By: Donna Fenn
It’s tough to put a positive spin on a recession, but for many small business owners, a punishing economy meant access to a talent pool that would have been completely out of reach in better times.
As larger companies slashed head count, savvy smaller firms were able to scoop up top employees faster than you can say “severance package.” But as the economy improves, will these seasoned employees be tempted to seek out greener pastures? After all, small companies can rarely compete with big firms when it comes to compensation.
The good news is that a fat paycheck alone is rarely a reliable retention incentive. As it turns out, many of the most effective retention strategies are not only accessible to entrepreneurial companies, but are also easier to implement in small firms than in large ones.
Invest In Employee Development. Employees who signed on with you because they were unable to get a job at a large company are most likely to jump ship when big firms start hiring again. In those instances, “management needs to be even more aware of employees' professional goals, and provide them opportunities to develop and grow,” says Tom Brown, director of CFO Services at Pacific Crest Group a human resources consulting firm in Larkspur, CA. “This might consist of a special training class, access to a networking group, or travel to a conference or seminar. It also might entail entrusting the employee with greater responsibility, or accelerating the timing of promotional opportunities.”
The idea is to send the message that you’re invested in your employees’ future and that you’re willing to tailor your program to their specific needs.
Be Flexible. Large companies, where productivity is measured largely by face time, are notoriously inflexible. “Small companies have the ability to be flexible and to customize,” says Michael Alter, CEO of Sure Payroll, which offers payroll and human resources services to small companies. “You may find that some of the folks you’ve hired may want more flexible hours -- like leaving at five to coach their kid’s soccer team, working four days a week, or working at home part of the week.”
Remember that flexibility isn’t accommodation; it can be a highly effective productivity and retention if used correctly. Set guidelines, establish goals, get the right technology in place, and make it clear that a flexible schedule works only if the company’s benchmarks are being met. Make sure you offer flexible work arrangements to all employees to avoid any appearance of favoritism.
Create a Team Environment. “People have more difficulty leaving their friends, so if you create a team environment, it’s harder for them to leave,” suggests Lori Dernavich, who has her own leadership development consulting firm in the New York metro area.
Young employees, particularly, are extremely team-oriented and are most productive when working on projects in groups. But even if that’s not how your company is structured, you should think about social events that foster team spirit. “You can do more activity-oriented retreats,” says Dernavich. “Right now, philanthropic events are very popular, so you might see if you can get people at the company to help organize volunteering.” And don’t underestimate the value of having fun; when employees from all departments of your company work and play together, they forge stronger bonds with one another and with your company.
Align Incentives with Retention. “Lots of companies are offering sabbaticals after a few years,” says Michael Alter. “What you’re trying to do is lock someone in for the longer term.” Allowing an employee to spend, say, a month trekking in Nepal may sound extravagant, but weigh it against recruiting and training a new employee and it looks like a bargain. Alter also suggests offering company trips, with spouses or significant others, after a few years of service. It’s not just the reward that’s important, he says. “You’re creating an event memory that they wouldn’t normally have, especially if you let them take their family.” You might also consider smaller rewards that are tailored to employees’ interests, such as concert tickets or a night at the ballpark.
Stick to Your Core Values. You can’t expect employees to stand with you unless they know where you stand. “A company should never change aspects of the core values because of economic times,” says Michelle Roccia, a senior vice president at Winter Wyman, a staffing firm in Boston. For instance, if you’ve been committed to employee training and tough times force you to cut back on formal initiatives, you need to find creative alternatives. “Start peer learning and mentorship programs,” suggests Roccia, “establish a brown bag, learn-at-lunch initiative taught by managers and in-house specialists, explore online opportunities, or band together with business partners to train each other's staffs.”
Remember that the best retention program starts the minute a new employee walks in the door. “Think of ways to tell them how their role fits into the big picture, and make sure they feel they’re part of the company,” suggests Dernavich. “Communication is huge part of retention; people will leave if they feel they aren’t contributing.”