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How to Attract and Retain Employees

Brian Bastis and Pete Ryan

Employees: They are your greatest asset or your biggest liability. Like any investment, there is always risk but the rewards can be tremendous.

Your employees are undoubtedly your largest expense. According to Chart Your Course International, it costs an average of 2.5 times an employee’s salary to recruit and train him or her. Moreover, if turnover is an issue in your organization, you likely spend even more money to replace terminated employees. For an hourly, low-wage employee, those replacement costs can run between $4,000 and $7,000. Specialized, highly trained workers such as nurses generate costs that can be as high as $40,000 to replace one. Losing a top-level executive can result in replacement costs of $125,000 and up.

Understanding Employees’ Job Satisfaction

The key to attracting and retaining employees is to understand them in the first place. As simplistic as that seems, many employers’ perceptions are off base regarding their employees’ job satisfaction. According to a Salary.com 2007/2008 Employee Job Satisfaction and Retention Survey, 60% of employers feel that they are “somewhat perceptive” and 24% feel “highly perceptive” when assessing job satisfaction among their employees. In actuality, many of these same employers were overly confident in their observations.

Though there are times when employee turnover is necessary or in the company’s best interest (i.e.-downsizing, poorly performing workers, etc.), there are do's and don’ts for organizations that want to attract and retain valuable employees:

Do ensure that top management and HR work together to pinpoint reasons for turnover and to implement strategies for better employee retention. As evidenced by the survey above, managers don’t always have a good handle on what employees are thinking. Conversely, HR may not be addressing management issues with top executives. In turn, management might not be forthcoming with HR about employee problems. Therefore, it is imperative that the two work together to determine areas of improvement. An assessment of each tier of workers should also take place. Recognize and reward top employees. Integrate better training and education programs for mid-level performers. For those who are unproductive, consider terminating them.

  • Do reexamine turnover and hiring and retention costs. Since turnover and hiring don’t occur on a regular schedule, the costs associated with them can often be underestimated. Take the time to get a more in-depth view of what it is costing your organization annually, and drill down on what it costs on a per employee basis. You may be astounded by the size of the numbers.
  • Don’t dismiss the reasons an employee left the company. The reasons employees leave can reveal quite a bit about the state of an organization. There might be some trends in your attrition rate as well. Have your HR department conduct an exit interview with the terminating employee. Such interviews are a good opportunity to shed light on why employees are leaving. Is it lack of advancement opportunities? Do supervisors micromanage employees? Does your company offer little in the way of benefits?
  • Do perform a comprehensive cost analysis. Individual costs might seem inconsequential but tally all the costs associated with employees and you’ll soon realize how significant they are to your bottom line. Expenditures to review include recruitment, interviews, hiring, orientation, training, benefits, salaries, other compensation, terminations, severance packages, unemployment, lost productivity, administrative costs, dissatisfied customers and/or lost business and temporary workers.
  • Do work collectively with HR, operations and accounting to keep costs in line. Without cooperation among these departments, efforts to allocate hiring, training and retention funds as well as keep these costs in line will be counterproductive. Collaboration among these groups will help to identify and address problems and will make them more inclined to better decision-making in the recruitment, hiring and retention process moving forward.
  • Don’t be reactive. All too often, managers do not act on staffing problems until they occur. Even worse, they panic and will offer the exiting employee a retention bonus or increase in salary rather than finding out why that worker is dissatisfied. Instead, take a proactive stance by preventing turnover in the first place and ensuring that employees have job satisfaction.
  • Do follow up on your hiring, training and retention strategies. Just because you’ve implemented them doesn’t mean they are effective. Follow up after six months, and then again, after a year. Have you retained top employees? Are hiring, training and retention costs in line with your budget? Has productivity and the bottom line increased? Are you attracting top talent?
  • Do tap into the power of technology to reach Gen-X and Gen-Y potential employees. Start attracting applicants with a fresh and modern website that emphasizes your corporate culture (an important job element among these two groups). Continue outreach through text messaging and emailing. Use these mediums to acknowledge receipt of resumes or for post-interview follow-up. Consider creating a Facebook or MySpace page to reach prospective workers. Tap into YouTube to underscore your brand and illustrate your appeal. The past election is a prime example of how these mediums can bolster outreach efforts and enhance your brand.
  • Do solicit feedback from your top employees. They can provide you with valuable insight into what’s working and what’s not, what might lure them away and what keeps them motivated, etc. In doing so, you will also enforce to these employees that they are valued.
  • Do be more discerning and diligent in the screening and hiring process. Laying the ground work may be time-consuming but it in the end, it will pay off. Due diligence including credit, drug, psychological, criminal, educational and professional background checks can stave off many hiring and retention problems in the future. It may cost more upfront but can save a tremendous amount of money and heartache down the road. Many companies now offer pre-employment screening tools that can be integrated into your organization’s software. Fine-tune recruitment efforts to reach the most qualified applicants. Implement more stringent screening processes. Make sure you have checks and balances in place to ensure that you are making smart hiring decisions.
  • Do create an HR paper trail. Clearly outline all company policies and procedures. Ensure that they have been clearly explained to employees and posted prominently in the workplace. Document all employee reviews, complaints and other HR-related issues. The number of work-related lawsuits is on the rise.
  • Don’t assume money is the only motivator for your employees. In fact, employees often seek intangible benefits such as recognition, autonomy and challenging work to fulfill their job satisfaction. All the money in the world won’t help you hold onto your employees. Even those who do stay for the money may not be performing up to par.
  • Do assess current benefits. Do you offer anything beyond the norm? Are there benefits that you may have overlooked but that could be attractive to employees? Aside from compensation, there are many benefits that can help to attract and retain good employees. Professional development tops the list for those responding to the Salary.com survey.
  • Do offer creative perks. Flex-time, telecommuting options and bonding activities are just a few perks that can enhance your hiring and retention efforts. The latter, in particular, appeals to employees. According to the Salary.com survey, relationships with coworkers is the main reason both men and women stay on the job. Additionally, women cite flex-time and telecommuting options as reasons to work and remain at a particular company. 

Employees are the heart of any organization. By taking the time to evaluate your hiring and retention practices, and then implementing strategies to improve them, you can strengthen your organization immeasurably. Not only will it result in happier employees, but more satisfied customers, a healthier bottom line and greater longevity in the marketplace.


Peter Ryan, CPA, is a co-founder and partner, and Brian Bastis, CPA, is a partner at Ryan & Wetmore. They specialize in accounting and consulting services for real estate firms, construction companies, medical practices, government contractors, and also offer tax compliance, planning and litigation support services. Ryan & Wetmore has offices in Vienna, Virginia, and Silver Spring and Frederick, both in Maryland. The company offers its employees job growth, training and higher education, bonding opportunities, flexible schedules, and even regular in-office bingo games. Peter and Brian may be contacted at 703-288-4777.

 


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