Employee Retention: Keeping the Best of the Best

When covering employee retention and turnover issues, the media primarily focuses on wages and benefits, but other factors, like quality hiring practices and trust, are equally important when trying to hire and keep the best employees.

Ken Pinnock, director of human resource services at the Mountain States Employers Council, a regional non-profit employer’s association located in Denver, says there is a lot of media hype about retaining top employees through high pay and extravagant benefits, like taking pets to work or Google Inc.-type free food and games. Consequently, small companies tend to think they can’t compete.

Money does matter, but it isn’t the only factor involved with retention issues, especially for the most dedicated employees. Pinnock says businesses should monitor their industries and the market in terms of what they are paying, but small businesses that may never be able to compete salary-wise can still compete in work life programs, flexibility and other areas that are just as important as money.

Furthermore, he says spending the appropriate amount of time and money in the hiring process on the front end and focusing on trust-building after hiring will do more for employee retention than the over-glamorized perks portrayed in the media. Pinnock adds that businesses must follow their due diligence when hiring by testing prospective employees for competency, checking references and backgrounds and by looking for candidates whose personalities will fit the business culture.

“Next, employers need to determine what they can do to build and maintain trust with their employees. The obvious works, but that doesn’t necessarily mean it is easy,” Pinnock says. Non-financial issues that kill trust and encourage turnover include the following:

• Making an employee do different work than what they were hired to do or what was described in the interview.
• Understating the work load when hiring.
• Providing little or no feedback about job performance.
• Constantly changing business rules, perks or policies.
• Devaluing employees by not being open to their thoughts and ideas.
• Not offering opportunities for job growth, which Pinnock says involves more than advancement opportunities and includes such things as training, educational and skill-building opportunities.

“Another trust killer,” Pinnock says, “is when the employer or supervisor doesn’t do what he says he’ll do or doesn’t take responsibility for his own mistakes. We tend to trust managers or owners who take responsibility for their own roles and hold themselves accountable for what they do, rather than casting blame elsewhere.”

For businesses that have turnover problems Pinnock suggests conducting retention interviews rather than exit interviews. “Exit interviews are too late,” he adds. “Talk to your people who are staying and find out why they are staying. Ask them, ‘What’s keeping you here? What can we do better?’ Then build on your strengths.”

Ultimately, he says, retention boils down to the relationships, the most important one being between the manager and the employee. Managers or owners who empower their employees and present themselves as enablers will always draw loyalty from their employees.

Aside from being bad for morale, high turnover is expensive. It’s a disruption to business and is bad for customer service. Pinnock says losing one skilled professional can cost as much as two times the employee’s annual salary in lost productivity and hiring/training expenses. Replacing a non-exempt, hourly employee can cost almost one and a half times the employee’s annual salary.

Employees who are thinking of leaving generally become disengaged and check out mentally before they leave physically. Use the following suggestions to engage the hearts and minds of your employees before it’s too late:

• On an individual basis, determine what motivates your employees? Do they require recognition? (Some employees require little or no recognition, while others will leave you quickly if none is given.) Implement a program that motivates and recognizes your employees.
• Realize that work-life is a form of social networking and encourage work-related activities that help your employees feel like valued members of a team.
• Offer incentives of one type or another. They don’t have to be huge payouts and can take other forms than cash, like movie tickets, tickets to a sporting event or anything that generates positive feelings.
• Make your benefits information more accessible. If your company offers training or educational benefits, encourage employees to utilize the tuition reimbursement program and have a college administrator come to your company so employees can find out about classes and programs.
• Consider flexible working arrangements, where possible, such as telecommuting or job sharing.
• Provide and communicate clear career paths at the company.