One way to increase your business’s competitive edge is to achieve workforce stability. As demonstrated by the figure below, employee longevity affords more than a savings of staffing dollars. While it may not always be measurable, these strengths definitely affect your bottom line.

According to a recent article in HRFocus the potential cost associated with the unexpected departure of a valued employee is two to seven times their annualized income!! Additional costs to recruit and hire an experienced replacement may run as high as $7,000 plus training.

In examining the business environment that shapes today’s employment picture there are several important points to remember:

1. The economy is expected to continue to grow, creating more jobs, but also making it more difficult and expensive to find qualified workers.
2. The labor market is tightening. The drop in the birthrate a generation ago reduced the number of new workers by 20%.
3. A significant proportion of workers laid off in the early 1990’s started their own businesses, further reducing the number of eligible recruits.
4. Technology continues to put an increased demand on the level and complexity of skills employers are looking for.
5. The career attitude of the Generation X’ers is resulting in the expectation to work for two to four years and then move on to another opportunity.

Retaining valued employees is a strategic business issue requiring a serious level of commitment from senior leadership. Following are steps to help companies focus on this issue.

SAY THANK YOU. Use the words and send notes too.

HOLD REGULAR MEETINGS. Talk about the critical importance of a stable and productive workforce.

COMMUNICATE. Don’t allow retention to be a money issue. Focus on how to support employees in their work and keep them satisfied.

EMBRACE A CULTURE OF CONTINUOUS LEARNING. Focus on enhancing job-related skills for future employability requirements.

CREATE AN OPEN ENVIRONMENT. Share details about how the company is doing, ask for input on policies and operational issues. Employees who feel like they are "insiders" are more likely to want to stay.

BASE REWARDS ON A PERFORMANCE-BASED COMPENSATION SYSTEM. Explore approaches that recognize the efforts and contributions of every employee against pre-established goals and objectives.

© Debbie King, Evolution Management, Inc.  All Rights Reserved.