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In a booming economy with the lowest unemployment figures in years, businesses of all sizes must devise innovative ways to attract and retain the best and brightest employees

management. Others insist on company-sponsored health club memberships, job-sharing options, tuition reimbursement, child-care assistance or overall focus on employee wellness. These days, benefit packages must be customized to fit the needs of each employee; if a manager is already covered under another insurance plan, for example, she may prefer paid parking or home care for an elderly parent.

“People don’t leave jobs because the 401(k) match is a percent lower here than it is at other companies. The issues [are] more [about] the environment and the work itself,” says Branch. “So I think companies that try to solve the retention issue by throwing money at the problem are really taking a shortsighted approach.”

In fact, in the AMA study, respondents rated perks and flexible job arrangements much higher than pay incentives. “The shortage of skills is so widespread that money is not enough,” says Eric Rolfe Greenberg, AMA’s director of management studies. “Money is the beginning, but anyone down the block can match your money. What they cannot match so easily are your work-life policies, your skill-enhancement policies, your opportunities for promotion and your understanding that these people want a life outside the office.”

Nevertheless, you can’t rule out good old-fashioned dollars and cents. Salaries, of course, must be in line with your competitors’. Signing bonuses are particularly attractive for young employees who are just beginning to build their bank accounts. So are stock options, especially for entrepreneurial types who yearn for a piece of the company pie. “IT professionals are asking for stock options more than anything else right now,” says Martha Daniel, president of Costa Mesa, California-based, Information Management Resources Inc. (IMRI), an 8-year-old management consulting firm specializing in e-commerce. “Their No. 1 criteria for moving to a new job is ownership in some form or fashion. And that’s coming at all levels, not just the executive level.”

The secret to keeping employees happy, successful business owners agree, is to stay open-minded and flexible. And how do you find out what they want? Simple: Ask them.

Carolyn Jones, president of C. J. Enterprises Inc., a 20-year-old records and information management firm based in Chattanooga, Tennessee, allows her 130 employees to participate in company decisions, including the choice of one new benefit each year. So far, the package includes complete dental, health and vision insurance; tuition reimbursement; direct deposit payroll options; a lucrative profit-sharing plan and an alternative work schedule that gives employees every other Friday off with pay.

Just as important, Jones says, is showing an interest in the personal lives of your workers. “When people are having personal problems or they’re working on a project, don’t just throw them to the wolves and not show them your appreciation,” she points out. “You don’t have to baby them, just show them that you care about what’s going on with them. Be a little bit lenient. Bend when you need to bend.”

This willingness to bend is actually one of the most cost-effective benefits you can give your employees, says Nancy Urell, a

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