Financial Data
Updated 27 Sep 2020

Don't let the good ones go

The days of employees, especially professionals, building a whole career with one company seem to be a relic of the past. That does not mean, however, that the workplace should be viewed as a market for mercenaries. Follow these guidelines if you would prefer to not get a dog when you want loyalty.

02 April 2012  Share  0 comments  Print

All the answers to your unique business lifestage questions

Times have changed and many employees don't consider loyalty to an employer to be as important as it once was. So, how do you keep quality workers on your team?

According to an article on unwanted employee turnover costs companies in the United States more than $140 billion annually.

In South Africa, it is estimated that the turnover cost of a salaried employee is between 100% and 200% of that person's remuneration (including benefits and any other compensation). So, what can you do to avoid this cost? Start with your new employees.

Five steps to successful staff orientation

  1. Induction. Be prepared to welcome the new employee on the first day of work. Have their office phone number, email account and user IDs ready. Show them you are happy that they have joined your organisation.
  2. Acclimation. Help new employees become familiar with the work environment by giving them tools that help them to be productive immediately. For example, this could include acronym dictionaries, process diagrams, checklists, organisational charts and phone lists.
  3. Integration. Many people spend more time at work than they do with their friends and family. An emotional connection with co-workers contributes to employees staying with the company. Help new employees to get to know their colleagues.
  4. Relationship management. Have regular one-on-one conversations with employees. Get to know them as people. During the first 90 days, schedule times in which new employees can discuss things with management.
  5. Expectations. Both employee and employer have certain expectations of each other. It is important to share this. Find out what new employees are thinking. Encourage questions - many of the things you take for granted are unknown to the new employee.

Building long-term loyalty

What exactly does loyalty mean in a business setting? In its most basic sense, it is an abstract, often unwritten contract in which the employer agrees to provide the materials and resources that the employee needs to get the job done, matched by the employee's agreement to work at an optimal level to fulfil the goals of the company.

Loyalty is the glue that binds an employee to his/her job, and is a function of the respect and allegiance that an SME needs to develop in his or her team.

Ultimately, loyalty is what gets the employee up and into the office every morning, and once lost, it is extremely difficult to rebuild.

Loyalty also helps to create a history and a culture of stability. Loyal employees understand the business, the rules and 'how it's done around here'.

They reduce turnover costs by eliminating the time needed to advertise for, interview and train new employees. They are usually also more productive employees, and as an SME owner, that's exactly what you need.

What does staff turnover really cost?

According to a local personnel company, only 9% of employers measure the cost of their staff turnover - and yet four out of five employers cite it as one of their top concerns. So what does losing an employee really cost? Consider the following:

  • How much production was lost while no one occupied the job in question?
  • What are the administrative costs of replacing someone? Think about advertising, interviews, contracts, etc.
  • What will it cost to train a new employee?
  • How long will it take the new employee to become fully productive? Normally it takes three to six months.
  • What will it cost to support an employee, eg, office space, desks, chairs, car and phone allowances?

Steps to develop loyal employees

  1. Earn respect. Don't make excuses for a problem or your own lack of knowledge. Lead by example.
  2. Be there for them. Behave consistently with your staff. In this way you prove that you are reliable.
  3. Create unity. Stand up for your employees. Try to correct errant behaviour in a way that helps the employee to learn. Better yet, help the employee to identify an issue before it becomes a problem.
  4. Be honest. A manager who openly shares appropriate information that helps employees to work more productively and efficiently, will be seen as trustworthy.
  5. Be fair. This includes treating staff equally, following fair market practices and adhering to the various laws that govern the workplace.
  6. Communicate. This is a two-way process. Explain the reasons for your instructions and give employees a chance to contribute ideas and opinions before you make a decision. Practical examples could include quarterly performance reviews, staff bulletin boards, suggestion boxes and regular meetings.

Praise for appraisal

When setting performance objectives with your employees, first look at the aims of the business as a whole. A structured appraisal system can help employees to feel that their good work is recognised and that they are valued.

