Employee retention is a critical aspect of the success of any business. Maintaining a consistent employee base increases customer satisfaction and a more efficiently functioning organization.
Employee turnover can cost a business a lot of money. We have seen estimates that say the cost of losing a middle manager can be up to 100% of his or her annual salary. These costs involve hiring a new employee (recruiting fees), training costs and time (which is time not spent being directly productive), and reduced efficiency of other co-workers in terms of lost productivity.
The question of how to keep your employees from leaving the company is certainly important. We have compiled a list of what we believe are the top ten ways of retaining employees. Here they are:
- Make sure you hire the correct person for the job in the first place. Do the research on what skills the employee needs to be successful, and take steps to ensure the person hired is equipped to accomplish the tasks. Consider testing prior to hiring, from background, credit, or criminal to personality, or even a job-skills test. Some clients even do a working interview; we always recommend a temporary period of 30-90 days where the employee is being “evaluated”.
- Offer a competitive benefits package. Research what other companies in your industry offer and match or exceed what others are doing. If your company cannot match what others are doing, try to boost the other areas on this list.
- Ensure that your employees feel respected. Use the golden rule in your workplace and make sure that any managers working for your company do the same. If decisions are being made which change an employee’s job responsibilities, try to involve that employee in the discussion.
- Praise employees for work well done. Be specific in details about the behavior or results that worked. People will feel that they are a valued employee and will repeat the behaviors that bring them success.
- Provide performance feedback for improvement purposes. If results need to improve, communicate specific tasks or outcomes with specific time frames. Focus on the outcome desired. This should also be done in writing, with an agreement from the employee that he/she understands what the issues are, why they are important to the organization and their personal development, as well as a timeframe of when the results or change will be reviewed again.
- Be trustworthy in your communications with your employees. Do what you say you are going to do. If your company is facing difficult decisions ahead, be as honest as possible, as soon as possible. Too many entrepreneurs think they have to give a rosy picture all the time. Trust us, your employees know a lot more about the company than you think. And what they “know” might not be accurate (hearsay) so it’s up to the owner/management group to be sure accurate and honest information is being shared.
- Staff adequately. Try to ensure that your employees are not overburdened. Be fair about the distribution of work and avoid the temptation to give a new task to the one person who can always be counted on to finish the job.
- Provide clear expectations for employees. It can be demoralizing for an employee to spend time working on things that are not important to the employer. Make sure communication is open and if priorities change, let your employees know.
- Link employee pay to performance in consistent methods. If possible, try to make employee performance measurable and communicate that measurement up front, so that there are no surprises at appraisal time.
- Try to provide the perception of fair treatment of all your employees. Even if you know that you are treating all your employees equitably, sometimes it appears not to be the case. Make sure you do treat employees the same and maintain the appearance of that as well.
As we review this list we notice that compensation is not the only thing that is important to employees. However, we often seem to concentrate our efforts mainly on employee salaries. Employees value being an important part of the workplace as much or more as being highly compensated.
Follow these rules and watch employee turnover decrease while efficiency and job satisfaction rise for years to come.