In June 2014 a Forbes article circulated on LinkedIn entitled, “Employees Who Stay In Companies Longer Than Two Years Get Paid 50% Less”. Within the article were some startling statistics:
- The average raise an employee can expect in 2014 is 3%, but given the cost of inflation, it actually amounts to more like 1% in additional spending power.
- If an employee leaves a company, however, they can look forward to a 10%-20% increase in salary. In extreme cases, they may even see as much as a 50% increase. As well as the overall costs of replacing an employee when truly analyzed can cost your company thousands of dollars. In fact, statistics state that it costs:
What these statistics show us is that it is more advantageous for employees to leave their current situation and change jobs than be loyal. As managers, it can feel like your staff are jumping ship left and right for greener fields elsewhere. How does one create an environment of retention against the trends?
- For entry-level employees, it costs between 30% and 50% of their annual salary to replace them.
- For mid-level employees, it costs upwards of 150% of their annual salary to replace them.
- For high-level or highly specialized employees, you’re looking at 400% of their annual salary. (Ross Blake of Retention Associates)
Have a Retention Plan:
Most managers do not actually sit down and develop a plan about how you cultivate an environment that keeps your employees there. Here are key prescriptions that are needed:
Step 1: Frequent Recognition
- Recognition from Managers to Direct Reports
- Recognition from Colleagues
- Know results, qualities & behaviors you want to reinforce
- Be Creative
Out of ALL the activities you engage in as a LEADER, “Catching people doing things right” –and recognizing them for it –needs to be one of your TOP PRIORITIES!
Step 2: Competition and Reward
For your sales team, have a competitive compensation system in place when quotas are met, and exceeded. Monetary incentives are good but here are additional ideas if resources are tight:
- Take them out to breakfast, lunch or dinner
- Send a praise letter to family or spouse
- Hold a sales/company kickoff meeting and give out plaques
- Publicize a “Wall of Fame”
- Give out gift certificates to their favorite restaurant, movie theatre, clothing store, etc.
- Open and close meetings with praise
- Give recognition in monthly newsletters
- Give them an extra day off
- Provide opportunities for them to attend training or seminars they would like
- Ask individual or teams what they would like for rewards (survey)
Step 3: On-Going Training
Offering training on a consistent basis shows that you value employees. It creates an atmosphere of growth, individuals are able to learn new techniques and keep knowledgeable about new technology. Employees are a company’s number one asset. Training should be relevant, job specific, informative, challenging and motivational. By investing the appropriate training in employees, they will develop a greater sense of self-worth as they become more valuable to the company.
A good training program facilitates confidence and satisfaction. A well-trained employee feels pride in the work that they do.
Step 4: Positive Relationship with Manager
“ The number one reason people leave an organization is because of the relationship (or lack of) with their Manager.” –Paul Hersey & Kenneth Blanchard
Employees need to know that their Manager truly wants them to succeed, and will do whatever they can to support that. True leadership is performance through others. Employees need to know that they have someone who believes in their abilities and sees their strengths.
Integrity and trust are vital to retain employees. Learn what is the best way to support each team member based on their personality and strive to give them the support in the channel they prefer it. If it is recognition, responsibility, or reward – find the avenue that they respond to best.
Step 5: Clear Road Map for Advancement:
Make sure the employee knows the opportunities that are available for advancement. Know where your staff sees themselves in the next five years. Clearly outline what skills are necessary for the next level of advancement. Tenured representatives need options for increased responsibilities like major accounts representative, project manager or team leader. Use tenured representatives to mentor others or lead large projects. Increased responsibility can lead to a greater sense of satisfaction if the employee desires it. 