different professional levels with different tasks and responsibilities, the company should in a better way communicate more clearly to the employees what is available and how they can get there. However, as we found out from the interview with E2, it is not always seen as a goal to reach the
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highest levels when it might require a lot of personal sacrifices. Also, E1, who has reached the highest level never had this as a sole and most important goal in the working life. So, even though having the different levels and communicating them, it does not always mean that the employees strive to climb fast at any cost. As we have mentioned before, E1 and E2 seem to have taken charge of their own development and career seriously, while we are not as convinced that E3 has done. This makes us wonder if Company X has succeeded in communicating that the employees are themselves in charge of what happens to them. However, we realize that this could indeed be an impossible task since all persons are different and people are more and less taking responsibility of their own lives. Whether it comes to the career or the personal life. In other words, E1 and E2 could be persons who make sure to be where they want to be which has nothing to do with Company X. 6.3.3 Motivation and performance
This topic, motivation and performance, is very tied and connected to the previous topic, internal labor market and career, since the employees are to great extent motivated by the career and opportunities within the firm. As the HR manager told us, the managers have development meeting with the employees where they can receive feedback about their work and also discuss the future and goals. However, none of the employees we interviewed talked about this when we asked why they chose to stay. This does not mean that the employees do not appreciate the feedback, when it only can mean that this issue is not the main reason for staying. It must be pointed out that almost all employees however talked about the personal development which could be very tied to the feedback given by the managers. If the feedback sessions would not have been organized the managers maybe would not be given the information about the aspirations and future goals the employees have, which could lead to that the personal development would not occur in the same extent. Also, as the HR manager mentioned, managers are good at giving corrective or negative feedback, but some are less good at giving positive feedback and recognition. As E1 told us, he/she was lacking this kind of recognition and motivation from the managers during the first years. However, the situation might have changed since then. These issues should not be neglected according to Branham and other sources, when the intangible rewards such as positive feedback and recognition is very important and does very much for the retention. Further, Branham writes that the firm should communicate to the employees how and what they contribute to the success of the firm, which neither the HR manager nor the employees said anything about. Company X seem to invest a lot in the employees, which Branham encourages, especially regarding the education given and the package offered to all. However, as the reward package, that the HR manager mentioned, is offered to all and contain the same rewards we must question if this is a good idea. Branham writes that different rewards should be given to the employees since not all appreciate the same things in life. At the same time, none of the employees mentioned the package as anything special. Here we wonder if the other auditing firms offer the same kind of package and therefore are more taken for granted by the employees. Since the rewards need not to be tangible, Company X seem also to offer intangible rewards or being flexible in the way that parents as an example can work shorter days or leave on maternity leave, which two of the employees shortly mentioned that they have used. Also, some of the employees talked about that the work as flexible and that as long as the work gets done, nobody cares about if one
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comes late to work some days or leave early other. This seemed to be appreciated and is in line with what Branham says, that different people appreciate different rewards, which flexible working hour is an example of. Finally, when comparing Maslow?s theory with what the HR manager and the employees said, we can see that the basic human needs have been fulfilled, which is not so surprising at this time in Sweden: most have a home, there is no war and there is no shortage of food. Therefore, it is natural that most of the employees talked about and appreciated the opportunities for personal development and more knowledge. This might also be the reason for why the employees did not emphasize the monetary rewards, as they already got it and can fulfill the basic needs such as shelter, with the salary. When this is done, the personal development becomes more important. This also seems to be the focus of the HR department, when they also emphasize the opportunities to develop within the firm, with the career and feedback in mind. 6.3.4 Culture and leadership
Company X seems to devote much resource into social activities, such as the "games" that the HR manager mentioned. If we compare this fact to Branham?s four keys, this is indeed good, especially since the auditing industry can be stressful during the work peaks. However, this none of the employees directly highlighted as the reason for staying within the firm. This makes us wonder if the social activities are as important as the time and effort put into them. One reason for why the employees did not emphasize this issue could be that the employees spend a lot of their time at work and rather want to load their batteries at home, away from work. However, as Branham claim, that there needs to be a balance between work and fun, and the social activities organized by Company X can be crucial even if nobody mentioned them as the main reason for staying, the games are still of importance. But then again, Branham claimed that one should have fun at work also, which could be interpreted as that the activities need not to take much time or effort (as maybe Company X does it) and that it is not the social activities outside work that are the most important. There seems to be an emphasis on own leadership in Company X when the own initiatives are encourages by the company. The employees seem to be aware of this and the possibilities are there to be taken. However, not all employees seem to see that they themselves are the ones in charge of their own fate within the company. While the HR manager says that the development responsibility is shared between the employee and the closest manager, we can see that some employees have taken full responsibility of their own development (E1 and E2) and thus have climbed in their own pace. This could indicate that the employee indeed can affect the own career to a large extend. Also, at least one of the employees did not see one self in the centre when "one" became a senior associate more of less automatically after some years in the firm, which shows that not all believe the self can influence everything. But then again, E3 had not climbed to the next level even though the E3 had worked as long as E2 within the firm. Here we can draw parallels to Branham who claim that the employee should be given the tools for taking charge of the own career, which Company X has done very well, and thereafter communicate that it is up to the employees to use them, which some of the employees have understood while others seem not to have. Furthermore, the focus in Company X seem to be performance, and as far as we can see the firm has succeeded in communicating areas of improvement by having feedback sessions where the employees are told what can be done better and what challenges lie ahead.
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However, as the HR manager pointed out, the firm has not been as good at telling the employees what they actually have done right and praise them for that. Here, we wonder how motivating this is for the employees, when the focus seem to be in the future but seldom are seen for what they have done well. A clue from E1, that the managers at the former office were not good and motivating leaders, shows that the firm can indeed become better in this matter. As Branham claim, simple praise and appreciation can make a huge differ- ence and should therefore not be neglected. When the HR department serves the managers and thus never the employees, we wonder if the distance to the employees is too long. Can the HR department really see if the employees are getting enough appreciation and if there is a lack of it, has the HR department given the managers enough support in this matter? Here further research could be appropriate and we will not dig deeper into the issue in this thesis.
7
Conclusions
Company X?s retention practices are for the most part in line with the chosen theory, and it seems like the firm overall does a good job retaining their employees. It appears like the HR department conducts recruitment and introduction in a satisfactory manner. We believe this is because Company X takes the recruitment process very seriously. This is evident in how they approach their key target group, the Swedish university students, by establishing a relationship early on in their education. This creates a reputation as being a serious employer that wants to create a long term relationship with their future employees. However, we question the rational of having quite similar reward packages for all employees. This might prevent the feeling of a hierarchic organization, but is not reasonable to sustain motivation and performance. Branham (2001) argue that employees appreciate different rewards and thus rewards should be developed in cooperation with each employee and given based on performance. This is also true regarding the type of reward, as Branham claims, not all rewards have to be monetary. Company X set wages on an individual basis, but most of the reward package is predetermined. One alternative could be to offer spare time. We find it reasonable to conclude that the HR department is focusing on the „right? layer of Maslow?s "Hierarchy of Needs", since they emphasize personal development rather than merely satisfying the basic need of a wage. The employees seem to stay and enjoy their work because of the opportunities to develop. Company X appears to nurture a culture of commitment, which Branham (2001) claims to be of great importance. This commitment is expressed in how employees are involved when shaping the organization. By asking for evaluations through different surveys, management shows an interest for the opinions of the employees, thereby demonstrating the maturity of their leadership. Company X seems to offer many different career opportunities, which is in line with the theoretical framework. But as Branham point out: the responsibility of the career should beplaced on the employee and communicated very clearly, which is something Company X has been unsuccessful with in some cases. There are possibilities to change position within the firm, but management has probably failed to communicate this to their employees in a sufficient matter. As we are comparing development opportunities within Company X with
40
theory, a reasonable interpretation would be that the internal labor market is the main advantages in the struggle for retention and motivation. To make it clear, we present short answers to our research questions: How does Auditing Company X work with retaining valuable employees? It appears like Company X is taking a holistic view when dealing with retention. From theory we know that this is important as the different areas are interrelated. Company X realizes that they profit from listening to both current and resigned employees. Is there a difference between retention practices of Auditing Company X and current theoretical framework within the topic? There are many similarities between the retention practices at Company X and the chosen theory, but there are also differences. Two major areas in which theory and empirics differ are regarding inflexible reward structure and insufficient communication of career opportunities. Is there any area that Company X can improve regarding their retention practices? Yes, Company X could reassess their reward structure and how they use recognition. In addition, the fact that employees are responsible for their own career development and pace, should be communicated clearer.
8
Discussion
During the process of writing this thesis, we have come across many interesting subjects closely linked to retention practices, all of which we could not include in this report. We must have in mind that the purpose of this thesis was to gain a deeper understanding of the retention practices at a company, thus a case study was the right choice. Because of this choice, we are limited in the scientific generalizability of our conclusions and the general application of the results might be reasonable to question. It does neither allow us to validate the theoretical framework, but none of this was our intention. If we would have done the study some other way we would not have gained the same deep understanding. Therefore we claim the generated empirical data to be the main strength of this thesis. We did not expect to find that the HR department only serves the managers and thus rarely directly the employees. This creates a distance between HR and the employees. Can the HR department really monitor how much appreciation employees are receiving, and do the managers receive enough support from the HR department? Further research within this area could show if it is important to keep the HR department close to the employees, and if there are better ways to support regular managers in their HR responsibilities. We found that managers are quite good at alerting employees when they do not meet their goals, but not equally skilled in positive feedback. This makes us believe that this is an area of improvement, especially as feedback is closely linked to motivation. Further research within this area could provide indications on how important feedback is for retention. Al- so, by focusing more on employee opinions (present and resigned), research could lead to a broader understanding of key factors for staying with a company.
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A firm profits from encouraging their employees to have fun at work. The social activities organized by Company X are however not very tied to work, and therefore not what Branham would have noted as fun at work. Perhaps this is related to feedback, since you have more fun at work if you hear positive comments from the managers (or fellow co-workers). How does a company make a strategy to have fun at work, and how do they implement it? For further research we suggest finding out exactly what employees do at work and what they appreciate the most, and then relate this to retention strategy. To take the conclusions one step further, the HR practices dealt with above can all be linked to a company?s costs and hence also its profits. It is not possible to gain a comprehensive picture of the positive aspects of low employee turnover, unless including the factor of money. One of the reasons, possibly the biggest one, to retain employees is to decrease costs in the long run. If employees change employer every second year, the companies lose competencies in which they have made investments like education, training, recruitment etc. More resources must also be allocated towards recruiting new employees, which consumes both money and time. The purpose to investigate retention is thus not on- ly to make employees more satisfied at work and greater achievers. It stretches further than this to include how a company?s profits and overall wellness is damaged by a high em- ployee turnover. If we can provide research results on how the soft aspects of HR results in hard cash, we could build a framework on how to best retain employees and thus keep companies from incurring these extra costs. Further research of the economical aspects of employee retention could be very beneficial for this industry, but also other industries of similar structure. In other words, deeper knowledge of how to calculate on these soft issues could potentially not only help companies to provide a better working environment for their employees, but also save firms a great deal of money.
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Appendix
Appendix 1 Branham's original four keys and practices
Key one: Be a Company That People Want to Work For
1. Adopt a "Give-and-Get-Back" Philosophy 2. Measure What Counts and Pay for It 3. Inspire Commitment to a Clear Vision and Definite Objectives
Key two: Select the Right People in the First Place
4. Understand Why Some Leave and Why Others Stay 5. Redesign the Job Itself to Make It More Rewarding 6. Define the Results You Expect and the Talent You Need 7. Ask the Questions that Require Proof of Talent 8. Give a Realistic Job Preview 9. Use Multiple Interviewers and Reference Checking 10. Reward Employee Referrals of Successful New Hires 11. Hire and Promote Managers Who have the Talent to Manage People 12. Hire from Within When Possible 13. Creatively Expand Your Talent Pool
Key three: Get Them Off to a Great Start
14. Give New Hires the Red-Carpet Treatment 15. Communicate How Their Work Is Vital to the Organization?s Success 16. Get Commitment to a Performance Agreement 17. Challenge Early and Often 18. Give Autonomy and Reward Initiative
Key four: Coach and Reward to Sustain Commitment
19. Proactively Manage the Performance Agreement 20. Recognize Results 21. Train Managers in Career Coaching and Expect Them to Do It 22. Give Employees the Tools for Taking Charge of Their Careers 23. Know When to Keep and When to Let Go 24. Have More Fun!
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doc_639248582.docx
The general definition of an audit is an evaluation of a person, organisation, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, internal auditing, and government auditing, but similar concepts also exist in project management, quality management, water management, and energy conservation.
HOW AUDITING COMPANY X WORKS WITH RETAINING VALUABLE EMPLOYEES?
Abstract
Today, neither employees nor employers seem to take for granted that a person will stay with the same firm until retirement. Yet, keeping employees for longer periods is an important challenge for firms. One industry where retention is interesting is the auditing industry in Sweden, this because certain requirements are needed to become an auditor. Firstly, the employee needs to have a Swedish university degree, including specific courses within auditing/accounting. Furthermore, the person needs practical experience for a specific period of time. Due to these statements the challenge of retaining and motivating valuable employees is crucial for the auditing firms, which is why we have chosen to do a case study at Auditing Company X to see how they work with employee retention. We have compared the findings to our chosen theory, which consist of four categories: the hiring process, internal labor market and career, motivation and performance, and finally culture and leadership. These four categories are initially based on Leigh Branham?s book: „Keeping the people who keep you in business: 24 ways to hang on to your most valuable talent? (Branham, 2001). In our conducted case study, at Auditing Company X, we have been able to conclude that the firm?s retention practices are to a great extend in line with the theoretical framework. There are some areas that need further attention from the company, such as an individualized reward system and communication between managers and employees. Even though there are some parts to work on the most important aspects of retention, such as having a holistic and long-term orientation, Auditing Company X seems to have incorporated this into their practices successfully.
