From the March 2004 issue of Entrepreneur

An economic turnaround is great-but it can bring with it some unwanted stress on business owners. Namely, the war for top talent that companies saw in the late 1990s will return when businesses start hiring again. "In the last two years of difficult conditions, a lot of people have been cautious and haven't gone out and looked for a job because the environment was too risky," says John A. Challenger of Challenger, Gray & Christmas Inc., an outplacement consulting firm in Chicago. "As things start to get better, we'll see more people begin to make voluntary [job] change decisions." Though this year may not see a torrent of new hires, this is the first time in two years that people are starting to feel they have options outside their present employer, so you need to motivate your best employees to stay.

Challenger notes that good communication with your employees will make the difference in who stays and who goes. "Talk with them, communicate with them-find out what it is that is driving them crazy," says Challenger. "Most bosses are oblivious to the people who are unhappy or considering change."

Find out what your employees want before you start creating random benefit programs for them, though, says Challenger. Perhaps it's flexible hours or child-care help or a tuition reimbursement program that would motivate them to stay-not a big cash bonus or a salary raise.

For Naras Eechambadi, that kind of communication was learned by trial and error. In the early days of Quaero Corp., a customer relationship management company in Charlotte, North Carolina, Eechambadi lost some key talent without notice, and his company suffered. Now he talks openly with employees about their wants, needs, problems and goals within the company, which boasts $8 million in yearly sales. He's commissioned a detailed survey of employees; enacted performance-based bonus plans, knowledge-sharing and mentoring between employees; set meetings to discuss each employee's growth prospects within the company (not just yearly reviews); and provided specialized training to help each employee meet his or her goals. "If you have smart, ambitious people, it's tough keeping them," says Eechambadi, 47. "You need to understand what makes them tick and satisfy those needs. It pays for itself several times."

Even if you communicate with employees, you may find that a few are still itching for greener pastures. "Sometimes it's time for people to leave," says Challenger, "[when] the job has outgrown the individual or the individual has outgrown the job."