Keeping the Good Ones Around

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If you are losing more people than you'd like, you don't have to sit there and take it. Many things can contribute to an employee's decision to move on, but one stands above the rest. "The immediate supervisor is by far the number-one reason people stay or go," says Alan Preston, a West Chester, Pennsylvania, retention consultant. Retention experts say that people don't work for companies, they work for people. It's a good thing to keep in mind when you're addressing the retention issue.

At ImageRight, a $30 million content management software company in Conyers, Georgia, annual turnover is less than 1 percent, according to co-founders Don Elias, 51, and Mike Jansen, 44. One reason is that they keep the 105-person organization flat, with no more than one manager between any employee and the founders. "It's very easy for us to tell whether a manager is doing something wrong," says Elias. "Then we address it."

After you handle problems with supervisors, take a look at how you hire. Companies with low turnover almost universally say it starts with hiring the right people to begin with. Les McKeown, a Marblehead, Massachusetts, HR consultant and author of Retaining Top Employees, says improving hiring processes is one of the most powerful actions a small firm can take to reduce turnover.

Entrepreneurs put themselves at a disadvantage because they often hire on instinct rather than with the help of a system, McKeown says. They may wind up with a company full of people just like themselves, in which case many may leave because they don't see opportunity for advancement. McKeown recommends bringing in a professional HR manager early on to keep personal idiosyncrasies from negatively influencing hiring.

A company's culture also exerts profound influence on retention. When hiring, address such factors as recognition, development, and the opportunity to understand and influence the company's overall objectives and success.

At J.L. Patterson, employees get to stand up and talk about ideas they have for improving the company at monthly "lunch universities." Younger employees especially appreciate the opportunity to make suggestions to company veterans who may have "we don't do things that way" attitudes, Patterson says. "And we bring lunch," she adds, "so everybody attends."

It's also important to develop employees. Tuition assistance isn't the only way to help employees gain career-boosting skills. Cross-training helps them gain new proficiencies and also benefits the company. Having the latest technology is critical for retaining technical workers who must keep their knowledge up-to-date. Few small firms can afford bleeding-edge technology, but there are other solutions. Patterson, for instance, beta tests key software applications so employees get to use new technology and also give feedback to developers.

Corporate culture is the murkiest part of the retention equation. Far more important than fringe benefits is the feeling that a company cares about, listens to and supports its employees. "People stay where they feel at home," says McKeown. "If you make an environment where people feel at home, they're much less likely to go."

One person's home can be another's hell, of course, which doesn't make the job of crafting a retention-boosting culture any easier. One approach is to listen to employees and give them what they need to feel at home. Another is to choose a culture and then find people to fit the environment. That's the tack taken by Go2Call Inc., a 32-person Evanston, Illinois, company that sells VoIP services. The 7-year-old company has several employees who have been there for more than five years, says co-founder Larry Spear, 39. The company, which Spear started with John Nix, 37, projects $24 million in sales for 2006.

Challenge is an important element in the company culture and in the people it hires, Spear says. "We recruit for the long term, and we're looking for extremely talented people who can get jobs elsewhere," he says. "So we put in place a plan that challenges them every day." Keeping high-achieving employees challenged keeps them engaged, Spear says. One way the company does it is by setting aggressive goals. Another approach is to move people who are feeling stale into new positions in the company where they will face new challenges.

However, Spear doesn't aspire to make Go2Call an endurance contest. Employees are rarely asked to work weekends, and the company offers flextime to help them maintain work-life balance. "We also opened up an office on the other side of Chicago to make it more convenient for people who live there so they don't have such long commutes," Spear says. "That's helped us retain some of our key engineers."

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This article was originally published in the April 2006 print edition of Entrepreneur with the headline: The Long Haul.

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