Keywords for this paper: Retention, Auditing
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Table of Contents
1 Introduction ................................................................................. 4
1.1 1.2 2.1 3.1 3.2 3.3 3.4 3.5 3.6 4.1 4.2 4.3 4.4 5.1 5.1.1 5.2 5.2.1 5.2.2 5.2.3 5.2.4 5.3 5.3.1 5.3.2 5.3.3 5.3.4 5.3.5 6.1 6.1.1 6.1.2 6.1.3 6.1.4 6.2 6.2.1 6.3 6.3.1 6.3.2 6.3.3 6.3.4 Background ..............................................................................................5 Problem....................................................................................................6 Research questions .................................................................................7 Perspective ..............................................................................................8 Research approach and strategy.............................................................8 Reviewing the literature ...........................................................................9 Data collection........................................................................................10 Qualitative data analysis ........................................................................11 Delimitation ............................................................................................12 Hiring process ........................................................................................14 Internal labor market and career............................................................14 Motivation and performance ..................................................................15 Culture and leadership...........................................................................17 Auditing Company X - One of the "Big Four"........................................18 Information from the HR manager .........................................................19 Interview with HR manager....................................................................20 Being an attractive company .................................................................20 Hiring process ........................................................................................21 Introduction of new employees ..............................................................22 Motivating and supporting employees ...................................................23 Interviews with employees.....................................................................25 Interview with E1....................................................................................25 Interview with E2....................................................................................26 Interview with E3....................................................................................26 Interview with E4....................................................................................28 Interview with E5....................................................................................29 How the HR department works compared to Branham.........................30 Hiring process ........................................................................................30 Internal labor market and career............................................................31 Motivation and performance ..................................................................32 Culture and Leadership..........................................................................34 Why the employees stay........................................................................35 In General ..............................................................................................36 Comparing the HR department, employees and the theory..................37 The hiring process .................................................................................37 Internal labor market and career............................................................37 Motivation and performance ..................................................................38 Culture and leadership...........................................................................39
2 Purpose ........................................................................................ 7 3 Method.......................................................................................... 8
4 Frame of reference.................................................................... 13
5 Empirical Findings .................................................................... 18
6 Analysis...................................................................................... 30
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7 Conclusions............................................................................... 40 8 Discussion ................................................................................. 41 List of references ........................................................................... 43 Appendix ......................................................................................... 45
Appendix 1 Branham's original four keys and practices ....................................45
Table of Figures
Figure 4-1 Maslow's Hierarchy of Needs............................................................16 Figure 5-1 Auditing Industry Market Shares.......................................................19
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1
Introduction
The reason why we are interested in human resources (HR) is that we have barely touched upon this subject during our studies. We believe that this subject is a key in real business life, especially for managers, and an important area of study concerning soft values, which have lately been attracting more attention than just the bottom line i.e. profit. Thus, we were all interested in HR and especially in what firms can do in order to retain their employees, and how they actually do it. Also, we have taken part of the debate in media, which states that there has been a major shift in how employees move from one company to another. During the last decade, there has been a shift from having a lifelong employment at one single firm, to changing employer every other year. This shift must naturally have enormous implications for the companies. Losing your employees means losing your competencies and your investments in form of education, training, recruitment costs etc. In addition, more resources must be allocated to recruiting new employees. Thus, retaining your staff is the real issue of the 2100 century. As we are soon to be done with our studies, we took the opportunity to increase our knowledge about this subject by writing our bachelor thesis within it. This bachelor thesis is the final report that the authors do before leaving Jönköping International Business School (JIBS). It is thus not a course report, neither a part of a larger research project. This is the final piece before we receive our bachelor degree within business administration. The purpose of this case study is to dig deeper into the retaining practices, and we hope to generate valuable information not only for the auditing industry, but also for other service industries. We have chosen to focus on one of the "Big Four" (Deloitte, Ernst&Young, KPMG, and Öhrlings PriceWaterhouseCoopers) large auditing firms in Sweden because they have more resources allocated to deal with this issue and thereby more extensive retention practices than a smaller auditing company. Therefore, it becomes more visible what the HR department is doing to retain the employees. In this report we started to review the literature and constructed a basis for our theoretical framework, using Branham?s four keys for retention. We then conducted an interview with the HR manager at Auditing Company X and later five employees to find out what the HR department focuses on and if the employees have the same picture. Finally, we compared this snapshot with our theoretical framework, evaluated their practices and made our interpretations. We were particularly interested in the auditing industry because we believe that they might be more vulnerable. The special rules concerning how to become an auditor limits the amount of available candidates for employment. All auditing companies need to breed auditors that in a few years hopefully become accredited. If they do not succeed with this process they will not have a sufficient amount of accredited auditors to conduct their business, and recruiting auditors from other auditing firms is not the solution, when this only happens on rare occasions. In other words, once hired, it is important for auditing companies to keep their employees. This topic is important to study because it shows how firms should work to keep their valuable employees, thus decreasing their employee turnover and thereby saving both money and time. This thesis is important because it can potentially be of assistance to the auditing industry and work as a guide in how to work with retention. On the other hand this work might prove to be interesting for other industries that also suffer from involuntary em-
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ployee turnover, but might have an easier task of finding suitable employees than auditing companies due to the fact that they are not as limited in the search of new employees. The issue of keeping the valuable employees is not only a matter of money and time, but also a social key to make your employees feel satisfied about their work, thus not only staying but also giving their best for the success of the company.
1.1
Background
Imagine yourself as an employee, perhaps you already are one. Why would you stay with the same employer for the rest of your life? Or why would you not? Today, neither employees nor employers seem to take for granted that the employees will stay with the same firm until retirement. Yet, keeping employees for longer periods is an important challenge for firms today. About 20 years ago employees were loyal to their employers and tended to stay within the same firm for life. Today the situation is different: if an employee is not satisfied with what the employer has to offer, the step to move on and find other alternatives is not very big (Peppitt, 2004). Many seem to agree that employee turnover is both time consuming and costly for organizations (Branham, 2001; Peppitt, 2004; Baron & Kreps, 1999) and that the market for talents and valuable employees has become more competitive today than it was only a few decades ago. There are many factors that have led to this change, and firms must act upon the new conditions. The strategy that the firms must take is neither easy nor the same for all firms, but the fact remains: firms must take action and work with long-term perspectives to keep their valuable resources. It is also crucial for the survival and success of firms to have long term relationships with their employees, since they are the most valuable resources the firm has and what in the end leads to the success of the firm (Branham, 2001). We can see that it is indeed important for firms to work with retention, even though this work is difficult. Especially when there is no quick fix solution. Furthermore, firms can benefit from having long term employees in the way that the costs of recruiting and training the employees can be spread out over a longer time period. Thus, when organizations realize the value that can be gained by being able to keep the valuable people within the firm, the firms will want to discourage these people to leave voluntarily. This is indeed possible and can be done by having strategies that reduce turnover (Baron &Kreps, 1999; Peppitt, 2004). However, even though many firms agree that employee retention is important and a major concern for the firm, only a fraction of these organizations make the matter a strategic priority. Also, very often firms invest more money on recruiting employees than actually keeping them (Branham, 2001). This shows that even though some firms realize that there is a problem, it cannot be taken for granted that all organizations focus on this issue and take actions to keep their employees. There are a lot of reasons for why employees leave their job, and many of these reasons are not possible for a company to have any control over. One reason, among many others, for leaving a firm could be that the employee is moving abroad. In this thesis, however, we are rather interested in, and will research, the factors that a company actually can influence when it comes to retaining their valuable employees. In this thesis valuable employees are defined as all employees except the poor performers who are ineffective, responsible for
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the majority of all errors, and who create discontent and lower the quality of work. From now on "valuable employees" will only be referred to as "employees". As previously mentioned, retention is interesting in the auditing industry (from now on only referred to as the "industry"), because certain requirements are needed to become an auditor. Firstly, the employee needs to have a Swedish university degree, including specific courses within auditing/accounting. Furthermore, to be able to take the accreditation/authorization exam the person must have practical experience for a specific period of time and preferably have worked within an auditing firm (IREV, 2007). This puts pressure on the auditing firms to find suitable employees that are willing to stay and make a career within the firm. Having employees simply working at one company to get the practical experience with intention to leave afterwards is not desirable, since the investments, training and development costs made in these employees become a loss for the company. Also, the matter of retaining employees in firms that offer services is important, as auditing firms do, because the main and most valuable resource of the firm are the employees. Naturally, without valuable employees auditing firms cannot exist and therefore they are crucial to retain.
1.2
Problem
Many companies face the problem of involuntary employee turnover. The reasons for resigning are probably as many as the number of employees that leave. Never the less, this causes several problems for the concerned companies. In the auditing industry the requirements of accreditation/authorization keep the work force limited, which increases the pressure on the industry to keep competent employees. Since the auditing industry can not hire people from other industries in the same extent due to regulations (IREV, 2007), it becomes important to keep the employees that are to become authorized auditors. This can be explained by an example: an auditor can become employed by another firm operating in another industry as a Chief Financial Officer (CFO), but a CFO that has not previously been authorized as an auditor cannot be hired as an authorized auditor. Further, as the HR manager Bolander B. at Lindebergs Grant Thornton claimed in an article in the magazine Civilekonomen „(?) accredited auditors are difficult to get hold of. The mobility in the industry is low. The auditors that quit often change line of work, not firm. This re- quires the auditing companies to have a very good long term plan to have the right amount of auditors when they are needed? (free translation from the article by Levander, 2007). Bolander further claims that about thirty auditing associates must be employed in order to have twenty finished auditors after five years (Levander, 2007). Pär Isaksson (2007) claims, in an article by Affärsvärlden, that HR commitment from the highest levels within auditing firms have always been quite lukewarm. This is mainly because the business is spread geographically, the responsibility is shared by all partners, and because of the fact that most employees spend most of the time at the customers? offices. In this way, the largest challenge right now for auditing firms are to provide themselves with competence, which is why they need to restore the old employee politics. These firms need to focus on attracting new talent, as well as keeping and developing them (Isaksson, 2007). As mentioned before, the challenge for auditing firms starts with the requirements to become an auditor. An authorized or accredited auditor in Sweden must have a Swedish university degree that corresponds with regulations of the Supervisory Board of Public Accountants (Revisorsnämnden) and is required to pass specific theoretical tests. Practical
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training is also a prerequisite, three years for authorization and five years for accreditation, but in order to become accredited one must be authorized. This practical training is preferably done within an auditing firm (IREV, 2007). During this period the firm invests a lot of money in recruitment, training and education of the beginner, thus if the firm is able to retain this employee they would spread out these costs during a longer employment period. Also, the employee can contribute to the income of the firm for a longer period of time, which leads to a reduction of total cost of employment. The costs that the industry face in recruiting and training new employees, is indeed often very high due to the characteristics of the job. Deloitte, as an example, which is one of the "Big Four", spent US $900 million in recruiting and training expenses due to involuntary employee turnover (Coster, 2007). As total revenue that year was US $12.5 billion, the expenses put on recruiting and training corresponded to 7.2% of total revenue (Deloitte, 2008). It would not be surprising if other auditing companies face similar costs due to involuntary employee turnover. Therefore, it becomes interesting to investigate how an auditing firm deals with the challenge of retaining and motivating talented employees in order to decrease the high cost involved with employee turnover.
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Purpose
The purpose of this paper is to gain a deeper understanding of employee retaining practices, which will be done through a case study at Auditing Company X. This topic is interesting because of the problem of finding and employing accredited auditors, due to the regulations and difficulty to hire employees from other industries. It will be interesting to look at the retention procedures to see how these problems are dealt with, and therefore a case study at Company X creates an appealing setting to study. By investigating what the HR department focus on, and thereafter asking a number of employees why they stay, we would gain an understanding of how Company X works with retention. The results shall thereafter be compared to the theoretical framework, which will serve as a base for evaluating the retention practices of Company X. This paper will shed light on the differences between theory and empirical findings, that will help us come to a conclusion about what can be improved to further increase retention among employees. The results of this study have the potential of making the auditing industry aware of the differences between theory and practice. If there are big differences, the firm might want to look closely at their retention practices in order to improve them. On the other hand, if there are no, or small, differences between the practice and theory it will validate the theoretical framework and enable other industries, that also need to work with employee retention, to learn from the results of this study.
2.1
Research questions
How does Auditing Company X work with retaining valuable employees? Is there a difference between retention practices of Auditing Company X and current theoretical framework within the topic? Is there any area that Company X can improve regarding their retention practices?
From our discussion above, we have decided on the following research questions:
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3.1
Method
Perspective
We are taking a company perspective on the issue because we are interested in finding out what Company X does in order to retain their employees. We will conduct an interview with the HR manager, as a representative of the firm, to see which areas they are dealing with. We are not taking an employee perspective because of time constraints that both us and employees of Company X have. Also, it would be difficult to find employees that are willing to devote much of their working time to interviews as their performance evaluation and thereby salary depends on what they put their time on. However, we will have short interview with some employees to get a picture of why these individuals stay within the firm in order to see if what is said by the HR manager is in line with the employee?s reasons to stay within the firm. Furthermore, since we focus on the fact that retention is a challenge and problem for the firms, and not for the employees, a company perspective is more suit- able. We have chosen to keep the name of the company and employees anonymous since we do not want to disclose internal information about the firm or employees, and who they are. Since we have chosen to do one case study at one firm, the firm is very much in focus which is not the focus of the thesis. We want to see how the chosen situation looks like in one auditing firm, not at a special auditing firm. Also, we believe that no additional value would be created if the name of the company would be known. The findings and results from the thesis are far more important than the name of the firm where the case study was conducted.
3.2
Research approach and strategy
Saunders, Lewis & Thornhill (2003) argue that it is important to consider research strategy and approach before you start your data collection, thus research process should be considered before data collection. They have developed a research process onion, which they claim could help the author to, in a better way, collect the needed data (Saunders et al, 2003). The first layer of this onion is the choice of research philosophy. This study will be adopting the research philosophy of interpretivism. This is according to Saunders et al. (2003) a philosophy that seeks to understand the subjective reality and meaning of participants. This is the case in our study since the purpose of this report is to look into the retaining practic- es of an auditing company. Thereby we will make an effort to understand the meaning behind the retaining practices of Company X, which inevitably is the subjective meaning and reality of a specific company. The second layer of Saunders et al.?s (2003) research process onion is the choice of research approaches. We believe that our study will be most in line with the deductive approach i.e. testing of a theoretical proposition. In our purpose we claim that the theoretical framework will serve as a base for evaluating the retention practices of Company X. This clearly indicates that we intend to compare the practices of Company X and the theoretical framework and investigate if there are differences between them. By looking at the differences of theory and practice indicates that a more deductive approach is taken.
