Keeping Your Top Performers

A recent discussion with a friend of mine about his company’s hiring practices led us into a larger conversation about companies with high turnover rates vs. those who retain talent successfully. I know this doesn’t sound like a very interesting conversation between friends, but we came across some interesting issues.

With the economy in decline for the past 24+ months and the jobless rate hovering in the double digits for the past year many people have been scrambling to make ends meet. Former suits found themselves jobless, without insurance, and jockeying for a few jobs with hundreds if not thousands of other candidates. While this sounds like a terrible situation none of us would want to be in, there is a small silver lining. The job market for the last few years has been the perfect storm for growing companies looking for talent on the cheap.

Companies with HR department’s stout enough to weed through the piles of resumes for top contenders would find more than qualified candidates. Former mid and top level managers jockeying for positions only requiring 3-5 years of experience offered easy decisions for hiring managers. People making 6 figures would gladly take a 40% pay cut just to keep working in this economy. Not only were these companies able to hire at an advantage, but they were able to retain solid employees who may have left for greener pastures long ago. The employees who’ve been sitting in the same positions without the usual raises or advancement opportunities are much less likely to leave or complain about the lack of opportunities within their company. Companies whose HR departments were on their game now have top talent they’ve hired on as well as talented employees they’ve retained for a bargain price.

Now that growing companies have been able to reap the rewards of this stagnant economy the question still remains…

What will companies do when the job market turns and they watch their top performers leave for more money and other opportunities?

It’s no secret that headhunters and aggressive HR departments will seek out other company’s employees and people are usually willing to leave a company for more money or opportunity. Combine that with your older semi-disgruntle employees looking for something fresh and new and you may find yourself in an empty meeting room during your weekly department gatherings.  Companies will find themselves spending thousands of dollars to re-train, re hire and rebuild once stable departments. This, all while the economy is rebounding and demand on departments will be at it’s highest. This is not the situation any business wants to be in, so how can you avoid it?

1. As your shares, P&L, revenue, earnings, or whatever you like to call them grow so should your employees compensation. They are the backbone of your success and much like you they have been in this battle to keep overhead low and production high in the worst economy in 30 years. Reward them accordingly.
2. Promote from within. Stop paying recruiters, and spending money on searching for new hires until you’ve exhausted your current pool of talent. Only then, when you don’t find a good fit is it ok to look outside your 4 walls.
3. Offer incentives for your employees based on growth. Not quite commissions, but similar. Say you grow revenue in 2010 by 13% by July and you only projected 5%. Why not offer a surprise mid year bonus to keep moral and employee retention high? These bonuses don’t have to be a lot, but a few hundred dollars here and there can really go along way.
4. This one will not cost you a dime, yet it’s one of the best tools you have to let employees know you care. GIVE CREDIT WHERE IT’S DUE! More people get in a funk from lack of feedback than you may ever believe. A simple email, card, phone call or visit to an office with a, “I wanted to let you know you’re work here is really appreciated…” can go further than any amount of money for some people. I’m serious, and you wouldn’t believe how many managers/supervisors overlook praising their employees.

The companies that have managed to thrive or sustain in this economy have proven to be viable competitors in the market place. Much like their ability to stay afloat financially they will need to predict and plan how to retain employees during a market rebound. Those that plan accordingly will be rewarded with a seasoned staff ready to ride the upswing and those that do not will find themselves struggling to meet expectations at a very critical time.

Where you end up is completely up to you.