By Dr. John Sullivan, Head and Professor of Human Resource Management College of Business, San Francisco State University

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Retaining key employees is one of the hottest Human Resource issues companies are facing today. Numerous studies have identified the reasons why employees leave their jobs. Perhaps surprisingly, the key reason employees leave is not compensation. In a similar vein, studies show that the key reason applicants accept new jobs is not the pay and the top motivator of employees is not money. Many H.R. departments emphasize compensation in attraction, retention and motivation because it is easy and traditional. But another approach that is worth considering focuses on challenging employees. Lack of challenge is almost always ranked above pay as a key motivator of employees.

Unfortunately each of us is unique so that a challenge for one may not challenge another. This means we must develop plans that focus on the changing needs of each individual. We call such a plan a Challenge Plan. You must formalize this process because even though almost everyone wants to be challenged not everyone knows how to ask our boss for more challenges. In addition because downsizing and delayering have eliminated most promotions we must find new ways to motivate and energize our employees. The challenge plan is an excellent solution to this "plateauing" problem

Goals of a Challenge Plan

• To energize and stimulate key employees to
  maintain a high level of productivity.
  
  
• To continually challenge employees so that they are satisfied
  to the point that they don't seek or accept outside job offers.
  
  
• To drive employees to continually develop new
  competencies and to become continuous learning
  individuals. These increased competencies will
  also increase our corporate capabilities and agility.
  
  
• To increase our image as a desirable employer
  in order to encourage the best and the brightest
  to accept jobs at our company.

Steps in developing a Challenge Plan

• Identify High Potential (Hi Per's) employees that we must retain.
  
  
• Develop a range of challenge options that are feasible within our company. Challenges might include:
  - new projects new equipment/ tools
  - different responsibilities a job rotation
  - new customers
  - new location
  - new work team
  - new schedule
  - new manager

• Work with the manager to identify the range of feasible options that are available to that individual. Inform the individual of the options available to them and ask them to rank their challenge options.
  
  
• The manager and the employee then draft a challenge plan with goals, program elements, timetables, budget and progress evaluation points.
  
  
• The plan is reviewed in relation to other similar plans to minimize conflicts and to identify possible problems.
  
  
• The approved plan now becomes a living document that is continually updated as corporate and individual employee needs change.
  
  
• Individual satisfaction and growth are periodically assessed through interviews and surveys. Retention rates are monitored to ensure that the desired goal is met.

Possible Problems

• Employees may not be aware of what challenges them.
  
  
• Pay or other factors may become so out of line that they negate the impact of the challenge plan.
  
  
• Managers may not have the skills necessary in order to develop a realistic plan.
  
  
• The range of available challenges may not be sufficient to challenge all employees.
  
  
• An overly ambitious plan may result in employee "burnout".

A sample employee challenge plan

• Challenge Plan Manager - ________________
• Targeted Employee - _____________________
• The Retention Risk Rating For This Employee (A-C): _______
• The Retention Risk Rating For This Job Classification (A-C): _______
• Does The Employee Have A Key Corporate Competency? : Yes / No _________

Overall goals for this challenge plan

1. _____________________________________

What Challenges This Employee?

1. _______________________________________

How were challenges identified? Asked ____________________ .
Manager tracked _____________________ Reviewed Records
Are there any potential "Dis-Challenges" (Dis-satisfiers) that would reduce this employees motivation?:
1. _______________________________________
Was Challenge plan reviewed / jointly developed with the targeted employee?
Yes/ No
(Met with employee on _________________)
Next Challenge plan review date : ( _________ )

Elements of the challenge plan/list of possible motivators

New Action/Assign Start Date......Goal/Challenge/Motivator.......Priority

• New projects
• New Job Responsibilities
• New Equipment/ Tools
• Work Team
• Work Environment Training and individual development
• Compensation, recognition and rewards
• Work/ Life balance
• Communication and feedback
• Visibility and control
• POSSIBLE CONCERNS OR RISK FACTORS

Sample completed employee challenge plan

• Challenge Plan Manager - John Martin
• Targeted Employee - Tony Bush
• The Retention Risk Rating For This Employee (A-C): A++
• The Retention Risk Rating For This Job Classification (A-C): A
• Is This A Key Corporate Competency?: Yes (Engineering. Design)

Overall goals for this challenge plan

1. To energize and stimulate Tony to maintain a high level (top 5%) of productivity.
2. To continually challenge Tony so that he does not respond to headhunter calls.
3. To drive Tony to develop new competencies in engineering design and to become a continuous learning individual.

What Challenges This Employee?

1. Exposure To Management
2. Leadership Roles
3. "Impossible" Projects
4. Training / Mentoring Others
5. An Opportunity To Work With New Equipment
6. Opportunities To Build His Self-Esteem / Confidence
7. Opportunities To Learn, Increase Competencies And Stay On The Cutting Edge

How were challenges identified?

Asked employee and coworkers. Manager tracked past challenge successes. Are there any potential "Dis-Challenges" (Dis-satisfiers) that would reduce Tony's motivation?:

1. Lack of control
2. Lack of training support

Was Challenge plan reviewed/jointly developed with the targeted employee? Yes (Met with Tony on 3/1/97) Next Challenge plan review date: ( 8/1/97 )

Elements of the challenge plan

New Action/Assignment.......... Start Date ........... Goal/Challenge/Motivator

New projects
1. Assign lead of X design team ........... 4/1 ............... Leadership skills
2. Develop Executive Training Program.......4/30......................... Exposure to top management
3. Fix Newton (product failure)................... 6/2 ............................ Impossible task

New Job Responsibilities
1. Fill in during my absence................... 4/1 .......................... Self-esteem
2. Rotate to sales (for 1 month)............ 5/1 ........................ Increase customer service skills
3. QC Officer...................................... 5/1 .......................... Learn measurement

New Equipment/ Tools
1. Purchase SGI 31XD....................... 7/1 ......................... New equip. challenge/Self-esteem
2. Purchase QC Software.................. 5/1 ....................... Increased marketability

Work Team
1. Rotate in college hire................. 4/1 & 7/1 .................... Increase mentoring skills
2. Increase Product Goals 10%........ 3/1 ............... Develop process improvement skills

Work Environment
1. Increase Telecommute Days......... 4/1 ........... Improve work/ family balance

Possible Concerns

• Recent changes in his family life may decrease his need for work challenges.
• Risk of burnout (estimated at 33%).
• Decrease in training budget may frustrate Tony who uses training regularly.
• Stock price drop may negate any challenge plan success.
• Re-centralization of the Engineering Design function may frustrate Tony due to loss of control.

Signed _________________________ ___________________________

Benchmark Information

Challenge plans are often in place at companies that are experiencing outstanding corporate growth, especially in competitive markets. Cisco Systems is confident that they'll be able to continue to experience phenomenal growth because they have used a system that incorporates "stretch goals" into every employees goal setting plans. Likewise, Intel and Microsoft remain dominant forces due to their ability to define and incorporate challenge plans across all levels. The value of challenge plans increases dramatically in companies that have downsized and delayered. Where there are few or no opportunities for promotion, a challenge plan may be the only option if you are to maintain a motivated and energized work force.

Conclusion

A well thought out challenge strategy will increase corporate capabilities, increase retention rates, energize workers, and increase our ability to attract the best and the brightest. It requires a degree of open communication and a willingness to treat individuals differently according to their unique needs. It generally works best in technical, professional and management jobs which are usually staffed with people that seek continuous growth.

© October, 1998

by Dr. John Sullivan

Click here to email Dr. Sullivan
Head and Professor of Human Resource Management
College of Business, San Francisco State University

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