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The third layer of the onion considers the research strategy of the report. This is according to Saunders et al. (2003) a general plan of how you will go about when answering the research questions. There are several research strategies that a researcher can use; experiments, surveys, case study, action research etc (Saunders et al., 2003). We have chosen to do a case study since this, we believe, will enable us to gain a deeper understanding and knowledge of the retaining practices in general. It would be difficult to use for example asurvey as a research strategy since a survey only gives answer to the questions "what?" and "how?". Instead, a case study enables you to get an answer on both "what?" and "how?" but also "why?" (Saunders et al., 2003). Even though we state in our research question that we are interested in "how" Company X works with employee retention, we believe that by founding out "why" employees stay we are enabled to gain a deeper understanding of the retention practices and if they are appropriate. The choice of only one company to study will enable us to focus our efforts, and thereby enable us to explore a typical and critical case. We choose to do the case study at one of the "Big Four" auditing firms in Sweden (Deloitte, Ernst&Young , KPMG or Öhrlings PricewaterhouseCoopers), since they have a large number of employees and recourses devoted to work with retention matters. By choosing one of these companies we have a large organization to explore and we thus have a possibility to produce better results, as the HR department is larger and have more recourses to deal with retention issues. The choice of firm is based on how willing they are to cooperate with us, and while we know that this could cause a bias to our findings, a company not willing to cooperate would cause an even greater bias to the results. Also, we cannot conduct a research in a firm that do not want or have time to participate in our interviews. Since these companies are relatively similar regarding size and market share, it enables us to be indifferent which company to choose among the "Big Four". The last layer of the onion deals with the time horizons of the research process. Since our study is concerned with what Company X currently is doing in terms of retaining practices we are using a cross-sectional time horizon. According to Saunders et al. (2003) this type of time horizon deals with a particular phenomenon at a particular time i.e. a snapshot. The alternative would be to use a longitudinal approach, which is a study of a particular phenomenon over an extended period of time (Saunders et al., 2003). The reason why we have not chosen this approach is due to time constraints. We are aware of that the retention practices topic could be better studied as an longitudinal study since retention of employees is a process that the company works with continuously, but the time constraints for this paper do not allow us to pursue this approach. The core of the onion is to choose a data collection method. There are several ways of collecting the necessary data; for example by sampling, secondary data, observations, interviews or questionnaires (Saunders et al., 2003). The data collection method will be addressed under a separate heading.
3.3
Reviewing the literature
Since our research approach is more of a deductive nature we have to review the literature in order to see what has been done before in order to compare it with our case study. The literature will serve as a foundation for theoretical framework that will be used to interpret the empirical findings in our case.
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According to Saunders et al. (2003) reviewing the literature enables the author to gain deeper knowledge about the research topic, and also generate and help refine the research ideas. In order to critically review the literature there is a need to look at the available sources. Saunders et al. (2003) argue that there are three sources available when reviewing the literature; primary, secondary and tertiary literature sources. Primary literature sources are the first occurrence of a work. They cover reports, emails, conference reports, unpublished manuscripts etc. and have a high level of detail and are up to date (Saunders et al., 2003). Secondary literature sources are subsequent publications of primary literature. These are easier to locate than primary literature sources but are often less detailed and not up to date as the primary literature sources are. Secondary literature sources are represented as books, journals, internet etc. (Saunders et al., 2003). Tertiary literature sources are designed either to help you to find primary or secondary literature sources or to introduce a topic. Tertiary literature sources provide the researcher with an overview of the topic by using indexes, abstracts, catalogues etc. (Saunders et al., 2003). In order to gain the knowledge needed for our research topic we will first use tertiary literature sources to get an introduction to the research topic. Thereafter we will go on to the secondary literature sources in order gain a deeper understanding of the topic and also to see more in detail what has previously been done within this research. From these literature sources we will obtain the theoretical framework that will be compared with our case study. Primary literature sources, such as company reports, are planned to be used as empirical data and will serve as a base for interpretation of the theoretical framework. When searching for literature it is vital to use key words that will enable the researcher to find relevant, up to date literature. This will find what research has been done previously within the area. The use of a funnel approach is useful since it enables you to get a broad picture of the chosen topic to later narrow it down to you specific research question. (Saunders et al, 2003). This we have considered. Even though many of our sources have been taken from an American context, we find them useful in our study. Firstly, very much of the literature about retention practices have been written by American authors, and the American and the Swedish culture do not seem to differ to a great extent. Secondly, we have not found any authors that have addressed retention practices in Swedish auditing firms, which forces us to use other sources.
3.4
Data collection
As mentioned before, the method of data collection depends on the different research approaches and strategies. According to Saunders et al. (2003) there are several data collection methods that can be used when doing a case study. They include interviews, observations, documentary analysis, and questionnaires. We will use interviews when collecting data. By doing so we will be able to get a deeper understanding of how Company X works with this issue. According to Saunders et al. (2003) interviews enable you to reveal and understand the reasons behind the actions. This is vital when wanting to gain a deeper understanding (Sunders et al., 2003). In our research of Company X we intend to interview the HR manager to gain deeper and new insights on how they are dealing with retention of valuable employee within their company. We also intend to interview five employees in order to get their views of why they choose to work with Company X. The interviews with the employees will enable us to see if the company?s retention practices are in line with the employees reasons for staying
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in the company. This enables us to find out if the company is focusing on the issues that the employees find important in order for them to stay in the company. Our intention for the process of selecting employees for the interviews was to be as objective as possible, since it would enable us to get rid of the possible bias i.e. if the company would select only the people who would talk positively about the company. We sent instructions to Company X to ensure that the selection is made in an objective way. There, we stated that the seventh employee on each employee list in Stockholm, within the five different professional levels, should be picked to be one of the interview persons. In this way we get a random person from each of the five levels. According to Saunders et al. (2003) there are several ways of conducting interviews when doing research. You can use structured, semi-structured or unstructured (also known as indepth) interviews. Structured interviews are made by using standardized and predetermined questionnaires where the questions do not differ from one interview to another. This interview strategy is good when conducting a descriptive study, but can also be used for explanatory studies, although it is not common (Saunders et al., 2003). In semi-structured interviews there is a list of themes and questions, but they are not posed to every person interviewed as in structured interviews. Depending on the context, different questions are asked and the order of these also varies. Additional questions may be asked as well to explore the research question and the objectives (Saunders et al., 2003). Unstructured/in-depth interviews are used to gain deeper knowledge in a general area of interest. There are no prepared questions that are being asked; instead the researcher has a clear idea about the aspects that he/she wants to explore. The person being interviewed is given a chance to speak freely about events, behaviors, and believes within the topic that the researcher is interested in. According to Saunders et al. (2003) semi-structured and in-depth interviews are used in qualitative research in order to conduct discussions, and not only to reveal and understand "what" and "how", but also "why". The author also claims that for an exploratory study, indepth and semi-structured interviews are most suitable because these are helpful in find- ing out what is happening and in seeking new insights. With this in mind we will use semistructured and in-depth interviews. Our strategy is not to provide the HR manager with questions in advance. Even if the person could be better prepared when conducting the interview, there is also a risk that he/she might not answer „top-of-mind?, and that would damage the whole idea of having openended questions. However, we will conduct a pre-interview before the real interview with the HR manager to get basic information about the company in order to be prepared and be able to ask more precise questions. The interview with the HR manager will have a semi-structured nature. However, the interviews with the employees will be more in-depth since we only intend to ask one general question i.e. "Why are you working for Company X?". Depending on where the answer leads, further questions could arise. Here, the question will be provided in advance since we believe that there is a need to consider what to answer on such a question. The results of these interviews will be presented in the empirical part of this report.
3.5
Qualitative data analysis
The reason why it is important to sort your data is because you need to bring order, structure and meaning into the collected data. Unlike quantitative data analysis where there are
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established methods and procedures, qualitative data analysis is more complex, but also gives the researcher more freedom. In qualitative data analysis there are no rigid stages or rules for undertaking this process (Holland cited in Daymon & Holloway, 2003). The general process that Holland presents when dealing with qualitative data is to first sort the data. This will enable you to get an overview of the collected data. This also helps to keep the data intact, complete, organized and retrievable (Daymon & Holloway, 2003). Secondly, Holland claims that coding and categorizing the data will further help you to make sense of the data. Codes or categories serve as labels that enable you to tag segments of interests in the data, which later helps you to reduce and simplify the evidence in order to make sense of it (Daymon & Holloway, 2003). According to Daymon and Holloway (2003), unstructured interviews provide the researcher with the richest data and often uncover surprising evidence. They also argue that this kind of interviews generate the highest dross rate (the amount of data that is of no particular use for the study). This is also the case in semi-structured interviews, although not to the same degree (Daymon & Holloway, 2003). To have the data more structured we will transcribe recordings from the interviews into written words to decrease the risk of misinterpretation. This transcript will not be presented in the report due to the large amount of dross rate present in it. Rather, we will include shorter versions of the interviews with relevant information. With these arguments in mind we have decided, when presenting the empirical evidence, to sort the data into a couple of categories or codes. This will make the data more comprehensible and manageable to analyze and thereby get rid of the dross rate. Our intention is to categorize the data that we have received from the interviews into several categories in order for it to become more manageable. These categories will enable us to better understand how the auditing company works with the retention issues. Categorizing will also enable us to get the data more structured, which later will be useful when making comparison to the theoretical framework.
3.6
Delimitation
As we have a company perspective and focus on how Company X works with retention, we will touch upon why employees stay, but it will not be our focus. The reason why we chose to incorporate employees in the paper is because we want to get a sense of if the work of the HR department is reaching down to the employees. We do not intend to find out why former employees have left the company, as our focus is on what can be made to make employees stay. Of course it can be interesting to see why former employees have left the firm, since it can say something about what Company X does "wrong" in their reten- tion efforts. However this is not our focus and goes beyond of this papers scope, thus we rather recommend this for future research. Concerning the employee interviews in this study, even though we gave instructions for the selection process of employees we cannot guarantee that it was done accordingly and therefore this should be seen as a delimitation of this study. Further, it is important to bear in mind that employees resign for a lot of different reasons, many of which a company has no influence over. Perhaps the family of the employee is moving to another town or a child needs more care at home, which could prevent both parents working. However, reasons such as these are not within the scope of our research as we are only interested in the factors that a company actually can influence.
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Also, we have chosen to focus on the auditing department within Company X even though they have other business areas. The reason for this is that we are concerned specifically with the retention of auditors within this company, because of the constraints of this profession mentioned in the problem.
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Frame of reference
We have chosen to use the four keys model developed by Branham (2001) since it gives an overview of the whole subject in matter. It gives a good comprehensive picture that deals with many issues and retention actions that firms can take. There are numerous researchers that have dealt with the same topic, but few of them have dealt with the complete strategy of retention and rather focused on a single aspect within it. Even though Branham is not a researcher at a university, his model deals with a range of issues that have been validated by academic researchers. In a way the model is a "smorgasbord" containing different aspects and comments of authors and researchers. In this way the model will be reviewed and supported by the current research in order to justify it as a legitimate model. We are aware that there are negative aspects of using a more consultative model, as it has not been fully verified. However, Branham is not a beginner within the area of retention and he has personal experience within the field. He has gathered experience from business and management for more than 30 years (Branham, 2001). Branham was Vice President at one of the world?s premier consultancy firms within HR, Organizational Consulting with Right Management Consultants, and he has helped firms in a variety of industries to develop their employee retention practices (Keeping the People, 2007). We have however changed the model in a few places and left out some parts taken up in Branham?s model (which is commented in the text blow) to make it more useable in our work. The four categories described below will serve as a theoretical base or outlining when looking at the reality in Company X, thus giving us a deeper understanding of the retentions practices. According to Branham (2001) there are four main keys that a firm can use to keep the right employees in the organization. Within these four keys the author presents twenty-four retention practices that help the firm to take action and work towards the goal of retaining the most valuable employees. We will however not use or list all twenty-four practices, rather tie them up together. These practices guide actions that in the long run enhance performance, motivation and job satisfaction. The work of retaining the valuable human resources is in other words not something the firm can do overnight, as it involves many different stages of the employees life cycle. Therefore, the firm cannot just focus on one aspect if it wants to retain its employees (Branham, 2001; O?Malley, 2000). Because we feel that the four keys are very tied together and in many aspects overlap, we have chosen to categorize the twenty four practices into four new categories to make them clearer and more usable in our work. The four new categories are: the hiring process, internal labor market and career, motivation and performance, and culture and leadership. The practices are the same as in the original model, but we have categorized them to make them less overlapping and to fit better together. We have also included other sources that support or contradict the theory to make it even clearer and show that Branham is not the only one to believe these aspects are important in the work of retaining the employees. The outlining of Branham?s original four keys and twenty four retention practices can be found in the appendix.
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The four categories are explained below.
4.1
Hiring process
To be able to keep valuable employees it is crucial that the recruitment process is done properly. During the presentation of the company and the interviews it is important to give a realistic job preview, so that the future employees understand where they are heading and what they can expect the job to be like (Branham, 2001). PhD Robert Sniderman, president of HRFocus USA, argues that employers that want to see high performance must realize that clear visions, purpose, goals, and expectations should be expressed when hiring a new person. „Employees need to be able to see the big picture, especially when it comes to how their contributions work toward accomplishing the greater goal.? (Robert Sniderman cited in Leheney, 2007). This statement goes in line with Branham?s (2001) argument to give a realistic job preview. The process of finding new recruits should not stop when the interviews are over, rather the introduction of the new employees should be invested in: the first impression lasts (Branham, 2001). This is supported by Leta Beam (2006) who suggests that you must begin to think about retention straight away. Beam suggests that the first 90 days of employment are critical for the future of that workplace relationship and that firms must create mentoring programs with organizational ambassadors (Beam, 2006). Fran Parrish (2006) claims that by ensuring that the new employee is provided with a good orientation and necessary training, retention is begun. The employer should set targets and deadlines and clearly explain what is expected from the new employee (Parrish, 2006). The first encounter with a new workplace is crucial. Since changing employer often is a big step for the employee, he/she will often look for reassurance of this decision. If the employee finds no such clues he/she might get the feeling of having made the wrong decision (Branham, 2001).
