Hard To Hold

Conquer the tight labor market by retaining valuable workers.
Magazine Contributor
11 min read

This story appears in the October 1997 issue of Entrepreneur. Subscribe »

The days when U.S. businesses had an inexhaustible supply of workers are gone, replaced by an environment in which companies compete as fiercely for employees as they do for customers. One way to deal with a tight labor market is to avoid it. "If you can retain employees, you don't have to replace them," says Dale Hageman, president of Accord Human Resources Inc., an employee leasing firm in Oklahoma City. A successful employee retention program can reduce the effort you put into finding, screening, hiring and training new workers. Here are some tips for reducing turnover:

  • Make it a long-term commitment. Your entire organization must understand and reinforce the need for employee retention; mere lip service or a one-shot campaign won't work.
  • Hire the right people. Take time during the hiring process to make wise decisions. Be candid about working conditions, responsibilities, opportunities and other details to reduce your chances of making hiring mistakes. And avoid candidates with a history of frequent job changes.
  • Offer a competitive salary and benefits package. Hageman separates benefits into two tiers: traditional, such as insurance, retirement plans, paid vacations and holidays; and extras, such as negotiating for discounts with nearby child-care providers or health clubs, or asking your bank to waive service charges for employees' personal accounts. Come up with ways to help your employees save money and streamline their lives.
  • Provide an economic stake in the company. Consider profit sharing, or at least give bonuses when the company does well.
  • Be flexible with work schedules. Unless there is a sound reason for rigid schedules (such as a retail store that must open on time or an assembly line where one worker's production is dependent on another's), give individuals some control over their work hours. "As long as they get their job done, exactly what time they're in the office may not be critical," Hageman points out. "Consider flex time, telecommuting and other ways of creative scheduling."
  • Communicate. Let employees know what's happening with the company. "Communicate your vision for the company and the importance the employees play in helping fulfill that," Hageman says. And make communication a two-way street: Listen to what your employees have to say.
  • Encourage creativity and innovation. Create an atmosphere where employees feel comfortable making suggestions and trying out new ideas.
  • Build a sense of camaraderie. Provide opportunities for employees to bond with one another. Hageman suggests a combination of activities such as planned social events (company parties or picnics) and impromptu happenings (a surprise pizza lunch or taking off early on a Friday afternoon).
  • Reward individual and group performance. Recognize achievements with memos, mentions in staff meetings or articles in the company newsletter. Small, tangible rewards are also a good idea. "Hand out a $20 bill to someone who did a good job," Hageman advises. "You can do other small things--provide movie tickets or gift certificates to a restaurant--that don't cost much but have a tremendously positive impact on your people."
  • Invest in training. Training improves customer service and strengthens employee loyalty.
  • Remember that your employees have lives outside the company. It's not realistic to expect employees to leave their individual problems at home. "You have to recognize that employees have personal lives that come with personal problems," says Hageman. Those employees are still very valuable, and sometimes you need to make accommodations for the impact that their personal lives are going to have on the office."

Employee retention takes time and effort. But, says Hageman, it's something you must do. Because if you don't, "you're going to lose your quality employees to a company that does."

Service Call

Do you get annoyed when people don't respond to messages you leave on their voice mail? It might be your own fault. Linda Fracassi, president of Learning Essentials Inc., a telephone sales training company in Toms River, New Jersey, says the most common mistake people make when leaving voice-mail messages is speaking too quickly, especially when leaving a phone number. She offers these tips for leaving messages that get attention and make it easy for the person you're calling to call you back:

  • Speak clearly and carefully enunciate each word.
  • Give your name and telephone number twice.
  • Keep your message brief, but let the person know the reason for your call so they can be prepared when they call you back.
  • Always date and time your messages, even though most voice-mail systems automatically do that. "It sets your message apart from the others," says Fracassi.
  • Let the person know the best time to reach you. You don't need to leave your entire itinerary, Fracassi suggests; simply say, "The best time to reach me is --" and leave the time. Also, if you're calling out of the local area, let the person know where you're located or what time zone you're in.
  • Practice your message before leaving it so you make a professional presentation.
  • If the system allows, review your message and re-record it if necessary.
  • "Recognize that voice mail is here to stay," Fracassi says. "Realize that this is a communication tool that can either hurt or help you."

Almost Perfect

Hiring perfectionists may sound like a good business strategy--and most of the time, it is. Most working environments encourage perfectionism and the long hours and sacrifices that go with it. But with all its positives, perfectionism has the potential to create some interesting challenges in your organization when a perfectionist moves into a leadership position.

Management psychologist Joseph G. Cutcliffe, Ph.D., president of Cutcliffe Consulting Group in Torrance, California, says that perfectionists have trouble recognizing acceptable performance. They tend to be unforgiving of their own mistakes and lack sympathy for others' mistakes as well.

"The natural evolution is from being a doer to being a manager to being a leader," says Cutcliffe. "Perfectionism helps doers immensely--it turns them into all-stars. But that same perfectionism can cripple a person's ability to be an effective manager."

Cutcliffe suggests offering coaching to the perfectionists in your organization to help them recognize the difference between who they are and what they do. "[Teach them] to separate identity from behavior," he says. "Their personal self-worth need not be threatened by mistakes." Also help them learn to praise rather than criticize, and to establish attainable goals for themselves and others.

