How To Keep Your Best Employees
One of the easiest ways to relieve yourself of the pressure of hiring is to decrease the occurrences of employee turnover. Turnover is costly and disruptive, and the resulting strain on a company can limit its ability to compete effectively in today's business climate. The United States Department of Labor estimates the cost of employee turnover at one-third of the annual salary of the newly hired person. Costs include lost productivity while the position is vacant, recruiting and screening costs, interview costs, training costs, and the cost of reduced efficiency as the new employee learns the job.
The first step in increasing employee retention is to understand its importance. Obviously, you cannot eliminate employee turnover completely; it is a fact of business that people change jobs. You can, however, reduce needless employee turnover by doing all that you can to make certain you hire the right person to begin with.
Just imagine how much damage a bad hire with one month's job time can do versus the amount of business that a two-year veteran employee with a stellar performance history can garner for your practice. It is almost impossible to be too stringent with your employment requirements. My first hiring experience involved three applicants culled from a stack of a dozen or so resumes. I was told by management to pick the best of three. Today, when interviewing job candidates, the ratios are as follows: We receive 100 resumes, of which 60 are called on the telephone for brief interviews. Of those, perhaps 30 are invited to come to the office for an interview. Upon arriving at the office, these applicants are given two tests. Approximately one-third of these applicants pass the tests, leaving 10 applicants to be interviewed. For every 10 applicants that we interview, we are satisfied if one meets our criteria. The key here is not to hire the best of those interviewed, rather to keep interviewing until you have found the ideal candidate.
Eight steps to increasing employee retention:
- Be Sincere-Management must adopt the attitude that they will do what it takes to make their employees happy, and therefore, their employees will give them an honest day's work and remain loyal to the company. Employee retention means employee happiness. You cannot have employee retention without having happy employees.
Management Must be Supportive-Perhaps the most common reason for high employee turnover is what is viewed by the employee as unfair management. Managers must seem to support the needs of employees, while at the same time, they must be viewed as treating employees fairly. This does not mean that employees expect to be pandered to, but they do expect to be treated in a respectful manner. Many new managers take this need to be fair too far and direct all of their energies to accommodating employees and forget to discipline them when necessary.
Throughout years of interviewing multitudes of job applicants, I have found a few common traits that ring true for these applicants' favorite managers. "Firm but fair" is the best description of a good manager. If an employee has erred, let the employee know he or she made a mistake but do not belittle him or her. A simple rule is "praise in public, chastise in private." Many studies indicate that lack of respect and recognition is often the reason for leaving. Most employees, if they feel comfortable and valued, prefer to stay at their job, rather than look elsewhere.
- Provide Adequate Training-Employees inherently want to do a good job. It is imperative that employers offer adequate training to the employees, so that they know how to perform their job effectively. If employees do not receive adequate training, they are doomed to become poor performers until they can ascertain on their own how to do their job.
- Provide Guidelines-Employees need to know exactly how management wants them to carry out their job duties. It is absolutely necessary to have written protocols and procedures, so that employees know what is expected of them. All that good employees need are the rules to follow, so that they can do a good job. If they do not know the rules, then how can they perform to management satisfaction? Besides providing employees with a framework on how to do their job, protocols are invaluable when turnover does occur, keeping the employer from "reinventing the wheel" and having to constantly re-train new hires.
- Opportunity for Advancement-Employees must know that there is an opportunity for advancement within the organization. This may not necessarily mean that every employee has the potential of becoming a department manager. It does mean, however, that employees can become the manager's "right-hand man".
Human Resources Support-Employees must have someone who can assist them with their needs. This may take the form of a human resources manager who can discuss health insurance, days off, or any other issues that may arise. Warning: If employee guidelines are simply given to employees without explanation, employees could soon become embittered with the company. Often, taking the two or three minutes to explain to an employee why he cannot have a day off without notice may diminish the resentment the employee feels towards the company. One misconstrued conversation can become the "straw that breaks the camel's back" and cause a star employee to leave.
Also remember, a company needs to be flexible. You must bend the rules for employees on occasion, so that they know that you are willing to work with them. I have seen employees become disgruntled and quit over a disagreement on 30 minutes worth of overtime pay. Sometimes it pays to make the employee happy.
- Salary-It is important to realize that while money is not the major motivating factor for an employee's happiness, it is often what causes an employee to leave. Imagine that you pay salaries 5-10 percent above the market average for your employees. How many fewer employees would you lose? (Remember again the cost of high employee turnover.) However, a company cannot simply throw money at its employees and hope that this makes up for the company's shortcomings.
- Perks-What sort of perks do you give your employees to keep them happy and let them know they are appreciated? What stories do they tell about your company when they meet their friends at a party? Do they talk about their health insurance and the fact that they did not get a Christmas bonus, or do they talk about how the owner of the company and/or their manager took the entire office staff to lunch because they had a record billing month? The budgets for these types of events are usually small and the time requirements are not obtrusive. For example, you may allow each department to plan and host each event.
There are a number of extras you can offer your employees to make it more attractive to stay with your company. Most obviously, insurance, 401K plans, etc, but there are a number of incentives that you can offer that cost little or nothing:
- Personal notes thanking employees for achievements
- Desirable assignments
- Peer recognition
- Tickets to sporting events and shows
- Free beverages and snacks and occasional meals as appropriate
Perks do not have to be as expensive as those listed above. Simply close down your office one Friday afternoon at two o'clock to allow your staff to go to the movies or go bowling. Rest assured your business will not dry up and go away if you take off three hours one Friday afternoon. You can still have access to your pagers via the answering service or, if necessary, have someone in management stay and hold down the fort.
These small tokens of appreciation go a long way towards letting your employees know that you appreciate the hard work that they do for you. Remember the golden rule: If you take good care of your employees, they will take good care of you. You must invest in your employees' happiness in order to reduce your turnover. This reduced turnover will reward your business many times over.
Joe Sansone is chief executive officer of TMC Orthopedic, Houston, Texas.