4.2
Internal labor market and career
Another issue the firm must deal with is to make the job challenging from the beginning to the end. Top performers can be especially difficult to find new challenges for, but the solution is to listen to the needs and requirements of the employees, since they are the ones that best know what they want to do and accomplish. It is important to match the ability of the employee to a challenge, since neither a too difficult nor a too easy task is promoting job satisfaction. Independence is also important for employees and initiatives should be rewarded by the firm since this creates job satisfaction, which can lead to a decreased employee turnover (Branham, 2001). Furthermore, the job should fit the future employee and provide personal satisfaction. Even if some jobs might have less of these characters, the job can actually be redesigned to make it more rewarding (Branham, 2001). According to Cappelli (2000) redesigning the job itself would reduce turnover and improve retention of employees. He states that thinking carefully about which tasks to include in the job influences the retention rates. By concentrating on employees with the important skills, and redesigning the job to suit their preferences, it would decrease turnover of these valuable employees. This would reduce overall costs of finding, screening and training new employees to fill the previous positions (Cappelli, 2000). Cappelli also claims that customizing jobs to suit individual employees is a way to further increase retention rates. Individual arrangements such as part-time employment,
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tuition reimbursements, and flexible working hours are examples of how this can be done (Cappelli, 2000). In line with Branham, Butler and Waldroop (1999) argue that job sculpting is the solution for having satisfied employees. In order for an employee to be satisfied with their job, the job has to match the employees deeply embedded life interest. These deeply embedded life interests are according to Butler and Waldroop (1999) „long-held, emotionally driven passions, intricately entwined with personality and thus born of an indeterminate mix of nature and nurture?. Therefore the job should be sculpted to suit the person?s deeply embedded interest. This should be kept in mind when hiring a new employee (Butler & Waldroop, 1999). To have an internal labor market where the employees can develop and grow within the firm also facilitate the work of retaining the employees as they can see their opportunities and get introduced to more challenging and interesting tasks in time (Branham, 2001).
4.3
Motivation and performance
Branham (2001) proclaims that regular attention should be given to employee performance and that behavior should be praised, and corrected when needed, to give them timely feedback and chance to develop. Recognition plays a huge part here and should not be neglected (Branham, 2001). According to Mindy Chapman, at the law firm Mindy Chapman &Associates, successful firms are using both tangibles and intangibles to recognize and reward employees. At a human resource conference, Chapman emphasized the importance of not delaying recognition because it decreases the significance of it. Further, she states that recognition should be kept separate from feedback to not mix appreciation with advice or recommendations for the future (Law Office Management and Administration Report, 2007). On the contrary, Noelle Nelson (2006) suggests that when giving feedback on poor performance, you should start out soft with appreciation and then follow with a turn to the focus area on which you first ask the employee on his/her thoughts. However, according to Branham (2001) feedback shall never be solely negative and the person should not be criticized, since this pushes the employee away. Rather, the consequences of the action should be criticized instead (Peppitt, 2004). The firm must deploy a culture of both giving and taking. By giving the firm sends a signal to the employees that they are worth investing in and that the firm relies on them. Howev- er, there are different kinds of rewards the firm can give, and the firm must understand that the employees have different needs. Therefore it is crucial to be flexible. Some might want more money while others want more time off. Here good management is important in or- der to give the employees what they treasure, since intangible rewards, like showing respect and appreciation, also matter (Branham, 2001). However, when it comes to compensation, the firm should not just give away rewards randomly (Branham, 2001; O?Malley, 2000). The employees should feel that they are paid according to their efforts and performance, which in return require that the firm has a clear and communicated pay plan etc. and that the efforts are measured correctly. The desired behavior of the employees should in this way be clear, rewarded and reinforced (Branham, 2001). Horowitz, Teng Heng & Quazi (2003) recognized that compensation is one of the most effective retention strategies. Performance incentives/bonuses ranked third, on highly effective retention strategies. Even though this study was made in a Singaporean context,
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where the culture differs from the western, it still sheds light on the compensation issue as an important factor when attracting, motivating and retaining employees (Horowithz et al. 2003). Horowitz et al.?s study supports the arguments made by Branham that performance based compensation is a good strategy. Compensation may be an important issue for attracting and retaining employees but there are others as well. Branham (2001) claims that people want more than just material rewards when their work is contributing to the success of the company. This is also recognized by Cappelli (2000) who argues that when people have control over what they are doing they are more committed to the task. Cappelli (2000) further claims that factors such job design, customization, social ties, and location are important factors to consider when wanting to retain valuable employees. Furthermore, the firm should communicate that both the employees and their work is indeed very important for the success of the firm. All jobs have meaning, but the difficult part is to communicate it correctly and give the employees a good reason to be dedicated to the firm (Branham, 2001). Harry Wallaesa former CEO at Campbell Soup supports this; „you need to make people feel like they're truly making a contribution to the organization???In some cases, people value that more than they value money? (Tynan, 2006, p. 42). We find Maslow?s famous theory, the „Hierarchy of Needs?, to be highly relevant in our discussion of what factors that motivates people and why. We therefore include it in this section. According to the theory, there are several needs that drive motivation - these are shortly described below.
Figure 4-1 Maslow's Hierarchy of Needs
Psychological needs are fulfilled by things that all people require to survive, such as food and vitamins. Safety needs are fulfilled by feelings like stability and security. Belongingness and love needs are fulfilled by things such as friends, a mate, affection. Esteem needs are satisfied by things like achievement, competence, recognition and appreciation. Self actualization are what we feel when doing what we are fitted best for and when we are true to our own nature. This is very individual and commonly rest upon other needs, such as belongingness (Maslow, 1987; Huitt, 2004).
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If a person lacks everything in life, it is more likely that he/she will be motivated by the lower needs in the hierarchy, such as psychological needs. When the lower needs are fulfilled it is more likely that the person gets motivated by the higher needs in the hierarchy (Maslow, 1987; Huitt, 2004). From this we make the interpretation that different rewards can be categorized on different levels in the Hierarchy of Needs. Money could be interpreted as a safety need and recognition could be interpreted as an esteem need. This supports Braham?s theory that different persons need, and are thus motivated by, different rewards.
4.4
Culture and leadership
According to Branham, being a company that people want to work for involves creating a culture of commitment, which means that the company „treats their employees like family and with respect, with an attitude and philosophy of nurturing and caring? (Branham, p.23, 2001). The rewards do not necessarily have to be monetary when simple praise and appreciation can lead to a huge difference (Branham, 2001). Brendan Courtney, vice president of the recruiting firm Spherion, claims that today?s employees are willing to trade money and bene- fits for flexible hours, training or exciting projects (Dan Tynan, 2006). And the 2007 Job Satisfaction Survey Report made by Society for Human Resource Management (SHRM), the world?s largest association committed to HRM, shows that communication between employees and senior management is one of the top five most important factors for employee satisfaction. Another is to be able to balance work and social life in a flexible way (SHRM, 2007), which confirms Branham?s suggestion that monetary rewards are far from the only tool to use in satisfying employees. The U.S. Department of Labor further strengthen this by stating that the number-one reason employees resign is that they do not get enough appreciation (Nelson, 2006). Since different persons have different preferences, the rewards should be given according to what kind of rewards the individual wants and what efforts he/she wants to be appreciated for. It is not impossible to include the employee in the discussion and actually ask what is appreciated (Branham, 2001). 90% of all problems that employees perceive are related to the feeling that they are not being listened to (Beam, 2006). In a workforce study at Spherion conducted by Harris Conductive it was evident that there were big differences in what employees want and what companies are prepared to provide. This study also showed that what was done to retain employees, were not actually what employees considered key for staying in their positions. In other words, if the rewards that the company pay to retain their personnel, are not set after the personnel?s preferences, it is wasted money (Tynan, 2006). In the efforts to create job satisfaction, another important factor is to train the managers in coaching, since these persons can make a huge difference with small gestures (Branham, 2001). Likewise, Beam (2006) claims that coaching is one of the small things that make a major difference, and especially coaching skills like active listening and problem resolving. Also, it is important that the managers have career development discussions and communicate what paths are available for the employee within the firm. However, it is crucial to give the employees the tools for taking charge of their own careers and communicate that it is up to them to make a career even though the firm gives the opportunities (Branham, 2001).
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Lastly, since job satisfaction is very much connected to if the workers enjoy their work and have fun, a culture within the firm that promotes a balance between work and spare time can indeed become a competitive advantage, especially in industries where stress is common (Branham, 2001). Erik Dorr, from The Hackett Group, agrees that to keep your employees „it s essential to make your workplace an exciting place to be??„Creating that kind of culture will help attract top talent and keep them there? (Tynan, 2006 p.42). However, culture is very difficult to change and it takes a very long time to do it (Peppitt, 2004).
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5.1
Empirical Findings
Auditing Company X - One of the "Big Four"
There are four large auditing firms in Sweden, therefore they are nicknamed the "Big Four". These four; Deloitte, KPMG, Öhrlings PriceWaterhouseCoopers and Ernst&Young, are active in many different professional areas, of which auditing is one. Other services they provide are accounting, corporate finance, tax, risk advisory, consulting and financial advisory. The "Big Four" work with all company sizes; small, medium and large customers, many of which are listed on the stock exchanges. These customers work in all sorts of industries, like aviation, real estate, public sector, consumer business etc. (The Big Four - Deloitte, 2007a; Deloitte, 2007b; Ernst&Young, 2007; KPMG, 2007a; KPMG, 2007b; Öhrlings PricewaterhouseCoopers 2006)1. Each auditing company employs between 1000-3000 persons in Sweden at a total of 30125 different locations. Thus they are all large organizations and they all put a lot of effort into human resources. Last year they recruited 44-472 new persons each in Sweden. They are all active internationally with 110.000-150.000 co-workers and they are present in 140150 countries each. All four work actively to create exiting career possibilities by using development programs and they market themselves to reach out to new possible employees, such as students. Focus is on personal and professional development with education as a prerequisite, but also as a benefit for work progress (The Big Four, 2007). All "Big Four" use different career steps to define how far an employee has developed and what kind of responsibility he/she has. These professional levels are shaped like a stairway in which one enter as a freshman (associate) from below and then work upwards to senior associate, manager, senior manager and finally partner. These titles differ somewhat between the companies, and some have more or fewer steps than the others. Still the principle is the same (The Big Four, 2007). The turnover for last fiscal year was for each of the companies between MSEK 1,9003,318, and they earned revenue of between 169-378 MSEK. Regarding market share Öhrlings PriceWaterhouseCoopers is the leader with 34%, followed by Ernst&Young and KPMG at around 20%, and Deloitte at 13% (see figure 5-1). As we can see, these "Big Four" are relatively similar regarding both turnover, employee capacity and distribution and market shares (The Big Four, 2007).
1
Since the name of Company X is to remain undisclosed, the information and sourcing on the "Big Four" is cluster from now on, so that it cannot be traced which company we are investigating.
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Figure 5-1 Auditing Industry Market Shares (Konsultguiden (2005) cited by Öhrlings PricewaterhouseCoopers, 2006)
5.1.1
Information from the HR manager
Before we conducted any interviews, we had a short informal meeting with the HR manager at Company X to gather information about the firm and the HR department. This we did in order to be prepared and to be able to ask better questions at the following interview with the HR manager. Since the HR manager?s time is limited, we did not want to waste any time asking fact questions, but rather concentrate on the topic. During our visit at Company X, we also got the chance to look at their intranet. What we fist noticed was that it was quite comprehensive, including headlines like "For you who are newly employed", "Guide for personnel" and "Career program". Under these headlines we found detailed and general information about administrative routines and policies, ranging from IT-intro guides to insurance policies, from work ethics to work tasks. The "Guide for personnel" was very practical and informed on matters such as overtime and the compensation for it. There were also headings about health, working environment and information for global exchange between countries. We found keywords that Company X used as reasons why to join their organization; Career, Work Task, Possibilities, Knowledge and because you have certain personal characteristics. These are all very specific reasons why to explore the company, however there are some softer values mentioned too, such as „Go your own way and dare to do what you believe in, be curious, have fun and make your dream come true? (free translation from Company X?s intranet). Company X has a separate and general division for Human Resources serving and supporting the whole company. The division is divided into several focus areas such as compensation, recruitment and policy issues. These focus areas concentrate only on their specific area and have some personnel to develop and communicate it to the rest of the organization. There are also human resource personnel working close to the professionals out in the separate business departments, who help out with the more hands on issues of daily business. The focus areas are thus setting rules for how HR matters are handled in the company and are acting as support for the HR-personnel working in the professional departments (HR manager, personal communication, 2007-10-15).
