How to retain employees?
Last week we showed you how the most important step in avoiding expensive turnover is to hire the right person, including but not limited to values, personality, soft skills, diversity, and inclusion. The next step is to keep these employees with
In this blog, we will discuss steps to make sure you retain employees as you continue to grow your business.
Step 1: Compensation and Benefits
Dan Price, CEO of Gravity, (a credit-card-payment-processing company in Seattle), decided in 2015 to pay his employees a MINIMUM of $70,000 per employee. He justified this with social science research linking sufficient levels of income to greater well-being, combined with findings that benefits of happiness carried over from the personal to the professional sphere. Additionally, Seattle has a pretty high cost of living. He even cut his salary from $1.1 million to $70,000 a year (Ryans, A., Pahwa, A., Tao, L., Summers, T., Oh, W.-Y., and Chang, Y., 2015).
Gravity cut retention in half. But from this case, we learned that money is not everything. Money did not drive some people at Gravity, and they even disliked the pay increase because it felt like a handout, not based on their performance. So, while it’s competitive to pay your employees well, an important consideration is to include an element of “pay for performance” in their compensation packages.
Finally, total rewards for your employees do not end at compensation. Meaningful benefits are more important than just the following compliance. Of course, as employers, there are mandatory benefits to provide your employees, such as Social Security, Medicare/Medicaid, Unemployment, Workers Compensation, and Disability. But when you ask the people what they want, it looks very different.
A Harvard Business Review study conducted in 2017 provided 2,000 American employees, ages 18 to 81, a list of 17 benefits and asked them to weigh them when deciding between a high-paying job and a lower-paying job with more perks (Jones, K. 2017). The top benefits that would tip the ladder were better health, dental, and vision insurance, followed by flexibility and improved work-life balance. The last two highest scoring benefits were more vacation time and work-from-home options.
Step 2: Culture
Last week we talked about how hiring the right person, who is aligned with your company’s culture and values, is the most important thing you can do as an employer to avoid attrition. But how do you keep them aligned? It might sound like a turn-off, but performance reviews are the answer.
Performance reviews need to be:
1) your employees evaluate their work performance and
2) include culture and values alignment in this process to reengage and refocus their energies.
Creating a culture of recognition will also keep employees on board. People want their colleagues to catch them “doing good.” Consider creating a “kudos” system – where employees can recognize each other publicly on an app like slack or even systematically through email. Verbal praise also helps employees feel appreciated.
Step 3: Training and Development
This is the most ongoing step and should never end for your employees if you want them to stay. Training and development not only give them the skills and knowledge they need for the job but also help them feel appreciated and invested in. Just like you want your employees to believe in the company, they want you to believe in them.
There’s no need to reinvent the wheel. We look to companies with a proven track record, even when working with your small business. For example, as of 2019, Southwest had a 96% retention rate, 44 consecutive years of profitability, and no layoffs in its history.
They have various training programs that start early with college internships and a Technology Direct College Hire program. Southwest Airlines University provides virtual and in-person training to not only increase skills for the job and to foster personal growth and development. “Days in the field” provides on-the-job training aimed at the future in which they can experience other departments they may want to grow into. Lastly, “leadership development” assists with individual development as well as that of the company. Instead of hiring from outside for management and c-suite positions, employees are simply promoted from within after completing this rigorous training. This is retention at its finest.
How Can Startup Tandem HR Help?
If you follow these simple steps, you can retain your employees for years to come. Although it may take some time and money to implement culture and training programs up front, the cost is minimal compared to turnover and/or implementing these programs down the road.
Startup Tandem provides human resources consulting services to help you develop and implement culture and training programs that fit your specific business needs and budget. Read more about how To avoid expensive employee turnover or How to Avoid a Wrongful Termination Claim – Startup Tandem.
Jones, K. (2017, February 15), The Most Desirable Employee Benefits. Harvard Business Review. Retrieved August 15, 2022, from https://hbr.org/2017/02/the-most-desirable-employee-benefits#:~:text=The%20next%20most%2Dvalued%20benefits,paying%20job%20with%20fewer%20benefits.
Robertson, K. (2022, June 24). Southwest Airlines Reveals 5 Culture Lessons. Human Synergistics. Retrieved August 15, 2022, from https://www.humansynergistics.com/blog/culture-university/details/culture-university/2022/06/24/southwest-airlines-reveals-5-culture-lessons
Ryans, A., Pahwa, A., Tao, L., Summers, T., Oh, W.-Y., and Chang, Y. (2015, August 12). The $70k CEO at Gravity Payments. Harvard Business Review. Retrieved August 15, 2022, from https://store.hbr.org/product/the-70k-ceo-at-gravity-payments/816010