You’ve heard it before — it’s cheaper to keep them. Simply put, it costs less to retain an employee than to replace an exiting one. In fact, the American Management Association estimates that the cost of replacing an employee is equal to 30% of his or her salary.
In today’s global economy, companies risk losing knowledgeable employees to a competitor, another industry, or even another country. When an employee goes, so does his or her level of expertise, which could have an even greater impact on a company’s bottom line.
Employee retention is a hot button issue. According to A MetLife Study of Employee Benefits Trends, published in 2001, some companies, such as accounting firm Ernst & Young, have developed an office of retention.
Even in tough times, companies should commit to maintaining a staff that is knowledgeable and diverse, says Thurmond Woodard, chief ethics officer and vice president of global diversity for Dell Computer Corp. Woodard says diversity commitments create a work-friendly atmosphere. He adds, “people stay [at a company] when they can do things for their community,” such as attending a school function or a charitable event.
What can you do to keep talented employees from taking flight?
Understand what it means to be a retention leader. A retention leader is relentless in his or her pursuit of improvement. According to Avoiding the Brain Drain: What Companies Are Doing to Lock in Their Talent, published by Princeton, New Jersey-based Kepner-Tregoe Business Issues Research Group, a good manager will first take stock, then take action. Retention leaders keep their eyes on high performers and view people management as a strategic business issue.
Know what your employees need. According to Woodard and other industry gurus, most employees want the following: U.S. and global opportunities for promotions or projects, a balance between work and family life, competitive wages, mentoring into higher managerial levels, and, especially for those employees who travel a lot, more time off.
Acknowledge employees as experts. Everybody is an expert in his or her field. “As a manager, you should acknowledge employees as such,” says Dr. Mildred Boyd, president of Silver Spring, Maryland-based EduTech Ltd., which specializes in service training, outreach, and knowledge sharing. Boyd considers her employees to be master practitioners. “Once you listen to your staff and address their concerns and problems, you must validate them so they can refocus and get back to work,” she says.
Use cross training. You are not only molding the future leaders of your company, but you are also creating a group of people who can multitask. This creates a sense of pride and teamwork and prevents employee burnout. Also, employee thinking goes from “How is my performance?” to “How is my team’s performance?”
Recognize a job well done. Give credit where credit is due. Informal feedback can go a long way. Recognition programs are a great way to motivate people. In The 24-Carrot Manager: A Remarkable Story of How a Leader Can Unleash Human Potential ($18.95; Gibbs Smith), authors Adrian Gostick, Chester Elton, and F. Robert Salerno emphasize