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5.2
Interview with HR manager
We have interviewed the HR manager who works at Company X. The interview was conducted and recorded on November 5th, 2007 at Company X. In order to get rid of the large amount of dross rate and to make the interview more structured and comprehensive we have categorized it. It is important to point out that the following text is a summary of the interview and all statements that have been made are statements of the HR manager of Company X. The interview was held in Swedish and has been translated by us. 5.2.1 Being an attractive company
Company X is working with this issue by taking every opportunity to promote the company and talk about the special benefits and development opportunities that they offer to their employees. Since they are mostly recruiting fresh graduates from the universities in Sweden, promotion is usually done by being involved in activities at these universities. Company X does not think that it is wise to promote the firm only to the students who are on their last term. Instead they believe that it is important to create a good relationship with students by being involved from the beginning of their education. This enables the students to gain knowledge about Company X, and it also shows that Company X is a serious employer that wants to create long term relationships with its future employees (HR manager, personal communication, 2007-11-05). When promoting itself, Company X stresses the special benefits and development opportunities that are available in the company. These benefits involve individually based wages, private health insurance, food coupons (rikskuponger), maternity leave compensation (förstärkt föräldrapenning), etc. This package has been developed by the HR department and gained approval from the senior management (HR manager, personal communication, 2007-11-05). According to the HR manager, there is no general bonus system for the whole company, although there are bonus systems defined depending on what service line you work for. The terms for receiving a bonus look different for example in Advisory than it does in Local Business. Customers are different and therefore the willingness to pay varies, which affects the opportunity to have a bonus system for the whole company (HR manager, personal communication, 2007-11-05). When it comes to the development opportunities in Company X, each employee has an individual development plan. The development plan is built in consent with the employee, which enables the employee to have a say in the matter. Personal development is not something that is used as a reward for employees that are doing well, instead all employees are expected to develop personally. According to the HR manager at Company X, it is expected that the employee develops and goes on to the next professional level. It should be in the interest of the employee to develop, and the company can not force anyone to do it, but the company is encouraging the employees to do so. The responsibility for this is shared between the employee and the closest manager. The HR department is only used as a support function for the manager (HR manager, personal communication, 2007-11-05). The HR manager at Company X states that there is an opportunity for the employees to change position within the company if they feel that they are not pleased with the current job. There is an opportunity to not only change both within the four service lines but also geographically i.e. to stay within the same service line but switch to another office. By being
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flexible when it comes to switching, the company is able to keep employees that otherwise would leave (HR manager, personal communication, 2007-11-05). In some of the service lines it is also possible to customize the job so that the employee can work part time. This might be a good solution for people who have families or are in a life stage where they find that work is not the highest priority. Often these employees are the ones that are most valuable to the organization since they have been working for six, seven years and have extensive experience. Replacing them is very difficult because other companies in the industry face the same problems. Company X is giving these employees the opportunity to work part time or to only work with a few customers and thereby gives them a possibility to stay. Even though there is a possibility of customizing in some cases, Company X has had the problem of not communicating this opportunity to the employees in a sufficient matter (HR manager, personal communication, 2007-11-05). The HR manager claims that another aspect enabling the company to improve their practices, is that they find it important to learn from the employees that leave the organization. This is done with the help of a system called "Learning from Leavers" where the employee that leaves comment and answer a number of questions. They also have interviews with individuals of certain interest, the HR manager claims that it would be desirable to have interviews with all leavers, but it is not practically possible since a large number of employees leave each year (the turnover is about 10% per year). By having these interviews and using the system "Learning from Leavers", Company X is able to find out why people leave. According to the HR manger, the latest investigation showed that the number one reason for why people leave is that they are feeling that their manager is not providing them with the development opportunities that they strive for (HR manager, personal communication, 2007-11-05). Company X has struggled with the problem of poor communication between managers and employees that are doing well and have a positive development curve. Managers are far better at communicating with those who are not able to meet the demands. This is something that needs to be improved and is currently being worked on, by for example having small feedback sessions directly after a customer visit. There are also personal development meetings twice a year where the development plan is discussed to a greater extend, but the HR manager does not think this is enough and therefore they have started with the feedback sessions. The goal that they are striving for at HR, is to be an attractive employer, both for the existing employees and externally i.e. to their major focus group; university students (HR manager, personal communication, 2007-11-05). 5.2.2 Hiring process
When a position opens up in the company, the first thing that Company X does is to evaluate if this position can be filled by someone that already works in the team. They also look at the possibility of rearranging the working team so that the job that the previous person did could be taken care of by others in the team (HR manager, personal communication, 2007-11-05). If they come to the conclusion that they need to recruit, the first thing that is done is to put out an internal ad about the position which is visible to all employees within the organization. Since all employees, no matter what branch they work at, are able to see this ad, the company gives everybody a chance to move geographically as well as between business lines (HR manager, personal communication, 2007-11-05).
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If the position in not filled internally, then some form of external advertising is done, preferably in a magazine of interest, but also on the company?s internet page where available positions are advertised. Company X seldom puts out an ad for just one position. The reason for this is that there is often a need to fill several positions at the same time and therefore a joint effort is made to advertise all positions at the same time (HR manager, personal communication, 2007-11-05). When it comes to recruiting specialists, the company often turns to head-hunters for help. The company hire these head-hunters to find the specific competences that they are searching for. According to the HR manager, Company X is able to attract these specialists by informing them about the job, making sure that they know what kind of opportunities they have if they take the job, informing them about the degree of freedom associated with the job, etc. This is believed to be the best way to attract these kinds of employees since they are often interested in how they can develop individually. By giving the potential employees the specified description of the position, it enables them to see if the position is something for them (HR manager, personal communication, 2007-11-05). Since the organization is built upon that most of the new employees come directly from universities, the recruitment activities are concentrated to this target. Company X is making large efforts on being involved in different student activities where they promote themselves by talking to students about the company and the benefits of working with Company X. This is believed to establish a reputation as being an attractive and serious employer and leads to that Company X receives a large number of applications for their positions. The company strives for having approximately 50 applicants for 10 available positions. This enables them to find the individuals that are best suited for the organization. As the situation is today they are able to attract the right amount of candidates (HR manager, personal communication, 2007-11-05). 5.2.3 Introduction of new employees
The day a new employee starts working for Company X, he/she is picked up at the reception together with the rest of the employees that will start working the same day. New employees often start at the same time, since the company has two major starting periods, one in September and one in January. The first thing that they do is to take a tour around the office to familiarize themselves with the surroundings. After that, they are taken to the IT department where they receive a computer and information about other practical issues concerning IT. This is followed by an introduction of their working area. The secretary or the administrative personal then explains the prerequisites for the job and also introduces the new employee to the rest of the team that they will be working with (HR manager, personal communication, 2007-11-05). Within the first week of employment the new employee has to attend a mandatory introduction day, where he/she receives information about the company in general. During this day, the CEO of Company X visits and talks about the goals of the organization and how they are to be achieved. There are also other speakers that inform the employees about different aspects of the organization. Soon after the introduction day, new employees are sent away for the first mandatory course. This is the first and basic audit course and a foundation for all employees working at Company X. After some time the newly employed get to meet their coaches. Here, the new employee gets a chance to talk about his/hers expectations and ask questions (HR manager, personal communication, 2007-11-05).
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When the new employees come back from the training they take part in different activities within the firm e.g. client meetings, where the new employee observes and learns how things are done in Company X. During this first time they are also given smaller assignments within their area (HR manager, personal communication, 2007-11-05). There are some differences in how new employees are dealt with depending what professional level they are expected to work at or if they are hired as some kind of specialist. A new employee with a more senior position does not need the same training as the newly graduated associates, since he/she already has some kind of background in the industry. This means that he/she attends the introduction day to learn about the company, after that the employee is introduced to his/hers co-workers and work place. These employees are soon able to start contributing to the organization. They are given an introduction as the others, but since they do not need any training they are expected to start working with customers sooner than e.g. new associates (HR manager, personal communication, 2007-1105). When it comes to familiarizing the new employee with the senior co-workers there are no special activities. Some units have activities like "Friday coffee", where there is a chance for the new employee to be introduced to the senior co-workers. Getting to know people is something that is done in time, and since there are many new faces in the beginning, it might be difficult to remember all. Therefore the new employee is only introduced to the people closest to them (HR manager, personal communication, 2007-11-05). 5.2.4 Motivating and supporting employees
As previously mentioned, Company X supports their employees with help of coaches. These coaches are basically other more senior employees. The purpose of having coaches is that new employees should have a person to help them in their personal development and be available for questions. Basically someone that is there in case you need to talk about something concerning your situation (HR manager, personal communication, 2007-11-05). The coach must have been working within the organizations for about three years and often does not have any formal managerial responsibility such as negotiating wages, leading and distributing the work etc. It is more of a support function for the new employee. When selected to become a coach, the employee receives training which is provided by Company X, this is to ensure that he/she has some tools to work with when coaching (HR manager, personal communication, 2007-11-05). Other ways of making sure that the employees are being supported in their development is to have so called development meetings twice a year. During these meetings the manager and the employee discuss the development plan of that person, both in the short and long run. Here, they also talk about strengths and weaknesses of the employee and how the employee should go forward in the career. The manager is also expected to evaluate if there are any problems with the employee?s development plan. Emphasis is put on "why" this is the case. If there are problems, the manager is expected to be clear, and should therefore have a discussion with the effected employee. The HR department is there to help the manager with these issues. The individual manager is like a customer to the HR department. One reason for not performing as expected, according to the HR manager, is that the employee might not know what expectations the company has on him/her. Another reason might be that the employee feels that he/she does not fit in that specific service line. If the latter is the case, an alternative career within another service line in the organization can be a solution (HR manager, personal communication, 2007-11-05).
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Another activity arranged to support the employees in their development is daily feedback. This is done for example after a customer visit. The team leader or the person responsible for the account is expected to give feedback to the employees. Emphasis is put on what was good and what can be developed. This instant feedback is much better than waiting for the next development meeting where some of the details might be forgotten and thereby never discussed (HR manager, personal communication, 2007-11-05). In order to improve practices, Company X is offering employees to fill out different surveys. By seeing what the employees are unsatisfied with the company can focus on these areas and hopefully improve them. One system that is used for this purpose is called "Upward Feedback", here the employees are offered to evaluate their closest manager. There are a couple of parameters that the employee fills out, then the system generates a report that the manager can take part of to become aware of what he/she could improve. This al- so enables the employee to express his/hers thought about the manager. The report later serves as a part in that manager?s development meeting (HR manager, personal communication, 2007-11-05). Another survey that Company X uses for the purpose of finding out what the employees are dissatisfied with is the "Net Service" survey. This survey was developed for the entire organization and the employees answer questions about the organization in general. Even though the survey is not compulsory, the last "Net Service" survey had a response rate of 83%. This indicates that the employees are aware of why the survey is being done and by doing the survey they see a chance to influence the organization. There is also a third survey, done once a year, for the global organization called "People Service". This gives Company X a chance to compare the Swedish organizations with other countries? organizations. Depending on the outcome of these surveys, together with other forms of evaluations such as interviews with people that leave the organization, the company is able to form an opinion of whether or not the employees are satisfied with their situation. If not, then emphasis is put on improving the issues that employees are dissatisfied with, and thereby improving their motivation and engagement (HR manager, personal communication, 2007-11-05). When it comes to increasing motivation and engagement in other ways, the organization allows it to be handled at a local level. HR believes that it is difficult to give directives on how people are to be motivated and engaged. According to the HR manager, this is something that is best dealt with on a local level together with closest management and team members. But Company X also increases motivation and engagement by for example social activities on the national level, which enables them to work with the culture and values. This consist, among other things, of a weekend composed of different activities such as cultural events, parties etc. The company encourages employees to socialize and spend time together, for example during coffee breaks etc. There are of course guidelines when it comes to behavior and values in Company X that each employee receives in their introduction package, called the "Code of Conduct". This serves as a base for how a representative of Company X should behave in different contexts (HR manager, personal communica- tion, 2007-11-05). As previously mentioned, there is no bonus system for the entire organization, although there are bonus solutions defined in the different service lines. Prerequisites for a bonus system look a bit different between the service lines. The customer?s willingness to pay varies and thereby affects the possibility to have a general bonus system for everybody. The HR manager believes that they are offering the employees an extensive benefit package from the beginning and also the development opportunities that Company X offers are
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looked at positively from the employees? side (HR manager, personal communication, 2007-11-05).
5.3
Interviews with employees
We have, as mentioned before, also interviewed five people employed by Company X. We will call the employees "E1" to "E5" to keep them anonymous and to minimize the bias. We interviewed the employees one by one in person and only asked them one single question "why do you work at Company X?", thereafter we let them answer what they wanted. The questions were in this sense very open and unstructured. All of the employees work in Stockholm but are located at different offices around the city. Only E2 and E5 work at the same office, which is the largest of them all. The interviews were held in Swedish and translated by us. E1 has worked at the company for five years and is a partner, which is the highest position within the professional stages, since about four years back. E1 is an accredited auditor. E2 has worked for the firm for a little more than one and a half year and holds the title senior associate. Since E2 was out working at a customer?s office, we held the interview at lunch and could therefore not record the interview, thus notes were taken instead. E3 has worked one and a half year (as long as E2) and holds the title associate. E4 has worked at the firm for about seven years, but has been working in the auditing industry since 1985. The firm E4 worked at before starting at Company X was acquired by Company X seven years ago. E4 holds the title senior manager. E5 has worked for seven years at the firm, but been away a couple of times when children came in to the picture. E5 holds the title manager and is not an accredited auditor. 5.3.1 Interview with E1
E1 starts by telling the story of his/hers 18 year long employment within Company X. It has not been an obvious choice to stay within the firm and it has not always been so easy either. When first starting in the firm, in another city in Sweden, E1 confesses that the original plan was to stay within the firm for a couple of years and thereafter move on. This, however, never happened since E1 realized that the alternative job would be in small economy department with similar tasks year after year, which would get boring. Staying in Company X, the opportunities to grow and develop are much larger. Since E1 has worked intensively for many years, it has eventually led to that E1 more or less "is" the firm, as the same values are shared by E1 and the firm (E1, personal communication, 2007-11-23). E1 feels that the work is varied and that he/she has a chance of developing further. E1 also, points out that he/she did what felt fun and that new tasks can be found. For E1 it is more important to get seen and appreciated, rather than stress the climbing further within the firm (E1, personal communication, 2007-11-23). In time E1 got more responsibility and own clients and in the year of 2000 he/she shared the responsibility of the office together with another manager. This was rekindling for E1 when he/she got the opportunity to do what he/she was most appreciated for, work wise: work more with people and relations. This was personally very developing for E1 (E1, personal communication, 2007-11-23).
