Employees want to know that they are a part of the team. They want to feel that they are an asset to your future growth.
But, don’t forget about money — you should pay your employees what they are worth, what the market dictates and what your competitor down the street would offer a first-rate tradesman to steal him away from you. So, while money isn’t the number one reason why employees leave, it still plays a role. After all, would a company that says it really values you pay you poorly and offer no benefits?
Here’s another truth: Turnover is costly.
While companies know that employee turnover is expensive, most cannot quantify the cost. Estimates range from 25% to almost 200% of annual compensation.
Turnover is even more expensive if you add in how much money is wasted because of the mistakes, bottlenecks, redundancies and inefficiencies that result from turnover. And let’s not forget the lost productivity that results because the owner may be distracted from his primary responsibilities, or when other employees have to fill in and pick up the slack when an employee leaves. Finally, turnover can damage customer relations and employee morale, which will affect your bottom line, too.
Now that you have a better idea of what causes — and does not cause — your turnover problem, what steps can you take to alleviate the problem?
Create a Stronger Team Atmosphere
Have you ever heard an employee telling a customer or friend that this was the best company he has ever worked for? Or that he enjoyed the job and his coworkers so much, he wouldn’t work anywhere else?
It’s called “team mentality.” Those employees that truly enjoy working for their companies and with their coworkers are buying into the team philosophy. If you don't have one, create it. If you have one, promote it.
“Our employees know they are part of a winning team and they are proud of that,” says Erik Anderson, CGB, GMB, CAPS, vice president of Anderson-Moore Builders, Inc., in Winston-Salem, NC. “Our employees know we are here to help them, both personally and professionally.”
Don Strong, CGR, president Brothers Strong in Houston, says he keeps his turnover rate low because he involves all employees in marketing plans, advertising efforts, production problems and solutions during weekly sales or production meetings.
“The last item on every agenda is always, ‘Ideas anyone? Any new products we should know about?’ ” says Strong. “This shows our employees that we value their ideas and opinions. We also have a company philosophy stating we will back any employee’s actions no matter what. If the employee makes a bad decision that costs the company money, the decision is discussed in detail. Remedial and preventive plans are developed to find solutions to the problem. At no time do we ever discourage or admonish an employee for doing his job.”
This philosophy that “We are all in this together” is the foundation of many successful companies. Do you project the same atmosphere in your company? Evaluate how your employees view their relationship with your company.
Not Just Words — Deeds and Attitude, Too
“Studies show that compensation is not the top ranking requirement for a job, or conversely, the reason for leaving,” says Greg Miedema, CGR, CAPS, CGB, president of Dakota Builders in Tucson, AZ. “Job satisfaction, positive feedback from the owner or manager and self-direction all rank higher.
“Self direction/control is a big winner in this industry, especially with older, more experienced folks," Miedema notes. “They not only don't need to be watched and told what to do every 30 minutes; they expressly don't want it and won't put up with it.”
Strong agrees. “I am convinced that positive morale and attitude are as important as compensation,” says Strong. “We make it a policy that our key personnel attend the board of directors meeting. Everyone knows exactly how well or badly the company is doing. If a new employee benefit is offered or terminated, all employees know why.”
Another aspect of the “attitude” of a company that employees often judge is what comes out of the corner office. In the case of S.N. Peck, Builder, Inc. and Case Handyman® Services of Chicago, its employees see owners who don’t just care about the almighty dollar. They see bosses who give back to their community and ask their employees to stand beside them when they do it.
“My husband and I, co-owners of our two companies, are deeply engaged in creating a better future to be enjoyed by all people,” says Barbara Rose Peck. “Our companies have sponsored events to raise money for AIDS research, trained entrepreneurs from emerging democracies, built homes with Habitat for Humanity, promoted the well-being of women and girls and worked to end the persistence of chronic hunger. Our employees are proud participants in these activities. That counts, too.”
Invest In Your Employees’ (And Your Company’s) Future
While teamwork and great attitudes help employees “believe” in what they do, another important factor to employee satisfaction is growth. Employees want to grow personally and professionally in their work.
Many employers view this as an important key to keeping employees and, therefore, more and more invest in training and educational opportunities for their employees.
“While we offer a decent benefit package, the most appreciated benefit is our training program,” says Peck. “Some of our top people and oldest employees started with us as laborers. They are now skilled team members and very loyal. We pay well but do not match union wages. On the other hand, our work is steady and year-round.”
Anderson says that while his company has no set “training plan,” he does offer educational opportunities to his employees. “We ask them what they need to make their job better, we ask them what they want from their job, and then go from there in helping them get the training they want and need.”
Helping your employees get ahead will pay off whether you help your employees pay for college courses, hold computer/technology classes at the office or enroll employees in advanced trade training courses. Your employees will stay because you have invested in their growth — and your customers will appreciate your employees' newly acquired skills and knowledge.
Recognition Also Plays a Key Role
Another important piece to the turnover puzzle is recognition. Employees need to hear praise for the good work they perform. Recognition plays a key part in company morale.
Some companies go beyond a pat on the back for good work. Some tie in rewards programs to employee morale.
“We have a bonus plan that is directly tied into the gross margin of the company,” says Anderson. “This shows employees that their actions directly influence how much of a bonus they receive. The more efficient they become, the more money they will receive. The more successful our company, the more successful they will be.”
Miedema says his company also has created an incentive plan to help reduce employee turnover. “We encourage our employees to buy into the budget and company’s well being. We essentially ‘split’ any excess gross profit that comes in over our original budgeted gross profit.”
Step back and evaluate your company. Ask your employees what they would like to see happen. If the feedback is not unreasonable, implement some of the suggested changes to keep them happy.
While employee turnover will always occur, you can control the damage it does to your company. By initiating programs that show your employees that they are important assets to your organization, you will keep the best employees from walking across the street to your competition.
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