Employee Retention: Creative methods - financial and otherwise - to keep the best!
By Evan HackelOn the surface, hiring and keeping good employees in today’s competitive hiring market seems simple . . .
If you just pay more than everyone else, you will recruit and keep the best employees.
Of course it is not that easy, because if you believe and apply that principle, another business can just outbid you.
Retention Builds Profits
Let’s give this conversation some context. Losing a well-trained, successful employee is very expensive. Some considerations:
Hiring is costly. For me, I have found that I normally need to make two or three hires to find one really good employee.
There is no guarantee of payback. Recouping those higher salaries you pay doesn’t necessarily provide rapid or dependable payback. Paying employees more doesn’t mean you’re necessarily recouping the extra money you pay.
Great employees are more productive. They make fewer costly mistakes and the high-quality service they provide brings in more customers.
The payback can be greater than just the dollars you spend. Additionally, if your labor costs are normally 25%, a 1% price increase can cover a 4% pay increase.
So we see that simply raising wages isn’t the answer. The key to business success is the ability to recruit high quality employees and retain them.Here are the keys to being an attractive company to work for:
Provide good health insurance. People need it and will leave if you don’t provide it. Additionally, annual deductibles that employees must pay will discourage them from leaving, even for other jobs that offer health insurance.
Train, Train! Younger generations desire to work at companies where they can grow. Providing training, which allows your employees to grow, will be a game- changer. Also, today most learning management systems (LMS’s) offer personal development training; some offer personal development courses that you can add on. Having a culture of training will make a big difference and will cost less than losing employees.
Offer retaining pay. For instance, if you offer a $2.00/hour increase in compensation (retaining pay) on an employee’s work anniversary, the result can be a $4,000.00 increase in pay, which is something employees will find worth staying for. This will cause your employee not to want to leave before a year has passed, which will result in the loss of the retaining bonus. Is it better give someone a pay increase of $2.00 that is not tied to staying, or a $2.00/hour retaining bonus? The retention bonus will cost the same, but greatly improve retention. Also, if the employee leaves early, you will never have to pay the retention bonus.
Also offer productivity bonuses. Clearly define key KPI’s (Key Performance Indicators) that your employees should aim for. Those incentive bonuses will enable your employees to earn more while you earn more at the same time.
Provide feedback. Employees like to know how they are doing. They want coaching too. Remember, many employees leave because they don’t feel appreciated.
Use the 5/1 rule. This means making sure that you provide five pieces of positive feedback for every piece of feedback you give that employees could potentially perceive as negative. This is a simple principle which, in my experience, has provided exceptional improvements in employee satisfaction and retention.
Replace traditional yearly (or twice-yearly) job reviews with frequent touch base meetings. Traditional reviews usually are built around the question, “Tell me what you didn’t do well in the last year.” In contrast, touch base meetings can start with the positive question, “Tell me something you have done since our last touch base that you feel especially good about.” When you shift the paradigm from negative to positive, your employees will feel good about their work, enjoy working for you, and stay with you for the long run.
In Summary . . . There is more to retention than just paying more. With dedication and imagination, you can find many creative ways to get more value from every employee you hire and train and motivate them with opportunities to grow.If you are determined to win, I encourage you to apply all the strategies I describe above.