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The work carried on and E1 finally realized that he/she wanted to become a partner, and also made this known since he/she realized that no one will come and ask who wants to do what. The opportunities must be taken by yourself. E1 later became a partner and by the year of 2007 became the office manager in one the Company X?s offices in Stockholm. The current work is a new challenge and a chance for further personal development (E1, personal communication, 2007-11-23). 5.3.2 Interview with E2
When we ask for the reason why E2 stays within the firm, E2 starts by telling us that working for the employer is a good investment. One constantly gets the chance to develop and gain a good knowledgebase. Examples are that employees get experience in giving presentations, an insight into many industries is gained as well as education and training in leadership and responsibility sharing. In the end, all that is taught is useful in everyday work (E2, personal communication, 2007-11-23). E2 continued explaining why the search of employers ended with Company X. E2 had a lot of contact with Company X during the years of studying, as well as with other auditing firms. All of the "Big Four" were active at the university and it was natural to have the most contact with these firms. E2 was the sponsor coordinator and this further expanded his/hers contacts with the auditing industry. Eventually E2 chose Company X over another firm, when he/she found out that the other firm did not pay any overtime compensation. Also, the office manager at Company X gave a good impression (E2, personal communication, 2007-11-23). The office that E2 works at is smaller and therefore E2 feels that it is easier to get heard, in comparison to a larger office. But everything is your own responsibility and you totally depend on yourself. This may, however, take some time to realize. Also, there are several younger employees at the office where E2 works, which contributes to a great atmosphere (E2, personal communication, 2007-11-23). However, E2 claims that the question in his/her case is not whether to stay or not, since E2 already has made the choice of Company X. If the case would be that E2 he/she hated the working place, he/she would quit. But the plan is to give the profession a chance and stay at least three years and thereafter evaluate whether he/she wants to continue within the auditing industry or not. When we ask if E2 has the goal of becoming a partner in the future, the answer is negative, since E2 feels that this would demand too many sacrifices since the work demands too much effort and long hours. Balance is more important such as spare time and time with family etc. Furthermore, the hierarchy is clear and it is more or less expected that you climb. The steps are clear and the question is only how fast one will climb further. As far as E2 has seen, those that leave do it because they can get paid more at some other place, if they do not want to follow the professional steps. Also, senior em- ployees who do not climb further feel outrun by more junior employees and therefore chose to leave (E2, personal communication, 2007-11-23). 5.3.3 Interview with E3
E3 emphasizes several times that no day is like the next and that the work varies a lot. It is not like sitting in a finance department for years, doing the same thing. One example of this variation is that there are many internal projects to participate in if you like. Another reason is that even if you work on the same customer for some years, you get a different
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function in the team every year as your knowledge expands. A third reason for great variety is that the employees are free to distribute their time as they please, as long as they do the specific tasks in due time. E3 claims to be in charge of his/her own time, something that is not very common for comparable firms. E3 also values being able to influence the pace of his/her career and though there is a path to walk, you can still go your own ways (E3, personal communication, 2007-11-23). E3 believes that in working for a smaller firm, the work will be quite narrow in the sense that you have certain customers and only work with them. At a big company like Company X, E3 claims that there are possibilities to work with many different types of customers and in different teams. Within these teams there are people to learn from, which E3 feels is valuable in order to gain a toolbox of his/her own for the future. As the firm is large and has different departments one can always ask for advice from other employees and departments, which E3 claims to be a great asset. Also, there is a possibility to change department and work with a different area or to go abroad and work for a branch in a different country. This is something that E3 is considering, but regardless if he/she goes, E3 values that the possibility is there (E3, personal communication, 2007-11-23). E3 also talks a lot about education and how that is a true benefit of working at this company. „You raise your knowledge-level and your value constantly? (E3, Personal communication 2007-11-23). You receive an education within the frames of your work duties, and of course you want to finish the education for both personal and professional reasons. One learns new things all the time, new knowledge that can be used in the daily work (E3, personal communication, 2007-11-23). E3 also feels that his/her working day is really fun. He/She feels that you do not disappear in the great number of employees even if the office is big. This is because many departments stick together like small offices within the big office which makes it more personal. Since there are many young people working in the office, there are social activities outside of work too, which E3 really appreciates. Many of them you get to know well outside of work, and some you know from the university (E3, personal communication, 2007-11-23). E3 enjoys the work within the bureau right now and wants to stay. „You really have a future within the company (?) there are endless development possibilities? (E3, Personal Com- munication 2007-11-23). Since the variation of tasks is so large, E3 likes to work in the firm. This is enhanced by working in good teams, where friends also work, and by having fun at work. In conclusion E3 values continuous learning, having fun co-workers and to continuously develop. However education, freedom and variation exists at all the "Big Four", thus the crucial thing is how you connect socially (E3, personal communication, 2007-11-23). We must point out that E3 used "one" during the whole interview rather than "I", and E3 also said that „one become a senior associate after two years? (E3, Personal Communication 2007-11-23). This is interesting for us since it tells something about how E3 sees him/herself and if E3 stands for the statements personally. E3 further claims that the professional steps are to be followed and that he/she will probably do so as well (E3, personal communication, 2007-11-23). Finally, directly after the interview when we had just turned the recorder off and got up from the chairs, E3 said that "one" gets experience and education "if nothing else". Even though this was not a part of the official interview, this notion is interesting and worth involving in the actual findings (E3, personal communication, 2007-11-23).
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5.3.4
Interview with E4
E4 has worked in a smaller auditing firm earlier and make comparisons between that former employment and Company X. At a certain stage E4 felt that he/she had to move on from the small firm to either start working for one of the "Big Four" or to start an own business. What in the end decided was his/her curiosity of how it could be to work for a bigger firm and to try out a different way of thinking (E4, personal communication, 200711-23). When E4 met with Company X, they were the one of the "Big Four" that seemed most alike a small firm in their way of working and concept wise. This is the reason why E4 chose them without hesitation. The other auditing firms were a bit stiff and had difficulties to adapt, while Company X was more open. As a younger person E4 remembers that Company X lured with possibilities that a small firm did not have, like becoming Director or Partner. „You don?t want to end up in an organization that does not offer any possibili- ties for advancement and not get any rewards for the work you do?, E4 claims (E4, Person- al Communication 2007-11-23). The reason why E4 did not start a bureau of his/her own, is that he/she thinks that it is very tough. E4 does not find it desirable to put much effort into hiring and taking care of personnel. Also, a small auditing firm is very sensitive and there could easily be situations in which there is to much administration. However, at a small bureau you could easily see the direct effects of your work, which E4 thinks is a big plus (E4, personal communication, 2007-11-23). At the head office of Company X, were E4 worked for some years, it became too impersonal and messy, departments are very alienated from one another. When E4 was asked to move to a smaller office he/she was very happy. It was more entrepreneurial, more personal and closer to the market - much like the small firm E4 once worked for. An office that is more market and customer oriented meant that you had to sell the company and the ideas to the customer (E4, personal communication, 2007-11-23). Sometimes E4 can wish for more things, like a better salary, but E4 feels that most things are really good at Company X; for example the flexibility in scheduling you own times. Also, in such a big organization as this, you have all the help you could ever need; all personnel and all knowledge. Plus it is a risk-reducer. If you should be questioned by the Supervisory Board of Public Accountants (Revisorsnämnden), you have a big organization to back you up, which is a great relief, says E4 (E4, personal communication, 2007-11-23). One of the most important things is the continuous education but also benefits like health insurance and pensions. Also, the company puts a lot of effort in social activities and care for their personnel. E4 admits that even he/she gets surprised sometimes of this, but that it is really needed because it can go weeks before you meet your colleagues as you are out working on different projects (E4, personal communication, 2007-11-23). In conclusion E4 claims that when he/she compares with what other jobs has to offer, the most important things for staying is education, pension and freedom, even if it probably pays better to work as some sort of Finance Director in a "regular" company (E4, personal communication, 2007-11-23).
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5.3.5
Interview with E5
There are several reasons as to why E5 continues to work for Company X, reasons that have changed over time. E5 started to work for the company because they had a wide range of opportunities. According to E5, starting work for Company X is like starting a trainee program. The beginners get an intensive training program where they learn a lot from a number of different areas. A newly employed person is given the opportunity to work with many things. The focus lies on auditing but lately the new employees are also given the opportunity to work with other areas, such as marketing (E5, personal communication, 2007-11-26). Another positive aspect is that you are able to work with many companies that are active in different industries. The size of these companies varies, some are small while others are large. When working like this you are able to learn and develop your knowledge about different companies. E5 claims that it is challenging to work under these conditions, but also emphasizes that this is one of the reasons why he/she is satisfied with the job (E5, personal communication, 2007-11-26). According to E5, this wide range of opportunities gives the employees options to specialize within a certain field. E5 started to work within the auditing part of the organization as he/she found this field to be most interesting at the time. Lately, E5 has switched directions and the focus does not lay on auditing as much as before. He/she has been involved in creating and planning a tax-course that all new employees take part in. E5 is also lectur- ing within this course. If you feel that you do not wish to work within, for example audit- ing, there are other career paths that you can follow. Even though E5 is working with the tax course, he/she has not abandoned the auditing part completely. Today, E5 is a group leader within the local business area and has the responsibility for task distribution, which takes most of the working time. According to E5, he/she is able to steer the direction and be involved in deciding how thing should be done. The opportunity to influence as a group leader is something that he/she finds rewarding and fun (E5, personal communication, 2007-11-26). Another aspect of why E5 chooses to stay with Company X is the colleagues. E5 finds it important to have somebody to talk to when having questions concerning the job. This is not possible when sitting in a small company as head of finance or accounting. E5 claims that it is a relief that there is so much knowledge in the organization. It feels good to have the comfort of being able to ask somebody about an issue (E5, personal communication, 2007-11-26). E5 also claims that the management encourages employees to take their own initiative. If there is something that you have a passion for but is not within your line, for example marketing, you are able to devote some of your time for working with marketing activities. In this sense management is very flexible (E5, personal communication, 2007-11-26). E5 finishes off the interview by saying that the main reason why choosing to stay is that he/she is able to find new challenges every day, which enables further development of his/her abilities (E5, personal communication, 2007-11-26).
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6
6.1
6.1.1
Analysis
How the HR department works compared to Branham.
Hiring process
According to Branham it is important that the recruitment process is done properly. He claims that giving a realistic job preview will enable this process to be done successfully. Branham argues that the future employee should understand where the company is heading, but also to know what it would be like to work in that company (Branham, 2001). This statement is supported by Robert Sniderman, president of HRFocus USA, who claims that to be able to get employees to become high-performers the company needs to communicate clear visions, goals, expectations and a purpose (Robert Sniderman cited in Leheney, 2007) When looking at how Company X deals with the recruitment process, it is clear that they have taken this into consideration. When it comes to the recruitment process, which Branham claims to be important, Company X is involved in activities to ensure that they find and attract suitable employees. This is done in a variety of ways. Students at Swedish universities are the main focus of Compa- ny X when promoting themselves to find suitable employees. The reason for this focus, according to the HR manager, is that this is the place where the organization finds most of their new employees. Company X believes that being involved from the beginning of a student?s education is crucial. This way, the organization is able to establish a reputation as an attractive and serious employer. Presently, the organization is able to attract enough people when recruiting (HR manager, personal communication, 2007-11-05). Students are, however, not the only target group for auditing firms. When a position that requires special competences opens up, and the company is not able to find anyone that is suited internally, they use head hunters to find and recruit specialists. The HR manager claims that Company X is able to attract specialists by informing them about the job in detail, what opportunities they will have, and the degree of freedom that is associated with the job. (HR manager, personal communication, 2007-11-05). Branham claims that the hiring process should not stop after the interviews are over. Introducing the new employees is an important factor, since the first impressions last (Branham, 2001). Beam argues that the first 90 days of employment are critical, therefore the organization needs to start thinking of retention straight away (Beam, 2006). In this case, Company X places great efforts on making sure that the new employees are given the necessary information about their working place. According to the HR manager, the following takes place on an employee?s first period at Company X. As the new employee comes to the office, he/she is picked up at the reception and gets a tour around the office, thereafter the employee is taken to the IT department where he/she receives a computer. The new employee is introduced to the closest colleagues and to his/her working area. Shortly after the first day the new employee attend the introduction day as mentioned previously. Soon after this, he/she attends an auditing course that is given to all junior employees. Once back at the office, he/she attends activities to get a grip of how the daily work progresses at Company X. At this time, each employee has received a personal coach to help out if they have any questions concerning their job etc. (HR manager, personal communication, 2007-11-05).
