By Vincent Dajani
Finding and keeping your superstar employees is no easy task. And losing an employee doesn’t just cost money — it means you’re losing time and, potentially, valuable expertise. Nevertheless, business owners often don’t take the time to analyze the success of their retention efforts before it’s too late. So what strategies should you pursue to keep those employees you can’t afford to lose, and how do you find them in the first place?
Retention begins with hiring, says Ted Karkus, CEO of ProPhase Labs, makers of Cold-EEZE Cold Remedy. The company’s retention rate is 90 percent. “The key to hiring someone is first determining the job and the responsibilities. Different execs might have different ideas of what the job responsibilities will be. All key members of the team must be in agreement [as] to what the key responsibilities are, and what the most important characteristics of that potential candidate [are].”
Too many business owners hire quickly, just hoping to fill a position and keep that person with the company for years to come. But it really is all about having the right people in the right positions. As a business owner, you can only do that by knowing the desired skill set of the position, as well as the cultural fit of your company, says Ed Fleischman, founder and CEO of The Execu|Search Group, which has a retention rate of 84 percent. “Most CEOs are looking at revenue and profitability as their assets.” Instead, consider people your assets, he suggests.
If a team member leaves, that employee creates a gap in your business; one that you need to fill if you want to function. But “if someone gives you two weeks’ notice, you’re not going to refill that person in two weeks,” Fleischman says. “It’s going to be four weeks, six weeks.”
An example of a company that’s handled recruiting perfectly is Zappos, says Joe DeMattos, CEO of the Health Facilities Association of Maryland, which has a retention rate of 90 percent. “One of the things they did on the HR side was that they decided they weren’t going to hire any ‘if/but’ employees.”
If/but employees, DeMattos explains, are employees where a hiring officer might say, “they’re perfect for the position, if only they had …” Do not hire these employees, DeMattos warns. The right ones are out there, and only by finding that perfect fit for both the position and your corporate culture are you on the right track toward a high retention rate.
What do employees want? In other words, why do employees stay at certain companies longer than others? In short, it’s based on that individual employee’s passions and goals. And it’s your job to find out what those are, says Kristin Reynolds, director of HR for Point Breeze Credit Union, whose retention rate is 90 percent.
“We’re pulled in so many directions as employees,” Reynolds says. “We all have home lives, and for everyone, that’s a big struggle. The number-one reason for high employee retention is the opportunity for individual career growth.”
All employees have their reasons for wanting to go to work each day, and finding their passions will allow you to find the right opportunities for them. But you can’t forget about having competitive benefits and work-life balance, says Reynolds.
“Pay people fairly — make sure you are in the 40th percentile or better for pay,” says Dave Popple, Ph.D., president of Psynet Group, whose retention rate is 100 percent. “Create opportunities where employees feel like they are part of something bigger than themselves. And give opportunities for employees to become better through training, coaching or stretch assignments.” This is especially important with millennials, who want to feel that they’re making a difference with their work.
CEOs need to really stress the importance of making employees feel appreciated, says Stefani Markowitz, president and CEO of Charles Rutenberg LLC, whose retention rate is 96 percent. “It builds trust, it helps motivate, and when you feel like it’s more of a family, there’s a warmth and an energy. Then it’s a really nice place to be a part of and people are enjoying their work.”
Be sure to listen to your employees’ feedback and needs. “I have an open-door policy and I’m here if and when they need me. I’m very available to my agents,” says Markowitz. “Giving back is very important in any industry. Listening and having face time with the people who work for you [to make them] feel like they’re being heard.”
Insight into your employees’ motivations, paired with competitive benefits and a reassuring corporate culture, will put you in a position to keep your key talent.
Your steps to the perfect retention rate
- Mine employee feedback for potential problems. If a problem exists that’s causing employees to want to look for other places of employment, finding it and fixing it is the first step toward improving your retention rate. Use exit surveys to gain insight into reasons for leaving and find sources of frustration for employees, says Ben Landers, CEO of Blue Corona. You need “a strong ownership culture where when someone sees something that’s not right — something that could ultimately cause someone to leave the company — they take initiative and work to address it,” he says.
- Understand the importance of your team. The cost of losing an employee is significant, especially when it comes to the damage that can be done to a once-cohesive team. “If you’ve got a team of 10 and you lose one employee, in my experience, when you change one member, you’re changing the dynamic of the entire team,” DeMattos says.
