People Stay Where Their Future is Strongest [PODCAST]

← Back to All Podcasts

People Stay Where Their Future is Strongest

In this episode, David Alemian, Creator of the Alemian Retention System, is discussing how people stay where their future is the strongest.

Highlights of this episode include:

• How aligning an employee’s financial future with their tenure can change long-term retention behavior
• What distinguishes a short-term incentive from a true long-term retention structure in financial terms
• How forfeiture-based structures influence decision making compared to traditional benefit plans
• What financial modeling should hospitals use to project the long-term impact of retention strategies
• How hospitals can implement retention strategies without increasing net operating costs
• What separates organizations that successfully retain top talent from those that just continue to struggle

Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back David Alemian. David is America’s foremost expert on retaining highly skilled professionals and the creator of the Alemian Retention System. His work defines a critical reality for healthcare leaders, People Stay Where Their Future Is Strongest. He is the author of People Stay Where Their Future Is Strongest: How Organizations Retain Highly Skilled Professionals and Build Lasting Advantage. A definitive framework that explains why highly skilled professionals leave and what determines whether they stay long-term. With over 30 years of experience in financial and workforce strategy, David reframes retention as a financial discipline. He shows how workforce instability erodes margin, disrupts operations, and weakens long-term performance. His work has been featured in Medical Economics, MD Magazine, and Physician’s Practice. He has authored more than 300 articles and produced over 400 educational videos on talent retention and organizational performance.

In this episode, we’re discussing People Stay Where Their Future Is Strongest. Welcome, and thank you for joining us again, David.

David Alemian: Well, hi, Kelly, and thank you for having me. It’s so good to be back.

Kelly: Yes, it’s great to have you back. Well, let’s go ahead and jump in. So, David, yeah, you focus on aligning an employee’s financial future with their tenure. How does that change long-term retention behavior?

David: Great question. People are wired for the future. From the time we are very young children, we quickly learn to think about the future. It becomes imprinted on our brain. We’re asked, “What do you want to be when you grow up? Where do you want to live? Who are you going to marry?” It’s always looking toward the future. Employment is the same thing. Highly skilled people don’t make career changes on a whim. They think about it, and they think hard. And here’s what they think, “Is my future better here where I am? Or is my future better if I move to another organization?” Most major decisions are based on the future. When an employee considers staying or leaving, they are literally comparing two possible futures. One future is built by staying with their current employer. The other future is built by leaving and going elsewhere for another opportunity. The future that appears stronger usually wins. It’s that simple. For those who are listening to this, think about your own life and the decisions surrounding your career. Did you think about your future? Chances are very high that you did because our brains are wired for the future.

What’s really kind of cool is it’s one of the things that we all have in common. Here’s the difference. Traditional retention strategies often focus on the present. They focus on culture, recognition, wellness programs, team-building activities, and workplace perks. Those things are good, and they matter, but they do not fundamentally strengthen an employee’s long-term financial future. When an organization helps employees build a stronger financial future by staying, retention becomes much more stable because the employee has a compelling reason to remain committed for the long term. People stay where their future is strongest. And that’s what I mean by that.

Kelly: I love that. I mean, and I wholeheartedly agree with it, and it makes a lot of sense that focus on the future. You’re right. We do all have that in common. So, what distinguishes a short-term incentive from a true long-term retention structure in financial terms?

David: Okay. Now, most retention strategies are expenses, higher salaries, bonuses, 401(k) contributions, retention payments, enhanced benefits, and similar programs all have one thing in common. Once the money is spent, it’s gone. The organization incurs the cost, whether your employee stays or leaves. A true long-term retention structure works differently. The employer funds and owns the plan. The employee never owns the asset. The asset remains on the organization’s balance sheet where it continues to grow and compound over time. The employee agrees to remain with the organization until a future date is established in the agreement. It could be 10 years from now. It could be all the way until retirement. It could be anything in between. If the employee fulfills that commitment, the employee receives a substantial financial benefit. If the employee does not fulfill their commitment and leaves early, the benefit is forfeited. The organization keeps the asset. That distinction changes everything. Instead of creating another expense, the organization creates a growing and compounding asset while simultaneously creating a powerful incentive for the employee to remain long-term. Traditional retention strategies spend money. This strategy builds an asset.

Kelly: That is truly just so interesting to me, David. Thank you for explaining that. So how do forfeiture-based structures influence decision making compared to traditional benefit plans?