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The activities that a new employee participates in indicates that Company X does not simply show the employee to their desk and expects them to start working, as might be the case in many other companies. Company X first makes sure that the employee gets all the information and training necessary to do a good job. And after all the training and information, they are given a coach which assists them in case they have any question or thoughts that they want to share. This provides a comfort to the new employee and enables him/her to feel as he/she has made the right choice. Making the employees feel as they have had the right choice is important since that is the beginning of the retention process. What Company X does when a new employee starts working goes in line with the thoughts of Fran Parrish, who claims that retention starts with giving a good orientation of the organization and necessary training for the employee (Parrish, 2006). Since starting to work in a new organization is a beg step for a person, he/she will search for reassurance that they made the right choice (Branham, 2001). The empirical findings show that Company X has in a good way ensured that the employee is given a good orientation and the necessary training, as argued by Parrish (2006) and Branham (2001). 6.1.2 Internal labor market and career
When a position opens up at Company X, an ad is placed internally to find someone that already is familiar with the organization, according to the HR manager. This gives the employees a chance to apply for a job that they might want, but have not been able to get since the position was not previously available. The employees are also given the opportunity to change within the four service lines but also geographically i.e. change to another office (HR manager, personal communication, 2007-11-05). By doing this, the company is creating an internal labor market where the employees feel that they are given the opportunity to develop and grow. This according to Branham (2001), facilitates the work of retaining employees. It also sends out signals that the company is willing to give the already existing employees a chance to apply for the position. This is an excellent way in which the company shows that they value their employees and believe in them. Researchers within the field, such as Cappelli (2000), Butler and Waldroop, (1999) argue that redesigning and customizing the job to suit individual needs and wants is something that firms should focus on, to improve their retention rates. Branham also claims that redesigning the job is a way to get satisfied employees, which leads to decreased employee turnover (Branham, 2001). When looking at how Company X works with redesigning and customizing jobs, it can be seen that they are taking a slightly different approach. Instead of customizing or redesigning each individual job they focus on customizing an employee?s career. According to the HR manager, each employee at Company X has an individual development plan. This plan is developed in consent with the employee, and it is a way for management to give the employee an opportunity to influence their own development. Person- al development is something that Company X encourages, but also expects from their employees. The responsibility for this development is shared between the employee and the closest manager (HR manager, personal communication, 2007-11-05). As previously mentioned, the employees are able to apply when a position open up. This is also a way of customizing the job or the career, since you can change position within the firm, without taking the risk of changing employer. You might not like the job itself, but you are satisfied with the rest of the situation, such as managers, colleagues and corporate culture. Customizing a specific job to suit personal preferences can be hard to do for a company, even if
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desirable. Therefore enabling the employee to change position might be an alternative solution. Company X has realized that some employees at a certain stage in their life do not prioritize the work, thus it is great to have the possibility to customize the job in some service lines so that employees can work part time. This is the case especially among those who have worked with the company for six, seven years and are the one that are most valuable to the organization. This is because they have extended experience and the rest of the auditing industry faces the same problems with employees that do not put the career as highest priority. Therefore, Company X is giving these employees the opportunity to work part time and work with a limited number of clients instead of leaving the company completely (HR manager, personal communication, 2007-11-05). The HR manager claims that even though it is possible to redesign and customize the job in some cases, Company X has not in a sufficient way been able to communicate this to the employees (HR manager, personal communication, 2007-11-05). It seems like the employees are not aware of the possibilities to redesign or customize their jobs, why the company needs to communicate this in order to increase retention rates. Thus, communication is something that Company X needs to focus on. Especially for those that are most valua- ble i.e. the specialists who have worked for six, seven years and possesses valuable know- ledge and competencies. 6.1.3 Motivation and performance
It is clear that researchers agree on one aspect; in order to get satisfied employees and increase retention rates, managers need to motivate their employees. When looking at our frame of reference at the section „motivation and performance?, it is clear the opinions about motivation differ to some extend. Branham talks about feedback and development opportunities as important motivational factors. He also argues that the company should deploy a culture of giving and taking. By giving or rewarding the employees for desirable behavior the company sends out messages that the employees are worth investing in and that the firm relies on them. Branham argues that the company needs to understand that different employees are motivated by different thing. One employee might want more money, while the other want more time off (Branham, 2001). Although there are many ways to motivate your employees, Company X has chosen to approach this issue by offering employees development opportunities. But the company also offers a special benefit package that involves individually based wage system, private health insurance, maternity leave compensation, food coupons, etc. As previously mentioned, all employees have development opportunities and they are able to influence their career and place focus on what they find important, fun, and motivating. By involving the employees, Company X is showing that they are empowering the employees, and thereby creating a culture of giving, which is important according to Branham. When it comes to compensation, employees at Company X are receiving individually based wages. These are set according to the professional level of the employee, e.g. a manager is paid more than an associate. The HR manager claims that other factors such as performance also are taken into account, and proclaims that bonuses are given but not in all service lines (HR manager, personal communication, 2007-11-05). By having individually based wages (and in some cases bonus systems), Company X is making sure that they pay for performance and not just giving away monetary rewards random-
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ly. This is something that Branham stresses as important. Horowitz et al. (2003) supports the claim that compensation is an important retention factor. They also claim that performance incentives/bonuses are a highly effective retention strategy. Even though the HR manager claims that company X has a special benefit package, it would be a good idea to further individualize this package. The manager should be given freedom to, together with the employee, create a benefit package that goes in line with the employee?s preferences. As it is today, most employees receive the same benefit package, except from an individualized wage. When it comes to the intangible activities to motivate and engage the employees, the company is letting most of these activities be handled at the local level. The HR manager claims that giving directives on how to motivate and engage is hard to do on a national level. Therefore, this is best dealt with on a local level, by local management and team members. Something that is done on the national level is a weekend consisting of social events where the company is able to work on their culture and values. Here, all employees are taking part in different activities such as cultural events, parties etc. Company X also encourages employees to spend time together and socialize with one another (HR manager, personal communication, 2007-11-05). Branham (2001) claims that by having these kinds of activities, social bonds are created between employees which leads to a more effective retention since people that have some kind of social connection between them are more reluctant to break that tie by changing job. Feedback is also something that is argued to be important for ensuring motivation (Branham, 2001, Nelson, 2006, Chapman, 2007). Even though some researchers agree that feedback is important for motivating employees, their opinions differ when it comes to how this should be given. Nelson (2006) claims that you should start out soft with appreciation, Chapman (2007) argues that appreciation should be held separate from feedback in order not to mix appreciation with advice and recommendations. Branham (2001) states that feedback shall never be solely negative since this pushes the employee away. Even in this area Company X has developed their own way of dealing with this issue. According to the HR manager, feedback at Company X is mainly given after a customer visit. The manager, or the team leader, is supposed to have a small feedback session with the group were they talk about what was done in a good way and what can be improved. Another way to receive feedback is through the development meetings that are held twice a year. Here, the manger is expected to be clear and discuss problems with the employee. Comparing these practices to Branham, Chapman and Nelson, it is clear that Company X has developed their own way of giving feedback to their employees. Even though feedback sessions and development meetings are held, the company need to improve their way of giving positive feedback. According to the HR manager, management is doing a god job when it comes to communicating unmet expectations. But, when an employee has done a good job it is not always communicated and the appreciation they deserve are not always given (HR manager, personal communication, 2007-11-05). Even though the need for positive feedback has been identified, Company X needs to put more effort into improving this kind of feedback. This is important since those who are doing a good job are the ones contributing to the success of the firm, and therefore needs to be appreciated for it. Giving them praise and recognizing their work will motivate these employees and help the company retaining them.
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6.1.4
Culture and Leadership
In order to attract and retain talent, the company needs to develop and communicate a culture of commitment. A culture of commitment, according to Branham (2001), involves treating your employees as family and with respect. There are several ways of working with the corporate culture. Company X has among other things developed a "Code of Conduct" where they have stated how an employee should behave when representing the company. In order to learn from mistakes and improve their practices, the company is using surveys to get feedback from their employees. One system that is used at Company X is the "Upward Feedback".(HR manager, personal communication, 2007-11-05). The HR manager claims that by doing surveys and collect data they are able to form an opinion on what can be done in order to improve practices. If the results from the surveys are not satisfying, the company is putting emphasis on improving the things that the employees are dissatisfied with (HR manager, personal communication, 2007-11-05). This also contributes to a culture of commitment, which Branham (2001) claims is important, since Company X is striving to learn from their mistakes and improve their practices. By asking the employees different questions about what they believe, Company X is incorporating the employees in shaping the organization. This can lead to a feeling of employees being able to influence their situation and therefore becoming more satisfied with their situation. According to Branham (2001), coaching is another way of make sure that job satisfaction is increased. Beam (2006) also stressed the importance of coaches in an organization. Coaching according to Beam (2006) is a small thing that makes a major difference. In line with both Branham (2001) and Beam (2006), Company X uses coaches to support and help their employees. A coach is there for the employee so that he/she can get support in the personal development process, but also to answer questions regarding situations that the employee might face. Beam (2006) argues that skills such as active listening and problem resolving abilities are especially important for a coach. According to the HR manager, when selected to become a coach at Company X, the coach receives training which is provided by the organization. This is done to ensure that he/she receives the necessary tools needed for coaching (HR manager, personal communication, 2007-11-05). In this way Company X ensures that the selected employees receive formal training before becoming coaches, which goes in line with the thoughts of Beam (2006) who claims that certain abilities are needed for a coach. The development meetings, that all employees attend twice a year, is a leadership issue that is being dealt with at Company X. The HR manager claims that during these meetings the employee and the manager discuss the development plan, strengths and weaknesses of the employee and what he/she needs to do in order to advance in the corporate professional levels. Management is also expected to evaluate if there are any problems (HR manager, personal communication, 2007-11-05). This sends out the signal to the employee that the management is concerned with the development of their employees and want to help the employees to develop, both on the personal and corporate level. This serves as a motivational factor for the employee as well, which in the long run can contribute to increased retention rates. As can be seen by the actions of Company X, they are trying to incorporate their employees when shaping the corporate culture. Peppitt (2004) claims that culture is something very difficult to change and that it takes a long time to do so. By incorporating their employees, Company X is giving the employees a chance to influence the process. This can
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make the employees feel trusted and respected, which is a part of creating a culture of commitment.
6.2
Why the employees stay
When starting to look at the employees we find that personal development and challenges seem to be most important for E1. He/she also seem to have realized that the opportunities need be taken by oneself, since nobody will come and ask. This shows that E1 recognize that it is up to the individual to take charge of the own career. Also, it looks like the different professional stages do not have to be followed exactly in order to climb up the career ladder as fast as possible and since we got the feeling that E1 climbed in the own pace. E1 also took the chances given and did what felt most fun at the job, which had more to do with personal relations rather than numbers. This makes us wonder if the reason for why E1 stays is more his/her personality and determination rather than actions made by the firm? Furthermore, the opportunities in the career are not as important as the opportunities for personal development. It was also interesting to see that the leaders were actual- ly not perceived as very good by E1, and that the supporting fellow employees became more important when this was the case. E2 was very honest during the interview and felt comfortable with the job or position at the moment. He/she was similar to E1 in the sense that both realized that it is up to themselves to climb and make career. Further, both seem to believe that the career is not the most important aspect of life. But contrary to E1, E2 does not have the goal of becoming a partner since E2 feel that too much would have to be sacrificed. This opinion that E2 has is very much based on the observation of the fellow colleagues at the firm who are part- ners. Maybe if E2 would meet E1, the thought could be changed, since we did not get the feeling from E1 that too much was sacrificed. Further, E2 felt that there is a pressure to climb further or quit otherwise. We wonder if the focus on the career and the different opportunities within the firm can have the effect of creating too much pressure on some and demand that one should climb? Compared to the view of the more senior employees, E1 and E4 have different believes. Both seem to take it more relaxed and do not have the focus solely on constantly going forward. Can this difference be because the focus of Company X has shifted from offering a static career to offering more opportunities and being more career focused when recruit- ing new employees? The case could be that Company X put too much focus and pressure on the opportunities and the career, and by this demanding to much from the employees. One of the reasons E2 chose Company X was because another auditing firm did not offer compensation for overtime, which was not perceived as good. This makes us wonder if E2 works much overtime and if more wage is wanted, which can be done by working overtime at Company X? E3 on the other hand, used "one" instead of "I" during the whole interview. This could indicate that E2 does not see themselves in the centre and as responsible for what happens. Maybe he/she was afraid that the answers would scare us off of or maybe he/she wanted to protect the firm. Also, E3 has only worked for less than two years at the firm, thus he/she is probably not as secure as the more senior employees. We felt like the most of the phrases could have been found in a brochure from the firm, written to students to make them want to work for the firm, which could indicate that this was what he/she has heard many times in the recruitment process or within the firm.
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We also got the impression that E3 believed more in the career stages and that the different titles/positions were automatically given, rather than taken on your own (as E1 and E2 believed). It was very difficult to get personal opinions, which could be caused by that the interview was short, we had never met in person before and that E3 had not been working at the firm for that long. E3 had no direct plans for the future and believed time would tell whether to stay or not in the company. However, the fact that E3 directly after the interview said that "one" gets experience and education "if nothing else", which was very interesting since E3 has said nothing about this during the interview. This last phrase says quite a lot about what E3 believe is most important in the work, and the reason for why E3 stays within the firm. We felt that the main reason for why E4 stay, or prefers to be employed by the firm, is the security a large firm can offer. This might not be so surprising when E4 has been working as an auditor for a reasonably long time and is older than E2 and E3. The alternative for E4 could be to start an own firm, but since E4 has been employed (and owned a small part of) the firm that was acquired by Company X, he/she does not want to try that again. It is more difficult to run an own smaller business that does not have the monetary strength or the wide knowledge as a large firm. When comparing to the more junior employees, E4 seem to have a more traditional view when it comes to staying within one firm for life (E4 did not leave the first firm until it was acquired by Company X). E4 also seems to like the work itself and feels that the firm invests and cares about the employees, by constantly educating them as an example. Furthermore, E4 is more tied to the city of Stockholm after years of having lived there, which in a sense prevents him/her from leaving the city. Even though this does not prevent him/her from leaving the firm, it somewhat limits the oppor- tunities of working elsewhere. E5 was very prepared for the interview and had thought about the answers in before hand. This is good since time was devoted to the thoughts, but on the other hand the answers were not as spontaneous. We got the feeling that E5 stays within the firm or enjoys the work since it is flexible as the employees are given the chance to run own projects etc. Also, E5 was the only one to mention that the organization is flat and that response is received from the top but the initiatives are often coming from the bottom up. We also saw similarities between E5 and E1 when none of them seem to believe that the career and the actual climbing is the most important in the work. E5 is not accredited, even though one can take the exam after five years experience, which also was the case with E1 as it took more than five years before he/she took the test. Also, similar to E1, the focus seems to be on new challenges and the opportunity to develop as a person, even though this is not done by receiving another title. 6.2.1 In General
None of the employees mentioned that money was the most important factor that made them stay, even though it might have been important. Further, none spoke about culture, but the most surprising fact is that none spoke about leadership or that they had good leaders. Actually the opposite was the case when E1 told that the former leaders were not giving recognition. We can also question how good role models E2 has at the office when the title partner is not desirable as it seem to include to much sacrifices for the individual. The more senior employees E2 and E3 seem to agree on that Company X has a lot of student activities in the universities to communicate that they invest a lot in the employees, by education and offering experience in many areas. E2 and E3 also seem to agree that the job
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actually is a great experience but none were sure about (or convinced) that they will stay within the firm for life. Do they reason like other students that this might be a good career step, with potential of helping them in the career? This thought is not surprising since E1 confess that the first idea was to stay within the firm for a couple of years and thereafter move on, which although never happened. The key to keep the employees seem to be the internal labor market in the way that there is space to develop and grow within the firm, which would maybe be more difficult in other industries or firms of smaller size. However, the challenge is to communicate this in the same time that the pressure to climb should be minimized. Emphasis should lie on the individual and involve them in their advancement and career. The advancement or development does not have to be vertical, which E5 show by being a manager with other tasks that just accounting without being an accredited auditor.