Finally, Cutcliffe says, take a look at yourself. Entrepreneurs are often perfectionists, but when perfectionism turns into crippling behavior, it can affect your business. "It can be hell to work for a perfectionist," says Cutcliffe. So give yourself and your employees a break.

Good Riddance

Ever had a customer whose nuisance value exceeded his profit potential? Or who demanded champagne service at beer prices? The fact is, some customers just aren't worth it--but how do you deal with such a situation? The first step, says Carl Larkin, founder and CEO of Larkin, Meeder & Schweidel Inc., an advertising and public relations firm in Dallas, is recognizing that the relationship needs to end. Larkin has made the difficult decision to resign accounts a number of times over the past few years. It may be time to end the relationship when your client:

  • doesn't respect or appreciate your work
  • makes excessive demands on your company and staff
  • is not fair-minded in either his or her expectations or what he or she is willing to pay
  • wants work done cheaply and under unrealistic deadlines
  • pays his or her bills late or doesn't pay at all
  • pushes you to the limit in all areas, taking advantage at every turn
  • sees you as a disposable vendor and not as a valued partner

It's always a good idea, Larkin says, to try to fix the problem before you simply drop the customer. "Put the offending party or parties on notice," he says. "Talk to them. Outline what the problems are, what the possible solutions are, and ask for their cooperation to help reach those solutions." Be sure to document these efforts so you can refer to them later, if necessary.

If your attempts to make the relationship a mutually productive one don't work, it may be time to move on and focus on more profitable clients or prospective clients. Calculate what you will lose in gross revenue, and decide if your business can stand the financial hit. If you can't, Larkin advises, "put up with the current problem client until you can replace that client's revenues with one or more new clients."

Once you're in a position to let the client go, ask for a meeting with the highest-ranking people in the company. Calmly and professionally explain the situation, review your efforts to correct the problems, and make it clear that you'll have to terminate the relationship if things don't change. "Sometimes those higher-ranking people will see the wisdom of what you've done and will intervene and make a difference so that you can continue under a better relationship," says Larkin.

But if they don't, be prepared to move forward with the termination. Have a plan in place to make the transition as smooth as possible. "Usually I have a recommendation ready of some other companies that might have an operating style that will mesh with this client," says Larkin. He stresses the importance of keeping your professionalism throughout the process. No matter how badly the client behaves, he says, "you always want to maintain your integrity and the integrity of your business."

Rights And Wrongs

Can you reproduce a cartoon from the daily paper in your company newsletter? Or make 50 photocopies of a magazine article to use at a meeting? Yes, but only if you get permission from the artist or author--and permission may include payment of a fee. Those are just two items that come under the heading of intellectual property, and the rights to such property are protected by law. The term "intellectual property" is somewhat misleading, says Jay Conison, interim dean and professor at Oklahoma City University's School of Law, because it's not property in the physical sense nor is it always intellectual in nature.

Intellectual property law is designed to protect the intangible aspects of business. "An enormous amount of the value of a business is in the form of intellectual property," says Conison. That may include your name, the symbols (or trademarks) that represent your company, items that you have copyrighted or patented, and various trade secrets you've developed. And just as you have recourse if someone steals or misuses your intellectual property, so do others if you do likewise.

Whichever side you're on, be aware that intellectual property litigation can be lengthy, complicated and expensive. But the law is based on common sense, Conison says. "Don't try to take a free ride on someone else's investment. The consequences of a mistake in this area can be quite serious," he says. "Whenever you want to make use of someone else's idea, think about whether or not it's protected."

Adverse Reaction

People who work together often become very close, and when tragedy strikes one of your employees, it can have a tremendous impact on your business, as Joe Yore, owner of Electrical Marketing Services Inc. in Orlando, Florida, learned when the 2-year-old daughter of one of his employees was murdered. Though not every tragedy involves death, Yore says, "tragedy is relative. It doesn't have to be this drastic for it to affect individuals in significant ways."

Yore offers this advice:

  • Take care of the victim. Find out what he or she needs and make sure it's provided. These needs could range from simple moral support to assisting with a variety of logistical issues, such as transportation, food, and inquiries from friends and even the media. Remember that, in our transient society, many people do not have local family members to turn to in a crisis.
  • Take care of your other employees. "Get everybody together, and let them talk about what has happened," says Yore. Consider grief counseling to help them cope.
  • Keep the customers and vendors who deal with the employee informed. They will likely want to express their concern for the affected employee, and they also need to know how the tragedy will affect your business. "Your customers live this sort of thing with you," Yore says.
  • Help smooth the victim's return to work. People don't always know how to treat someone who has suffered a tragedy, so take steps to help the person ease back into the workplace. Yore recommends an off-site meeting with colleagues in a casual, candid atmosphere, if possible, before the affected person resumes his or her duties.
  • Expect performance variations. You may see noticeable changes--either positive or negative--in the affected employee's performance. Also, there may be tasks he or she has to deal with in the aftermath, such as insurance claims and other legal issues. Be as patient and helpful as possible.

Contact Sources

Accord Human Resources Inc., (405) 232-9888, daleh@accordhr.com

Electrical Marketing Services Inc., (407) 897-7000, joeyore@emsorl.com

Larkin, Meeder & Schweidel Inc., 2501 Cedar Springs Rd., #400, Dallas, TX 75201, (214) 979-5000

Learning Essentials Inc., (908) 341-7356, http://www.learningessentials.com

Jacquelyn Lynn is a business writer in Winter Park, Florida.


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