Keeping Good People on the Payroll Is a Challenge

TEC Worldwide is an international organization of more than 7,000 business owners, company presidents and chief executives. TEC members meet in small peer groups to share their business experiences and help each other solve problems in a confidential round-table session. The following questions and answers are summaries of discussions at recent TEC meetings in Southern California.

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Q: Employee turnover is killing me. We pay above-market salaries, we give a bonus each year at Christmas, we have a good benefits plan, and we have a nice place to work. Yet my turnover rate hovers around 100% annually. How can I stop this revolving-door syndrome with my employees?

A: Your question is one that employers large and small are raising. With unemployment rates at all-time lows and competition for top talent intensifying, retaining good people has become the No. 1 challenge for many companies. CEOs who report having success in this area share four common approaches:

* They make employee retention a strategic priority. Roger Herman, a leading authority on employee retention issues and author of “Keeping Good People,” predicts that the ability to retain employees and maintain a stable work force will soon become the primary competitive advantage. Companies that go to the head of the class will be those that implement well-crafted, quantifiable plans for reducing turnover and increasing retention.

* They focus on workplace “quality of life” issues. Today’s workers want challenge, growth and learning opportunities. They want to be treated as adults and be involved in the decision-making process. “Hard” compensation (salary, incentives, benefits, etc.) may attract good people to your company, but the “soft” issues will keep them there.

* They make new employees feel wanted and welcome. In particular, they put extra effort into their new-employee orientation programs, ensuring that new employees receive the education (about the company, its culture and values) and training they need to get off on the right foot.

* They say “thank you” a lot. Survey after survey shows that the biggest complaint from employees is lack of recognition from the boss. For that reason, sincere, honest praise for a job well done will go a long way toward keeping your employees from bolting out the door. Make it a point to get out of your office and personally thank the people who make you a success.

The Hiring Process

Q: How can we avoid making common hiring mistakes--for example, overestimating an employee’s skill set or hiring someone who turns out to not “fit” into our corporate culture?

A: Given the high price of hiring and training new employees--and the even higher cost of making a poor hire--you’re wise to focus on improving the hiring process.

Try to develop a structured hiring process. Although this may seem obvious, many organizations lack a viable, systematic way of recruiting and hiring employees.

Ask yourself, “Have we defined the position thoroughly? Do we have a list of sample interview questions or other tools available for employees to conduct personality screenings of prospects? Do we have a comprehensive manual that outlines the hiring process, including employee benefits and corporate rules?”

Use past behavior to predict future behavior. Ask prospective employees to describe how they handled situations in the past--and request more than one example. Consider taping interviews for later review. Look into using validated tests to help identify top performers.

Keep in mind, however, that testing adds only one additional piece of information to the hiring puzzle. Never make a hiring decision based solely on test results. Check references. Although the information available from previous employers may be limited, you can generally verify employment dates, compensation and responsibilities by making a couple of phone calls.

Finally, remember that sometimes even the most carefully researched and hired employees don’t work out. Make sure to evaluate the specific circumstances, address problems immediately and, if necessary, remove the employee and begin the process again.

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If there is a business issue you would like addressed in this column, contact TEC at (800) 274-2367, ext. 3177. To learn more about TEC, visit https://www.teconline.com.