6.3
6.3.1
Comparing the HR department, employees and the theory
The hiring process
When it comes to the hiring process, Company X seems to do a very good job. The recruitment process seems to be invested a lot in and the introduction of the newly employed seems to be done according to the theory we have chosen. None of the employees mentioned anything about their introduction, which makes us believe that HR does a good job. However, E2 talked some about the hiring process indirectly, when mentioning why choosing Company X. The firm seemed attractive and introduced itself at the university where E2 studied. This strengthens our belief that the recruitment process is done properly. Further, the fact that none of the employees talked about that the recruitment or introduction makes us draw the conclusion that Company X and the HR department makes a good job regarding this issue. 6.3.2 Internal labor market and career
How the firm is organized with many opportunities for the individual seems to be the real strength of Company X. The employees talked about the different opportunities and possibilities for development within the firm. Our chosen theory emphasize that the job should be challenging from the very begging to the end and here Company X seem to have done a great job. Even the partner, E1, who has worked for the company many years sees the job as challenging and as a source for personal development. Also, the more junior employees, E2 and E3, have realized the opportunities. Here can be given credit to the communication work of the firm since even thought there are opportunities within the firm it cannot be taken for granted that it has been communicated to the employees. In many aspects the company has been able to communicate the development opportunities but in others, like being able to cut done on work when for example being on maternity leave, communication needs to be improved. When comparing this to the chosen theory, we can see that the career opportunities are one of the main advantages that Company X has when it comes to retaining their employees. Furthermore, the structure of the auditing department, that there are different professional levels with different tasks and responsibilities, the company should in a better way communicate more clearly to the employees what is available and how they can get there. However, as we found out from the interview with E2, it is not always seen as a goal to reach the
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highest levels when it might require a lot of personal sacrifices. Also, E1, who has reached the highest level never had this as a sole and most important goal in the working life. So, even though having the different levels and communicating them, it does not always mean that the employees strive to climb fast at any cost. As we have mentioned before, E1 and E2 seem to have taken charge of their own development and career seriously, while we are not as convinced that E3 has done. This makes us wonder if Company X has succeeded in communicating that the employees are themselves in charge of what happens to them. However, we realize that this could indeed be an impossible task since all persons are different and people are more and less taking responsibility of their own lives. Whether it comes to the career or the personal life. In other words, E1 and E2 could be persons who make sure to be where they want to be which has nothing to do with Company X. 6.3.3 Motivation and performance
This topic, motivation and performance, is very tied and connected to the previous topic, internal labor market and career, since the employees are to great extent motivated by the career and opportunities within the firm. As the HR manager told us, the managers have development meeting with the employees where they can receive feedback about their work and also discuss the future and goals. However, none of the employees we interviewed talked about this when we asked why they chose to stay. This does not mean that the employees do not appreciate the feedback, when it only can mean that this issue is not the main reason for staying. It must be pointed out that almost all employees however talked about the personal development which could be very tied to the feedback given by the managers. If the feedback sessions would not have been organized the managers maybe would not be given the information about the aspirations and future goals the employees have, which could lead to that the personal development would not occur in the same extent. Also, as the HR manager mentioned, managers are good at giving corrective or negative feedback, but some are less good at giving positive feedback and recognition. As E1 told us, he/she was lacking this kind of recognition and motivation from the managers during the first years. However, the situation might have changed since then. These issues should not be neglected according to Branham and other sources, when the intangible rewards such as positive feedback and recognition is very important and does very much for the retention. Further, Branham writes that the firm should communicate to the employees how and what they contribute to the success of the firm, which neither the HR manager nor the employees said anything about. Company X seem to invest a lot in the employees, which Branham encourages, especially regarding the education given and the package offered to all. However, as the reward package, that the HR manager mentioned, is offered to all and contain the same rewards we must question if this is a good idea. Branham writes that different rewards should be given to the employees since not all appreciate the same things in life. At the same time, none of the employees mentioned the package as anything special. Here we wonder if the other auditing firms offer the same kind of package and therefore are more taken for granted by the employees. Since the rewards need not to be tangible, Company X seem also to offer intangible rewards or being flexible in the way that parents as an example can work shorter days or leave on maternity leave, which two of the employees shortly mentioned that they have used. Also, some of the employees talked about that the work as flexible and that as long as the work gets done, nobody cares about if one
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comes late to work some days or leave early other. This seemed to be appreciated and is in line with what Branham says, that different people appreciate different rewards, which flexible working hour is an example of. Finally, when comparing Maslow?s theory with what the HR manager and the employees said, we can see that the basic human needs have been fulfilled, which is not so surprising at this time in Sweden: most have a home, there is no war and there is no shortage of food. Therefore, it is natural that most of the employees talked about and appreciated the opportunities for personal development and more knowledge. This might also be the reason for why the employees did not emphasize the monetary rewards, as they already got it and can fulfill the basic needs such as shelter, with the salary. When this is done, the personal development becomes more important. This also seems to be the focus of the HR department, when they also emphasize the opportunities to develop within the firm, with the career and feedback in mind. 6.3.4 Culture and leadership
Company X seems to devote much resource into social activities, such as the "games" that the HR manager mentioned. If we compare this fact to Branham?s four keys, this is indeed good, especially since the auditing industry can be stressful during the work peaks. However, this none of the employees directly highlighted as the reason for staying within the firm. This makes us wonder if the social activities are as important as the time and effort put into them. One reason for why the employees did not emphasize this issue could be that the employees spend a lot of their time at work and rather want to load their batteries at home, away from work. However, as Branham claim, that there needs to be a balance between work and fun, and the social activities organized by Company X can be crucial even if nobody mentioned them as the main reason for staying, the games are still of importance. But then again, Branham claimed that one should have fun at work also, which could be interpreted as that the activities need not to take much time or effort (as maybe Company X does it) and that it is not the social activities outside work that are the most important. There seems to be an emphasis on own leadership in Company X when the own initiatives are encourages by the company. The employees seem to be aware of this and the possibilities are there to be taken. However, not all employees seem to see that they themselves are the ones in charge of their own fate within the company. While the HR manager says that the development responsibility is shared between the employee and the closest manager, we can see that some employees have taken full responsibility of their own development (E1 and E2) and thus have climbed in their own pace. This could indicate that the employee indeed can affect the own career to a large extend. Also, at least one of the employees did not see one self in the centre when "one" became a senior associate more of less automatically after some years in the firm, which shows that not all believe the self can influence everything. But then again, E3 had not climbed to the next level even though the E3 had worked as long as E2 within the firm. Here we can draw parallels to Branham who claim that the employee should be given the tools for taking charge of the own career, which Company X has done very well, and thereafter communicate that it is up to the employees to use them, which some of the employees have understood while others seem not to have. Furthermore, the focus in Company X seem to be performance, and as far as we can see the firm has succeeded in communicating areas of improvement by having feedback sessions where the employees are told what can be done better and what challenges lie ahead.
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However, as the HR manager pointed out, the firm has not been as good at telling the employees what they actually have done right and praise them for that. Here, we wonder how motivating this is for the employees, when the focus seem to be in the future but seldom are seen for what they have done well. A clue from E1, that the managers at the former office were not good and motivating leaders, shows that the firm can indeed become better in this matter. As Branham claim, simple praise and appreciation can make a huge differ- ence and should therefore not be neglected. When the HR department serves the managers and thus never the employees, we wonder if the distance to the employees is too long. Can the HR department really see if the employees are getting enough appreciation and if there is a lack of it, has the HR department given the managers enough support in this matter? Here further research could be appropriate and we will not dig deeper into the issue in this thesis.
7
Conclusions
Company X?s retention practices are for the most part in line with the chosen theory, and it seems like the firm overall does a good job retaining their employees. It appears like the HR department conducts recruitment and introduction in a satisfactory manner. We believe this is because Company X takes the recruitment process very seriously. This is evident in how they approach their key target group, the Swedish university students, by establishing a relationship early on in their education. This creates a reputation as being a serious employer that wants to create a long term relationship with their future employees. However, we question the rational of having quite similar reward packages for all employees. This might prevent the feeling of a hierarchic organization, but is not reasonable to sustain motivation and performance. Branham (2001) argue that employees appreciate different rewards and thus rewards should be developed in cooperation with each employee and given based on performance. This is also true regarding the type of reward, as Branham claims, not all rewards have to be monetary. Company X set wages on an individual basis, but most of the reward package is predetermined. One alternative could be to offer spare time. We find it reasonable to conclude that the HR department is focusing on the „right? layer of Maslow?s "Hierarchy of Needs", since they emphasize personal development rather than merely satisfying the basic need of a wage. The employees seem to stay and enjoy their work because of the opportunities to develop. Company X appears to nurture a culture of commitment, which Branham (2001) claims to be of great importance. This commitment is expressed in how employees are involved when shaping the organization. By asking for evaluations through different surveys, management shows an interest for the opinions of the employees, thereby demonstrating the maturity of their leadership. Company X seems to offer many different career opportunities, which is in line with the theoretical framework. But as Branham point out: the responsibility of the career should beplaced on the employee and communicated very clearly, which is something Company X has been unsuccessful with in some cases. There are possibilities to change position within the firm, but management has probably failed to communicate this to their employees in a sufficient matter. As we are comparing development opportunities within Company X with
40
theory, a reasonable interpretation would be that the internal labor market is the main advantages in the struggle for retention and motivation. To make it clear, we present short answers to our research questions: How does Auditing Company X work with retaining valuable employees? It appears like Company X is taking a holistic view when dealing with retention. From theory we know that this is important as the different areas are interrelated. Company X realizes that they profit from listening to both current and resigned employees. Is there a difference between retention practices of Auditing Company X and current theoretical framework within the topic? There are many similarities between the retention practices at Company X and the chosen theory, but there are also differences. Two major areas in which theory and empirics differ are regarding inflexible reward structure and insufficient communication of career opportunities. Is there any area that Company X can improve regarding their retention practices? Yes, Company X could reassess their reward structure and how they use recognition. In addition, the fact that employees are responsible for their own career development and pace, should be communicated clearer.
8
Discussion
During the process of writing this thesis, we have come across many interesting subjects closely linked to retention practices, all of which we could not include in this report. We must have in mind that the purpose of this thesis was to gain a deeper understanding of the retention practices at a company, thus a case study was the right choice. Because of this choice, we are limited in the scientific generalizability of our conclusions and the general application of the results might be reasonable to question. It does neither allow us to validate the theoretical framework, but none of this was our intention. If we would have done the study some other way we would not have gained the same deep understanding. Therefore we claim the generated empirical data to be the main strength of this thesis. We did not expect to find that the HR department only serves the managers and thus rarely directly the employees. This creates a distance between HR and the employees. Can the HR department really monitor how much appreciation employees are receiving, and do the managers receive enough support from the HR department? Further research within this area could show if it is important to keep the HR department close to the employees, and if there are better ways to support regular managers in their HR responsibilities. We found that managers are quite good at alerting employees when they do not meet their goals, but not equally skilled in positive feedback. This makes us believe that this is an area of improvement, especially as feedback is closely linked to motivation. Further research within this area could provide indications on how important feedback is for retention. Al- so, by focusing more on employee opinions (present and resigned), research could lead to a broader understanding of key factors for staying with a company.
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A firm profits from encouraging their employees to have fun at work. The social activities organized by Company X are however not very tied to work, and therefore not what Branham would have noted as fun at work. Perhaps this is related to feedback, since you have more fun at work if you hear positive comments from the managers (or fellow co-workers). How does a company make a strategy to have fun at work, and how do they implement it? For further research we suggest finding out exactly what employees do at work and what they appreciate the most, and then relate this to retention strategy. To take the conclusions one step further, the HR practices dealt with above can all be linked to a company?s costs and hence also its profits. It is not possible to gain a comprehensive picture of the positive aspects of low employee turnover, unless including the factor of money. One of the reasons, possibly the biggest one, to retain employees is to decrease costs in the long run. If employees change employer every second year, the companies lose competencies in which they have made investments like education, training, recruitment etc. More resources must also be allocated towards recruiting new employees, which consumes both money and time. The purpose to investigate retention is thus not on- ly to make employees more satisfied at work and greater achievers. It stretches further than this to include how a company?s profits and overall wellness is damaged by a high em- ployee turnover. If we can provide research results on how the soft aspects of HR results in hard cash, we could build a framework on how to best retain employees and thus keep companies from incurring these extra costs. Further research of the economical aspects of employee retention could be very beneficial for this industry, but also other industries of similar structure. In other words, deeper knowledge of how to calculate on these soft issues could potentially not only help companies to provide a better working environment for their employees, but also save firms a great deal of money.
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Appendix
Appendix 1 Branham's original four keys and practices
Key one: Be a Company That People Want to Work For
1. Adopt a "Give-and-Get-Back" Philosophy 2. Measure What Counts and Pay for It 3. Inspire Commitment to a Clear Vision and Definite Objectives
Key two: Select the Right People in the First Place
4. Understand Why Some Leave and Why Others Stay 5. Redesign the Job Itself to Make It More Rewarding 6. Define the Results You Expect and the Talent You Need 7. Ask the Questions that Require Proof of Talent 8. Give a Realistic Job Preview 9. Use Multiple Interviewers and Reference Checking 10. Reward Employee Referrals of Successful New Hires 11. Hire and Promote Managers Who have the Talent to Manage People 12. Hire from Within When Possible 13. Creatively Expand Your Talent Pool
Key three: Get Them Off to a Great Start
14. Give New Hires the Red-Carpet Treatment 15. Communicate How Their Work Is Vital to the Organization?s Success 16. Get Commitment to a Performance Agreement 17. Challenge Early and Often 18. Give Autonomy and Reward Initiative
Key four: Coach and Reward to Sustain Commitment
19. Proactively Manage the Performance Agreement 20. Recognize Results 21. Train Managers in Career Coaching and Expect Them to Do It 22. Give Employees the Tools for Taking Charge of Their Careers 23. Know When to Keep and When to Let Go 24. Have More Fun!
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