SOFT TRAINING

This is the first in a five part series on achieving Employee Retention. The articles will cover:

1. Competitive Compensation & Benefits
2. Sound Organizational Structure
3. Leadership & a Motivating Work Environment
4. Recognition & Rewards
5. Employee Dreams & Empowerment

The premise of the articles is that employee retention is not a program or product, but rather the result of effective organization and leadership practices.

1. Competitive Compensation & Benefits

Employee retention starts with competitive compensation and benefits. You have to be reasonably close to your competitors. You don't have to offer the top salaries and benefits in your market. In fact, if you are the leader you may be wasting money.

Several resources to assist you in determining if your organization's package is competitive include:

Eastridge Infotech
Nevada Association of Employers [you may find a similar organization in your area]
Requesting assistance from your local college's business department [student project]
Network through SHRM [Society for Human Resource Management]
Contact your trade and professional associations -- AFSMI [Association of Field Service Management International], ICSA [International Customer Service Association], BIA [Banking Institute of America], ASTD [American Society for Training and Development].
Networking with professional peers in your industry
Asking your employees

If you find that your salary and benefits aren't competitive, fix them immediately. The consequences are very expensive - - far greater than the cost of upgrading.

Non-competitive compensation and benefits will limit you to attracting and hiring 'bottom feeders'. These people will accept your job offer because it's their only one. Bottom feeders generally have low talent, skills, attitudes, and consequently low performance. They work to survive, rather than achieve. While they may not always arrive at work on time, they ALWAYS leave on time.

If you think you're saving money hiring these people, think again. In addition to low performance, these people love to create or join unions - - - to protect their right to maintain low talent, skills, attitudes, and poor performance. Remember that when designing hiring, leadership, and organizational practices, unions do not cause unions, management does.

Paying for low performance and potential unions are only the costly tip of the iceberg. The customer dissatisfaction that bottom feeders help create will cost you far more. Hiring 'cheap' employees becomes very expensive when your customers experience:

Product quality inconsistencies
Service quality inconsistencies
Higher prices due to inefficiencies

The resulting customer dissatisfaction and lack of loyalty leads to the ultimate turnover cost . . . customer turnover. This leads to lower profits which logically leads to lowering your organization's compensation and benefits package to make up for the loss in profits. This completes another loop in a downward spiral.

The formula we use to measure the value of employee retention [including inferior hiring] is:

Cost of employee replacement
+ Cost of customer replacement
+ Cost of lost customer profit contributions

Customer dissatisfaction is the major turnover cost magnifier.

I'd like to tell you that to turn the spiral around, sending it upward, that all you have to do is provide high compensation and benefits. And that by doing so you would attract and retain top talented, skilled, and top performing people. People who will consistently produce quality products and services that will create satisfied and loyal customers. Unfortunately, achieving success is bit more complex.

Your strongest swimmers will be the first to jump ship if the only thing you've got going for them is compensation and benefits.

Using high compensation and benefits to attract and keep talented employees is like feeding peanuts to the bear. Everything goes very smoothly . . . until, you run out of peanuts. Then they maul you and your organization with undesired turnover. You can't buy employee satisfaction, loyalty, or performance.

Competitive, and even high, compensation and benefits may get talented people to consider joining your organization. However, it is not enough to get the best and the brightest to stay. Your strongest swimmers will be the first to jump ship if the only thing you've got going for them is compensation and benefits.

Competitive compensation and benefits play a critical part in enabling you to attract and hire the level of employees that you want to retain. However, compensation and benefits play an insignificant role is in retaining people.

Part 2: Sound Organizational Structure will explore what we need to do to keep talented people. It will cover the essential elements needed to build and maintain a sound organization. An organization worthy of talented people.

Employee Retention, Part 1: Competitive Compensation & Benefits [749 words]