Why Should You Focus On Staff Retention?

Labour Market Shortage. With unemployment at record lows, there is a severe lack of talented recruits. If other businesses have better working conditions and benefits, you are immediately at a significant competitive disadvantage.

Cost. The cost of replacing staff is enormous. The hard dollar costs can include recruitment fees, advertising, leave entitlement payouts, engagement of short-term temporary staff plus the cost of any new ancillary items such as mobile phones and laptops.

Time. Think about the time cost of writing advertisements for the position, job descriptions, interview questions, interview time, preparation of employment agreements, offers and phone and email.

Productivity. A major cost is lost productivity. Departing employees generally "shut down" over their resignation period. Often confidentiality and business risk may also require you to ask individuals to depart immediately leaving you without a key staff member. The lead time in recruiting a new replacement staff member, even if candidates are available in a short market, is normally a minimum of 4-6 weeks. This may take owners and other key staff away from their current priorities causing further productivity losses.

Impact on Your Team. The departure of key staff members has a negative impact on staff morale and culture as continuing staff have to "shoulder the load". When teams are already working at full capacity this can lead to further resignations as other staff struggle to cope.

Customer/Client Dissatisfaction. Your customers and clients don't want to experience any drop in service levels.

Your Only Opportunity Is Before They Resign. Rarely do resigning employees change their minds. By adopting a proactive approach to retaining staff you introduce a number of forums that allow issues to be tackled and resolved before it results in a resignation.

Staff Retention Strategies to Consider

Leadership - You. It all flows from you as the leader in the business. Nothing attracts talented staff more than a magnetic leader that demonstrates a clear vision and winning attributes. Assess your leadership style and consider why talented individuals would want to stay with the business.

Management. Extensive research has been conducted on the impact of different management styles in a workplace. Individuals, and particularly Generation Y, want to be engaged in the business. This feeling of "engagement" results in lower absenteeism, increased productivity and lower staff attrition. This of course creates better service, happier customers and greater profits.

Personnel System. Great businesses have a structured personnel system. This includes documentation of job descriptions, employee records, employment agreements, employment policies, induction process,

appraisal process and team/individual performance criteria.

Remuneration. This is an absolute. Commit to paying market salaries as a minimum and above market if possible. Losing talented team members because of basic pay issues is disappointing.

Regularity of Remuneration Review. Tell every employee how often their remuneration will be reviewed. Be transparent. As a minimum review annually either at the end of financial year of on each anniversary of employment. Diarise this commitment and ensure you meet this expectation without staff members having to raise it with you.

Appraisal Process. You must draft an appraisal process. The appraisal process is different to the remuneration review. Staff should clearly know how often and the basis upon which they will be appraised.

Individual Reporting. Where there are individuals that have specific targets such as sales team, customer support and management you need to provide them with performance data against which they are being appraised.

Communication. Create a dynamic approach to internal communication. Don't let the business hide behind email and back room discussions. Introduce regular team meetings with a structured agenda to ensure everyone in the business knows the current state of play. Also promote the opportunity for individuals to approach you or management "off-line" to discuss important issues.

Support Staff When They Most Need You. This is a biggie. The response that you make to a staff member in need is one of the most critical drivers to retention. Be flexible and understanding when staff approach you with issues. They remember your behaviour forever in these pivotal moments.

Personal & Professional Development. Invest in supporting your staff in their personal & professional development by sponsoring them to attend training, courses and seminars relevant to their role and career progression.

Participation in the Business. Team members want to participate in the business. Focus on including them in customer meetings, attending company functions, attending customer functions and gaining exposure to industry events.

Mentoring. Consider the use of mentoring at senior/middle management levels and the buddy system for lower levels.

Non-Financial Reward. These include 5 weeks annual leave (additional week unpaid), leave in lieu of overtime, study leave and long weekends.

Tax Effective Benefits. Speak to your Accountant in considering tax effective benefits including motor vehicles, mobile phones, lap tops, in-house dining and other opportunities.

Other Benefits. These include car allowances, child care allowance, home telephone allowance, clothing allowance, travel allowance, relocation allowance, training and entertainment.

Golden Handcuffs. "Golden Handcuffs" are more major benefits that create a significant connection to employment. These include company car, profit share, commissions, bonuses, equity, above market remuneration and study sponsorship.

How to Get Started

Audit Your Current Position. Assess your current position in relation to leadership, management, personnel system, appraisal process, staff remuneration and benefits.

Analyse Your Team. Review each staff member currently (independently of their involvement) in relation to their remuneration, conditions, participation within the business, performance and perceived future within the business.

Assess Your Opportunities. Based on your audit and staff review, while keeping in mind current cash flow and profitability, scope out which individuals/teams are suited to applying some of the staff retention strategies outlined above.

Take Action & Implement. Implement over a period of time appropriate staff retention strategies at individual/team/company levels.

Review & Measure Outcomes. Measure the impact of implementing these strategies on company performance including attrition rates, absenteeism, length of tenure, recruitment costs, customer satisfaction, morale, productivity and profitability.

Darren Bourke, Business Influence, 2008. You are welcome to “reprint” this article online as long as it remains complete (including the “about the author” information at the end).