Owens & Minor, Retention, Recognition

Innovative Ways to Attract and Retain Employees at Owens & Minor

By now it’s probably pretty clear to everyone that there’s a talent war raging. The demographics, particularly in industrialized nations, are such that there’s a very real shortage of workers and it’s only going to get worse. Even in the face of an economic downturn, talent shortages persist, particularly in high-skill areas that require certifications like healthcare, engineering, equipment operators, trucking, and finance.

In the HROA Connections Newsltter, we’ve covered a number of stories about how companies are working to improve the speed and quality of the ways they attract new talent, but what about innovative ways of retaining it?

We recently sat down with Hugh Gouldthorpe, Senior Vice President of Quality and Communications for Owens & Minor, a Fortune 500 distributor of medical and surgical supplies to hospitals and healthcare systems, to discuss their employee recognition and retention programs.  What Owens & Minor has built derives from one fundamental principle, “We know how we treat our teammates is how they treat our customers,” says Mr. Gouldthorpe.  Even the word “teammates” conveys the sense of belonging and value that O&M places on its employees.  “Turnover can cost a company a lot of money, so we continue to invest in our unique culture by taking care of our teammates.”

According to the latest U.S. Department of Labor statistics, voluntary turnover in the US hovers around 23.4%¹. That means that every year almost one quarter of the workforce walks out the door, taking with them the investment in training, relationships, and productivity the company made in them. Stemming the tide of voluntary turnover – people leaving not because the company wanted or needed them to, but because the employee decided to leave – is therefore at least as important as focusing on improving recruiting.

“Engaged employees are productive; productive employees are engaged,” observes Mr. Gouldthorpe. “The number one need of any person is the need for recognition. It’s a basic human drive and desire.” Contrast that basic need with the fact that 65% of Americans reported not receiving any recognition for good work over the course of a year². There may be a correlation between the lack of recognition and turnover, or at least that’s the premise Mr. Gouldthorpe and the people at O&M have adopted.

“Our goals are, first, to retain as many of our teammates as possible. Second, to let them know we care and that they make a difference, and last, to give them the freedom to express themselves,” Mr. Gouldthorpe says. At O&M they’ve figured out that recognition goes beyond compensation. “Appreciation means something to people. Just go up to someone, anyone, and say ‘thank you.’ Watch their face light up. It makes them smile.”

And it’s not all about the soft stuff.  At O&M, recognition and retention have real bottom line impacts. According to Mr. Gouldthorpe, “It takes about 90 days for the typical teammate to get fully trained and productive. Beyond that, we also invest in continuous education for them. If they leave, they take that investment with them.”

Mr. Gouldthorpe and his team have put in place a holistic recognition program that begins from the employee’s first day and continues throughout their career. On day one they make sure the employee has all the tools they need to be productive. If an employee doesn’t feel like their presence is acknowledged and valued, it can have a very damaging impact on them right off the bat.

From there, O&M has established a mix of recognition and rewards built around a four-pronged attack. The first prong consists of service awards, recognizing employment anniversaries. Every year O&M celebrates over 1,600 service awards acknowledging the commitment of its employees. The second prong rests on O&M’s STAR Program, which provides instantaneous recognition opportunities. “We know that the closer the recognition is to the deed, the better,” says Mr. Gouldthorpe. That’s why they’ve put recognition in the hands of each teammate and team leader.  Team leaders can award STAR-bucks redeemable at The Company Store to recognize outstanding contributions right on the spot. Any teammate can also recognize another for going the extra mile or doing something exceptional by sending an email to the recognition team. That triggers the creation of a STAR Performer plaque and a personal note from Mr. Gouldthorpe congratulating the individual on their contribution and peer recognition.

Part of what makes the Owens & Minor program work so successfully is the relationship they’ve built with Rideau Recognition Solutions. They’ve outsourced the first prong – their service awards program – to Rideau, who handles tracking the anniversaries, sending out the recognition packages, and maintaining the overall program. “Working with Owens & Minor, we’ve put in place a comprehensive employee recognition program solution that allows Mr. Gouldthorpe and his colleagues in HR to focus on their recognition and retention strategy while we take care of the actual program logistics,” says John Mills EVP, Business Development for Rideau Recognition Solutions.

As a result of these programs, turnover has declined from 29% when the program started 10 years ago to 10%-11% today. Employee satisfaction is also up. Much of the improvement is directly attributable to the improvements in recognition. And “recognition” really is the key word. It’s not just about compensation and rewards. In fact, according to Mr. Gouldthorpe, it’s not the gift, but the presentation that matters.

“I write close to 800 personal notes each year. People save those notes,” says Mr. Gouldthorpe. The research in this field backs up Mr. Gouldthorpe’s assessment. According to Gallup, employees rank base compensation and recognition as the two most important factors in job satisfaction. “The key is having a very user-friendly program,” continues Mr. Gouldthorpe. “By making it easy for busy people like our line team leaders and teammates to actively participate in the program, we make it easy not just to build recognition, but to build our culture. It makes people feel special. It’s certainly important to give people money – and we do – but most of what we do is non-monetary. There’s nothing magical about it, it’s just timely, sincere, and flexible.”

For Owens & Minor, recognition has become a key weapon in its arsenal, successfully fighting the war for talent. Through its recognition programs, in partnership with Rideau, Owens & Minor has successfully increased both employee retention and satisfaction. Beyond that, the program has not only driven bottom line results by reducing and/or avoiding the significant costs of staff turnover and training, but it has also had a strong impact on the top line as well. “Where we have the happiest customers is where we have the happiest people. The real key is making the program meaningful for all our teammates and easy and relevant to our line team leaders. We’re constantly upgrading the program while keeping it focused,” says Mr. Gouldthorpe.

The program at Owens & Minor represents one key strategy firms can employ as they consider how to win their own talent wars.
------------------------

¹ Source:  US Department of Labor, Bureau of Labor Statistics, September 2005-August 2006.

²Rath & Clifton. How Full is Your Bucket, © 2004, Gallup Press.