What is your largest expense in running a company? Typically, it is your employees and they are expensive. Losing the good ones is even more expensive. Employee wages represent one of the single biggest expenditures a firm will have throughout the year. Retaining your key employees is a paramount effort. Based on a recent Monster report on employee loyalty, nearly 80 percent have updated their resume in the past 6 months and more than 55 percent say they are looking for a job “at all times.”
If you lose a key employee for any reason, the company has to reinvest in searching for replacements, interview new candidates, pick the right one, start the training, and finally bring them up to speed, while trying to minimize the loss of productivity. Usually, the costs to implement a few precautions outweigh these transition costs. Some options the company should consider to help mitigate those costs:
Avoid yearly performance reviews. Instead, have frequent employee interaction and evaluations to keep employees motivated, feel appreciated and develop professional development plans to replace employees that will retire. Implement quarterly or even monthly fifteen minute mini evaluations.
Today’s millennials are engaged with daily interactions via social media on Twitter, LinkedIn, and Facebook. New opportunities appear on social media much faster than 10 years ago. You, as a business owner, are competing with this constant bombardment of information your employees are receiving. Therefore, you have to be proactive and also provide constant feedback and encouragement to your employees. If you don’t, you will increase your risk of turnover.
When feasible, cross-train employees so they have more than one responsibility. This allows them to cover other jobs during vacation, sick days, maternity days, or terminations.
Offer a competitive benefits package that fits your employees’ needs. Providing health insurance, life insurance and a retirement-savings plan is essential in retaining employees. Having the right plans will also help mitigate tax liability and increase net profit.
Perks, such as flextime and telecommuting, also go a long way to show employees you are willing to accommodate their outside lives.
If you have a larger company, obtaining key man life insurance may be a good strategy to mitigate the financial impact of the death of a key executive.
The bottom line is your employees need to feel valued, appreciated, be given feedback, be provided with growth opportunities, be given work-life balance options, and have confidence in their leaders. All of these retention strategies are beneficial when an employer wants to keep employees within an organization and keep costs of turnover low. If you need help developing such a plan and understand the costs, please contact the CFO Consulting team at ProCFO in Bend.
Scott Lauray
ProCFO, Complete Financial In-sourcing
780 NW York Dr Suite 102
Bend, OR 97701
541-728-0444
slauray@procfo.com
www.ProCFO.com