It also provides the opportunity to tackle any weaknesses. Many businesses carry out an appraisal after a set period (eg, three months) for new employees. After that, appraisals once or twice a year may be enough.

Some businesses distinguish between goals, which apply to the whole business, and objectives, which apply to individuals. A goal might be to increase sales by a certain percentage over a 12-month period.

An employee's objective might be to bring in one new customer per month over that period. This is specific, measurable and - depending on the business and market conditions - realistic.

If the results you are looking for aren't easily quantifiable, try a system that scores employees from one to six on their level of competence in certain areas (eg, leadership skills, teamwork, and being proactive). The objective could be for employees to increase or maintain their score.

The benefits of incentives and perks

Introducing an effective system of incentives and perks can help you to recruit and retain valuable staff, reward performance and generally get the best out of your employees.

It also focuses employees on achieving targets while encouraging teamwork. Some perks may benefit your business indirectly, eg, free health assessments can lead to reduced absenteeism.

Incentives such as performance-related bonuses usually relate to the achievement of individual or organisational goals. Perks, on the other hand, are given in addition to salaries as a means of increasing job satisfaction.

Salary is often the most important staff motivator, and incentives and perks should not be seen as a substitute for a good pay scheme. They should also work in conjunction with sound work practices such as performance management, clear communication and training.

However there are drawbacks. It can be demoralising if employees don't reach their targets. Some might take the perks for granted, or they could become a point of contention for employees.

Financial incentives can also make it harder for employees to plan from one month to another if they become dependent on them.

What incentives and perks can you offer?

There is a wide range of staff incentive schemes, including financial and non-financial schemes, individual and group schemes, short-term and long-term schemes.
Financial incentives:

  • Profit-related schemes
  • Bonuses
  • Commission

Non-financial incentives:

  • Formal recognition
  • Vouchers
  • Gifts
  • Company cars
  • Occupational pensions

Perks include:

  • Leave over and above the statutory minimum
  • Health benefits, eg, health insurance/assessments
  • Family-friendly and work-life balance benefits, eg, flexible working hours
  • Subsidised staff canteens, tea/coffee-making facilities or goods/services
  • Social events, eg, Christmas parties and work outings
  • Membership of social clubs
  • Extra training, ie, which goes beyond skills needed for the job

What to include in your performance appraisal system

  1. Set objectives. Decide what you want from employees and agree on these objectives with them. If appropriate, set time frames for achieving them.
  2. Manage performance. Give your employees the tools, resources and training they need to perform well.
  3. Carry out the appraisal. Monitor and assess your employees' performance, discuss those assessments with them and agree on future objectives.
  4. Provide rewards/remedies. Consider pay awards and/or promotion based on the appraisal and decide how to tackle poor performance.

Managing the exit process

When staff resign they create room for you to introduce fresh ideas and skills to an operation.

However it can also damage the infrastructure of your business. Prepare yourself for this by making sure that you understand why people leave, and by implementing programmes to manage staff effectively from the time they are recruited.

Make sure that you:

  • Keep records of leavers.
  • Hold 'exit' interviews to find out why a person has decided to leave.
  • Monitor your rate of turnover regularly.
  • Benchmark your staff turnover.
  • Address issues facing new joiners and long-term workers.
  • Analyse your business culture.
  • Refine your recruitment process.
  • Review and benchmark your pay and benefits policy.
  • Assess your training, development and promotion policies.
  • Review and refine your appraisal systems regularly.
  • Review your work-life balance arrangements - are your workers able to manage both their home and work commitments?
  • Create and regularly review succession plans.
  • Keep a close eye on your managers' leadership styles.

At the end of the day, staff retention is all about you - how you behave, how you treat your employees and how you perform as a manager.

While it is great to think that you will always be able to hire people who will be loyal and go the distance, their interactions with, and respect for you will determine whether or not they do so.

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