David: Oh, but they do. This is where retention becomes truly powerful. Most traditional benefit plans provide value regardless of whether the employee stays for the long term. An employee may receive higher compensation, employee retirement contributions, bonuses, or other benefits, and still leave for another opportunity. There’s nothing holding them in place. And what happens is the organization absorbs the cost and loses the employee anyway. A forfeiture-based structure operates differently. The employer funds the plan. The employer owns the plan. The asset remains on the organization’s balance sheet where it continues to grow and compound. And the power of compound interest is amazing. The employee earns the right to receive the benefit only by fulfilling the long-term commitment established in the agreement. If the employee leaves before that date, the benefit is forfeited. The organization keeps the asset. The employee receives nothing. That creates a completely different decision-making process. Remember when I said that choosing between two futures, one if I stay and one if I leave?

Kelly: Right, yes.

David: The employee is no longer evaluating only what might they gain going elsewhere. They’re also evaluating what they will lose by leaving. As the asset grows and compounds, the financial consequence of leaving becomes increasingly significant.

Kelly: Oh, yeah.

David: Yeah. Absolutely. An employee may receive a recruiting call from a competitor offering a higher salary. The employee now has to compare that offer against a growing future benefit that could be worth substantially more. People become far less likely to leave when doing so requires walking away from something meaningful they have spent years building toward. In other words, you’re giving them something to lose by leaving. At the same time, the employer benefits because the asset continues to grow, regardless of whether the employee ultimately stays or leaves. That creates a powerful alignment of interests between the employee and the organization.

Kelly: I mean, it seems like a win-win, right? I mean–

David: Everybody wins.

Kelly: Everybody wins. Right. So, David, what financial modeling should hospitals use to project the long-term impact of retention strategies?

David: It’s actually relatively easy for a hospital, or any organization, for that matter, if they’re tracking [inaudible] turnover, to figure it out. The starting point is understanding the true cost of turnover. And most organizations underestimate turnover because they focus primarily on recruiting and hiring expenses. Those costs are only part of the picture. I mean, how do you deduct lost productivity? I mean, these are– okay, for a nonprofit hospital, that’s not a big deal. But if you’re a for-profit hospital, what you can deduct and not deduct is really important. But hospitals should also evaluate lost productivity, onboarding time, training costs, overtime, temporary staffing, management distraction, reduced continuity, and, this is key, the impact on patient care. And that’s another key issue here because, if patients have to wait too long, or if there isn’t a specialist to help that patient, or they can’t get the care they need, they go elsewhere. And the hospital loses that income that would be generated by that patient.

Kelly: True.

David: Those revenues. Once those costs are understood, leaders can compare them against the cost of a retention strategy. It costs somewhere between eight hundred thousand and a million on average to replace a physician, depending on your specialty and location. And for other skilled employees, the general rule of thumb is– it can cost more than double the salary to replace someone with skills. Now, you multiply that by the percentages of turnover that hospitals have– and the question is not simply, what does retention cost? The better question is, what does turnover cost? When organizations perform that analysis, they often discover that preventing turnover can generate a significant financial return. You see, turnover is not just an HR issue. Not anymore. It is a financial issue. It is an operations issue. And so many hospitals operate on such slim margins–

Kelly: Definitely. Yep.

David: –absolutely, that when you get rid of– when you mitigate turnover cost and literally take a portion of that cost and turn– or all of it, for that matter, and turn it into a growing and compounding asset on the balance sheet, it becomes amazing what it can do to the bottom line. And like any financial issue, it should be evaluated based on its impact on the organization’s performance and long-term profitability.

Kelly: Yeah, I mean, the true cost of turnover is key. I mean, I agree with everything that you’re saying here. So how can hospitals implement retention strategies without increasing net operating costs?

David: Oh, they so can because they already have a turnover cost. They know it. They track it. I’ve sat in on so many conversations where they talk about turnover cost percentages. And I’ve always heard them talk about, well, the turnover cost for this group, our nurses is X, and the turnover cost for this group is Y and so on. But I’ve never heard them talk about turnover in the cost of dollars. I actually, on my website, I have a free turnover cost calculator that people can go and visit and download. And they can adjust it to however they want it to work. But they will end up with right in the ballpark of what turnover is costing them. And that website is talentretentionplans.com. And it’s just so that they can get that if they would like to do that. Now, if you can take a portion of that turnover cost– and every financial professional will tell you, if you’re in business, whether you’re a for-profit or nonprofit, you have to know your costs. You take a portion of that and put that into this plan, and it mitigates the turnover cost. And remember, this is key. We’re not spending the money. We’re literally turning it into an asset on the organization’s books and the organization’s balance sheet.

