Many entrepreneurs, managers and supervisors don’t realize how beneficial it can be to retain employees; this deceivingly simple idea can strengthen any business. An employee who has moved up through the ranks will bring new perspectives to each promotion because they will have first-hand experience from each preceding level. Read on for three tips to help business leaders retain employees and three benefits to doing so.
Unfortunately, many small business owners have to complete a range of tasks that would be tasked out to individual departments in larger corporations, particularly issues with accountancy, employee management, advertising and hiring. When these four areas weigh on the mind of the small-business owner, it hinders the company’s ability to seek growth opportunities due to micromanagement. By taking the burden of employee management and hiring off of the shoulders of the owner-operator, more time is freed to grow the brand and expand the business.
This can be done in two ways. The first is to create an in-house HR department, which, depending on the size of the business, can be overkill. An alternative is to outsource the responsibility in the same way many businesses outsource accountancy and advertising — with a PEO. A PEO can be a great way for employers to get a handle on their hiring inefficiencies and lighten their load simultaneously; for those in Arizona, National PEO is a local company that can handle locally specific problems.
Offer Competitive Benefits
According to the Society for Human Resources Management, the most frequently leveraged benefits to retain “high-performance employees” were health care, potential for career development and flexible working benefits. By instituting these three benefits, organizations are more likely to retain the highest quality employees.
Smaller businesses benefit the most by having flexibility; these small companies are less likely to have excess funds to spend on health care or enough upper management positions for promotions. Larger businesses benefit from promoting within, as employees already know the inner machinations of the organization. Additionally, a large business will be more likely to have higher positions to promote internal employees to. Two large corporations who have just exemplified this tactic are Microsoft and Wal-Mart, each promoting a new CEO from within.
Ask for Employee Feedback
This is a surprising and subtle means of retaining employees. There are two recommended forms of beneficial employee feedback. The first is job satisfaction surveys, both anonymous and named. By taking anonymous surveys, a company can identify potential issues while allowing shier employees the opportunity to speak up. Named surveys allow a company to target assistance to employees who are or aren’t satisfied with the workplace as a means of learning what can be changed.
The second form of employee feedback is a little less intuitive, that of the exit survey. This will specifically target turnover and identify the causes for termination.
Benefit From Cost Reduction
According to government research, “The cost of turning over a staff position can be anywhere between one third and three quarters of a person’s annual salary cost.” These numbers are simply unacceptable to a company of any size. The opportunity cost, therefore, can greatly outweigh the actual cost of providing the most competitive benefits to employees.
Experience Increased Productivity and Efficiency
This one is rather straight-forward. By reducing the amount of time the average employee has to train for their job, the company is able to increase the productivity and efficiency of John or Jane Average. If an employee has already worked for your company, they already understand how company processes work and will need less training time to master new responsibilities.
Enjoy Increased Competitiveness
Any company will be more competitive if it is given more efficient employees and savings of up to one third or three quarters of their salaries — that’s just common sense.
To illustrate these benefits, let’s look at a hypothetical scenario. Two competing construction firms are operating in the Phoenix area and each has approximately the same cost sheet because wages and material expenses are comparatively similar. Company A retains employees while Company B is plagued by regular turnover.
Company A pays one sixth of their employees’ salaries in health benefits, paid vacations and provides promotion potential. This enables the company to save on the costs of hiring new employees, and their retained employees work more efficiently as a team due to familiarity. Company A can, therefore, put in lower contract bids, and they will also be able to complete them more quickly than Company B. Which company do you think will be more successful? All in all, there is no drawback to employee retention.