- Do your part as CEO. “[We] work to identify problem sources at a variety of levels. … Our senior leadership holds a meeting with me to discuss successes and challenges with the staff,” says Chris Laughlin, president and CEO of LMO Advertising. It is important to trust in your employees as well. By giving them the power to manage their role within the company, you are increasing the likelihood that they will stay.
- Communicate constantly. Hold staff meetings, send out company-wide updates, and understand that not everyone communicates the same way. “Keep everyone up to date,” Reynolds says. “Employees like to see those things and understand what’s affecting their day-to-day.”
- Offer growth opportunities. Everyone wants to improve and grow. Find their motives and passions, and get them on the right track. “Increase the level of training and professional development,” says Helen Stefan Moreau, owner and president of The Midtown Group. Along the same lines, if employees feel that they are not in the right position, you need to fix it before they decide to look for employment elsewhere.
- Don’t tolerate poor performance. “As a president, I’m here to help and encourage you. I try to lead by example, but at the end of the day, employees have to be on top of their game in order to be successful,” Markowitz says. The worst thing you can possibly do is consistently tolerate low performance, she says. Accepting poor performance lowers the morale of the high-performing employees. Those top employees have alternative job opportunities, and they might go somewhere else. Worst-case scenario, you lose the top employees and end up keeping the others.
- Acknowledge and celebrate your employees. You are going to have high-performing employees — that’s a great thing. Ensure you’re celebrating their achievements and letting them know that you appreciate their work, Fleischman says. “Very good candidates are very hard to get. You’re going to favor certain people, but in an organization, be careful about favoritism. I could be working just as hard as someone else, but for some reason, if you like another person working at the same pace better, I’m going to notice. As best as you can, eliminate favoritism. Don’t treat your A-players differently if it could hurt a whole team.”
We asked local business leaders to weigh in on their strategies for innovation, and any results they’ve seen.
“From our perspective, job satisfaction is the biggest driver of retention, and we find that control of one’s job is often more important than salary. If employees are held accountable for things they cannot control, job satisfaction plummets and no amount of compensation will retain them for long. Money can be used to extend employment for a period of time, but it tends to be a shorter-term solution than managers expect. Another major factor is an employee’s understanding of the purpose of his or her position and how it contributes to the whole company. Not every position has a glamorous title, but [all employees] should understand how they fit in. Most people want to do good work, and if they know what that means and how it helps, they tend to engage more. We set up systems and processes that give people the tools and authority to do their jobs. Another essential change is communicating the direction and goals of the company. Sometimes such clarity prompts employees to leave the organization because they disagree, but that ultimately makes a company stronger.”
“My company celebrated its 20th anniversary last year and we are fortunate to have many employees who have been with us that entire time. I attribute this to a few critical items: availability of senior management, … benefits … [and] training. Our president knows each employee personally and is always accessible for questions, concerns, etc. This hands-on management approach makes employees feel valued and builds a corporate culture where employees become a part of our corporate family. Each employee has options to receive classroom-based as well as web-based training on products and soft skills. We also have at least one corporate event per year which is totally paid for by the company and usually includes overnight accommodations. As a small employer, we are very generous with our benefits. The company pays 90 percent of health insurance costs for employee-only coverage and 80 percent for employees who opt for dependent coverage. Employees are eligible for discounts on certain vehicles through a partnership with two of our manufacturers.”
“For us, it is about taking the time to do things right. In the search business, people are often trying to make numbers and staff are typically paid on commission for their placements. At TorchLight Hire, both internally and externally, we focus on finding the right person; not only based upon skill sets and experiences, but personalities and culture. Those last two factors are often the difference between making a match and finding a long-term employee. We continue to focus on the customer-service aspect of our business. By taking the time to get to know candidates beyond their resumes, we are able to create more robust connections for employer clients, and ourselves. In fact, we have an employee who came to us as a search client, but after interviewing her and assessing her background and desires, we realized we were the best fit!”
“I think one of the things that have impacted [retention] is having a culture where people can grow. Their input is so valuable that they feel that they’re a part of the growth of the company. People feel like they’re being heard, and they have great input for how we’re doing things. I take an interest in people’s personal life. I like to know when you’re coming in where it is that you want to go. It’s our responsibility to help them meet their goals. I expect them to grow. That’s the kind of culture we have. It’s an open-door policy. I think it brings continuity. My employees can tell me more about the issues, programs and problems that the community faces. … They know what our services are and what the community needs. ” CEO