Six Tips To Retain Your Employees

In today's tight labor market, it is hard to find good employees, and it is all the more frustrating when the good ones quit. The Brookings Institute estimates the cost of replacing a professional or managerial employee at 1.5-2 times annual salary, and 0.75 times annual salary for administrative or production employees. These costs including placement fees, sign-on bonuses, relocation costs, perks and incentives. They don't include harder to measure but equally painful costs such as lost business, cancelled projects and delayed product deliveries that often result from employee turnover.

Estimates of turnover in the information technology industry range from 16 percent to 25 percent. Say your company employs 20 managerial or professional people earning $50,000 per year. Replacing 25 percent, or five of those people, will cost you upwards of $500,000 in a year, plus unspecified damage to your company's projects and business relationships. It make sense to put time and money into retention plans.

To whittle down those turnover percentages, hiring managers have to pay competitively, but that is only the tip of the iceberg. In the New Economy, skilled employees consider well-paid jobs a given. What they really want is a job that satisfies much higher levels on the hierarchy of needs: Opportunity for advancement; the chance to learn new skills; a great team. They won't put up with poor management and bad bosses.

That means you have to consider many complex factors in addressing retention. Exit interviews and pull-no-punches employee satisfaction surveys are invaluable tools. But as a general guide, here are some places to start looking for weak spots in your retention strategies.

Right Fit

This is your key preventative step. You are not going to retain an employee who doesn't have the skills, experience, availability and attitude for the job. Identify the specific attributes required for success and prioritize them carefully to help you find an employee who fits well into the job. By the way, if your employees often complain of long hours or excessive demands, only the deadwood will stay with you long. You must rethink your processes to create a sustainable, saner work place.

Enlightened leadership

A top reason people quit their job is because they dislike their manager. Leadership is a tough job. Invest in leadership development. Leaders need encouragement, skills development and coaching. Worst case, allow employees to change departments or areas to find a manager they like and respect. You will be rewarded with maximum productivity.

Team fit

Another top reason people quit is they dislike their team members. If an employee will have to work closely with others under demanding schedule conditions, it is crucial to facilitate the personality fit between team members. Reward and support the development of good team skills and recognize the value of interpersonal awareness.

Achievement opportunities

Here is another generation reminder: In the "old days," new employees expected to work for a firm for 15 or 20 years. They would "pay their dues" in the first few years on dull assignments until they worked their way to choice projects. Now, employees demand a speedy timetable both for moving up in responsibility and frequent recognition of success and achievement. Employers must meet those needs. Set expectations and corresponding reward systems for short-term work goals such as learning a particular tool or getting acquainted with proprietary software. Make employees feel successful early.

Income and benefits in the ballpark

You do not have to offer the best package on the market to retain employees, but you must stay competitive. In the last year or so, stock options were a popular benefit, but with the recent plunge in high-tech stocks, employees are taking a much harder look at options. Avoid depending on this benefit heavily. It also is important to understand that different types of employees place varying amounts of value on your benefit options. For instance, according to research by Watson Wyatt Worldwide, women tend to like spot bonuses and shortened work weeks, while younger employees prefer above-market and over-time pay. Technical employees like flexible schedules, while single employees value them less. Smart companies offer a choice of benefits to meet individual needs.

New challenges

Ever wonder why you often read about entrepreneurs cashing out millions of dollars from one company only to launch their next venture? The answer lies in new challenges. Some of the most talented, capable members of today's work force already have amassed large estates and really do not need to work. But they do, and in fact, they work just as obsessively as ever--in pursuit of their latest goal. Make sure you provide enough new challenges and opportunities for skills development. It may be the only thing that is keeping your best employees there.

Fostering a great work environment pays off in satisfied employees and eliminates a lot of frustrating disruption to your business. Think RETAIN: Right fit; Enlightened leadership; Team fit; Achievement opportunities; Income and benefits, and New challenges to keep good employees happy longer.