It’s one of the most important questions that hospital leaders can ask. Most retention strategies are treated as expenses. This is not an expense. Higher salaries, larger bonuses, increased 401(k) contributions, retention payments and benefits. They all require the organization to spend money today. Once that money is paid, it’s gone. And employees can still leave. A different approach is to create a retention strategy that is structured as an asset rather than an expense. Under this approach, the employer funds and owns the plan. And the employee never owns the asset. And the asset remains on the organization’s balance sheet where it continues to grow and compound over time. Now, imagine what that would do if for your key people, your doctors, your nurses, your technicians, your physician assistants, and all of the people that, shall we say, that we use to build the insurance companies, if they remained in place, and they didn’t leave, wow, look what that would do to your bottom line. And that’s where the money to fund the plan comes from. We’re simply taking a cost and turning it into an asset. And now the employee agrees to stay, and they have a serious, substantial reason to stay should they fulfill their end of the agreement. That alone creates a powerful retention incentive.

But there’s another feature that makes this approach particularly attractive from a financial standpoint. Because the asset compounds over time, it can grow to a point where the employee receives a significant financial benefit that they were promised, while the organization simultaneously recovers its investment in full. In many cases organization can recover more than it invested. That means the strategy can achieve something very unusual. The employee receives a meaningful long-term benefit, the organization recovers its investment in full and then some. The plan can actually generate additional value for the organization. From a balance sheet perspective, the net cost can approach zero while improving workforce stability. That stability changes the game. Instead of asking what will retention cost us, leaders can be asking, how can retention strengthen both our workforce and our financial performance? Most retention strategies, as I said, create an expense. This strategy creates a growing and compounding asset.

Kelly: Yeah, positively affecting the bottom line for sure.

David: Absolutely, it does.

Kelly: Yeah. So, if you were advising a hospital CEO preparing to retire in the next few years, how would you structure retention to protect their legacy?

David: Every CEO wants to leave an organization stronger than they found it. It’s just the way they’re built.

Kelly: Yeah, of course.

David: Yeah. One of the greatest threats to a CEO’s legacy is instability after they leave. Key people depart. Institutional knowledge disappears. Performance suffers. Momentum slows. I would focus on strengthening retention among the hospital’s most valuable professionals before the transition occurs. The objective would be to create continuity, preserve expertise, and maintain organizational stability. A strong leadership legacy is not measured only by today’s results. It is measured by how well the organization performs after the leader is gone. Retention plays a major role in making that possible. The most successful leaders don’t simply build organizations that perform well today. They build organizations that continue performing long after they leave.

Kelly: That’s their legacy, right? They’re part of it.

David: Legacy. Yeah.

Kelly: Right. So, what separates organizations that successfully retain top talent from those that just continue to struggle?

David: Organizations that continue to struggle with retention often focus primarily on current conditions. Organizations that succeed focus on the future. The best organizations understand that talented professionals are constantly evaluating where they can build the strongest future for themselves and their families. When employees believe their future is stronger somewhere else, they leave. They’re out of there. When employees believe their future is strongest right where they are, they stay. That is why I often say that people stay where their future is strongest. The most successful organizations create a future that employees do not want to walk away from. They understand that retention is not simply an HR issue. It’s a financial issue on both sides of the equation. It’s an operational issue. It’s a leadership issue. And increasingly, it is a competitive advantage. Organizations that understand that principle and build their reputation strategies around it consistently outperform those that do not. In today’s healthcare environment, retaining highly skilled professionals is one of the most effective ways to improve stability, strengthen performance, and protect the bottom line.

Kelly: Well, thank you so much, David, for sharing all these insights with us on people’s day where their future is strongest. And also, we’re going to link to that free turnover cost calculator that you mentioned. And if a listener wants to learn more or contact you to discuss this topic further, how best can they do that?

David: Oh, the best and fastest and easiest way is connect with me on LinkedIn. I’m the only David Alemian on LinkedIn, so I’m easy to find. And if they go to my profile, they’ll see my email address is there, my phone number is there, my websites are there, so they can find me. I’m really passionate about this. And if people have if your listeners have questions, I’m happy to spend time with them and answer any questions that they may have. Because good health starts with good healthcare, and nothing is more important than quality healthcare.

Kelly: Completely agree. Well, thank you so much. And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…

[music] This concludes today’s episode of The Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit besler.holdings/podcasts. The Hospital Finance Podcast is a production of Besler Holdings.

If you have a topic that you’d like us to discuss on The Hospital Finance Podcast or if you’d like to be a guest, drop us a line at contact@besler.holdings.

---

---