Personnel(ly) Speaking

A Monthly Newsletter from

Personnel Management Systems, Inc.

July 2006

Employee Retention in an Improving Economy –

And It’s Not Just About Money

Are you asking yourself either of these questions lately?

“We pay well but still have high turnover. What’s wrong with our employees?”

“We don’t have a lot of money and are starting to lose valuable employees. We’re nice people – how do we make good workers stay?”

As the economy heats up, you may be watching some of your valuable employees find new opportunities and leave. How can this be? Just a few years ago, these same employees were knocking down your door begging to work for you. Do they have no sense of loyalty?

The fact is that if a company is paying comparatively to the market and is still watching employees run out the door, this is a warning sign that something else is wrong. While it’s definitely true that most employees no longer stay with one employer throughout their careers, organizations should expect to keep workers engaged well past the initial training phase. Most of the time employees will stay in a positive, enriching work environment if they feel fulfilled and satisfied in the company and in their work, even if they could make a little more money elsewhere.

If your company is experiencing high turnover, a good way to get to the root of the potential problem is to take a thorough, objective look at your work environment, culture, benefits package, and performance reward system. There are a number of ways to do this, such as conducting an employee attitude or benefits survey, hiring a professional to meet with focus groups, or requesting that supervisors and managers ask probing questions about job satisfaction during the performance review process. You can also simply ask yourself and other members of management some telling questions: Are you experiencing high turnover in a specific department, or under the direction of a certain manager? Are exit interviews showing a high response rate regarding a particular issue? Do you have an inordinate number of grumbling, complaining employees – and what are they saying?

Be prepared for some hard truths to come out of this analysis, and remember that blaming your employees won’t help. While there will always be a few perpetual complainers in the bunch, you as a manager or owner have to take responsibility for the work environment. If you find that there are a number of disgruntled employees in your midst, this kind of toxic work environment will only get worse if you don’t figure out the underlying problems and determine how to change them. And the good news is: you can change them.

After deciding on the key issues, make an action plan of how to improve on the matters that arose. Ask employees, supervisors, and executives alike for their ideas about what would enhance the work environment. Some simple ideas to improve overall morale and job satisfaction include:

• Implement a recognition program: Many studies have shown that one of the most effective ways to motivate the workforce is to recognize workers for a job well done. This can be as simple as making a “top-down” effort to notice and appreciate the things your employees do every day. Point out the small things and be sure to mention to your workers how much you appreciate their hard work; encourage managers to do the same. If you want to go a bit farther, you can create an informal recognition program. An easy way to do this might be to provide special “Great Job” notecards on which employees and supervisors can write specific instances when others went above and beyond. These can be presented at meetings or just given to individuals as they do something great.

• Help employees manage their careers: Talk to your employees about their skills and interests, and make sure that what they’re doing really fits their personalities and interests. If not, can you make some adjustments to a position’s job duties or responsibilities? Can you be flexible in how a person does their job to help them feel empowered and take more ownership for their position? Is there another position in the company to which you could transfer the person?

• Award achievement: Think about the values and goals of the organization, and award people for outstanding achievement in these areas. If exceptional customer service is a cornerstone of your business, create an award program that recognizes individuals when they provide great service. In addition, you could recognize full work groups for fantastic monthly customer service ratings. Awards could be in the form of a plaque given at an awards banquet to recognize individual accomplishments, or a prize to each recipient in the work group such as a cash bonus, gift certificate, or a team outing on company time.

• Communicate succession and advancement opportunities: Whether this is an official, written program or more of an informal effort to communicate advancement opportunities, employees will often feel more job security if they know there are places to move within the organization if they work hard and hone their skills.

In order to promote an engaged and motivated workforce, managers and owners need to be committed to learning what works for your company and employees. The improved labor market means you will likely need to come up with more creative ways to retain top employees and keep your workforce engaged so that your organization remains competitive in the marketplace. After all, many employers say their people are their greatest assets – but do you really believe it?

For specific advice and other ideas regarding employee relations and retention issues, call Personnel Management Systems, Inc.

Personnel(ly) Speaking is a monthly comment on HR issues of importance. It is intended to provide general information and must not be construed as legal advice. Reproductions are allowed as long as credit for this information is given to PMSI. We welcome your comments, questions, and concerns. © PERSONNEL MANAGEMENT SYSTEMS, INC., Corporate Office (425) 576-1900, Colorado Office (720) 497-0200, www.hrpmsi.com.