Tag Archive: employee_retention

Overturn Turnover: How to Keep Employees from Leaving for Greener Pastures

Overturn Turnover: How to Keep Employees from Leaving for Greener Pastures. By Sherron Lumley.

Small businesses want the same top talent that large businesses do, but holding on to good employees is challenging when jobs are plentiful. As a result, small business owners have to be especially creative when it comes to attracting—and retaining—the best workers.

The numbers help tell the story. Since the official end of the recession in July of 2009, job openings are up 45 percent, according to Bureau of Labor Statistics’ latest Job Openings and Labor Turnover survey. In the first month of 2012, there were a more robust 3.5-million job openings, although that number remains below the 4.3 million mark before the recession began in December 2007. But even in those good old pre-recession days, employee turnover was higher for small businesses than for larger businesses, according to a report by the U.S. Small Business Administration, (SBA).

“Both large and small companies want to hire the same people,” says Casey Alseika, partner of WatsonBarron LLC, an executive recruiting firm in Spring Lake, N.J. His company works with clients ranging in size from major corporations to family-owned small businesses, providing him with a unique vantage point on the matter.

“Larger companies have taken the stance that the job market is not great and they have reduced their numbers and have fewer people doing more work,” says Alseika. “On the other hand, smaller companies are doing the opposite, trying to create a better overall quality-of-life experience for their employees,” he says.
First, hire the right people

Shawn Whisenhunt is the owner of Performace Prototypes, a manufacturing business in Vancouver, Washington that makes parts for excavators, forklifts and other heavy industrial equipment. He’s in his eighth year of operations with 14 employees and has had zero employee turnover since day one. So what’s his secret?

When it comes to hiring, Whisenhunt admits to being selective, taking care to make sure it’s a good fit before a position is offered. After that, “It’s a pretty simple equation,” he says. “Treat employees decently and pay them decently and they will be loyal. I’ve yet to have anyone quit on me.”

He describes the culture at his company as busy yet laid back, and says even though the workers could possibly make a bit more elsewhere, they stay because they like the work atmosphere.

“I let them listen to the stereo all day and they don’t have a set schedule. They can go to lunch when they want, and we have all-you-can-drink coffee,” he says. “As long as they’re turning out good products, I’m happy.”
PQ_Turnover.jpgThen, create the right culture

Kevin Sheridan is Senior Vice President of Human Resources Optimization for Avatar Solutions in Chicago and author of the new book, Building a Magnetic Culture. While he was surprised to see his book shoot to best-seller status, he feels its popularity underscores the mounting concern and interest that businesses have in attracting and retaining talent.

“The top reason people leave,” says Sheridan, “is lack of work-life balance, combined with job stress, which is the perfect storm for disengagement.” Work-life balance, he explains, means employees want to have flexible job hours to deal with things that come up from day to day and they also want the ability to telecommute or work from home, which lets them save money on gas and avoid the stress of a commute.

Besides flexibility, giving employees time off is also part of the work-life balance formula. “This is especially valued by younger workers,” says Sheridan.

The magnetic small business culture that wins the loyalty of its people is one of values and emotional and intellectual commitment from employees, Sheridan explains. “Employee engagement is the attractor and glue of top talent.”
Next, engage employees at all levels

CDL Helpers in Winona, Minn., was created to tackle employee retention in the trucking trade, an industry with some of the highest annual turnover—81 percent last year.

“Employees that feel like their work destabilizes their lives or that their job keeps them from achieving their personal goals will leave,” says CDL Helper’s founder, Tucker Robeson. He recommends a focus on creating stability in the lives of employees and paying people what they need to lead a satisfying, fulfilling life.

Robeson also advises small business owners to reach out to employees personally on a regular basis, in a situation away from their peers. “Give them a chance to have a candid one-on-one discussion with you about what you can do to make their days easier and improve their work environment,” he says.

It’s also important to show your ground floor employees exactly how their small actions are crucial to the big goals of the business, Robeson adds. Tell them directly how important their job truly is to the overall success of the business.

Alseika from WatsonBarron concurs. “People are a small company’s biggest resource. It’s important to give everyone a sense that they are a part of the company’s long term plans.”
Consider your employee benefits

Like it or not, “It’s difficult for a small business to retain employees if they don’t offer healthcare. People will take less money to get good health care benefits,” says Alseika.

Health and retirement benefits are the most important factors contributing to employee turnover, he notes, and SBA research confirms that benefits decrease the probability of an employee leaving by 26.2 percent, reports the SBA’s Department of Advocacy.

Beyond healthcare and retirement, 44 million U.S. workers lack paid sick days, according to the Center for Law and Social Policy, and this is another motivator in the decision to stay or go. Although healthcare benefits may be too expensive for some small companies to offer and still stay in business, paid sick days and family leave are supportive policies that improve job quality and employee morale, which, in turn, reduce employee turnover.
Finally, say ‘Thank you.’

Back in Vancouver, Wash., Whisenhunt says his employees at Performance Prototypes know they are appreciated and he sees this as key to his success. “Thank them,” he advises, “give them a bonus, pay them for Christmas and major holidays and buy them lunch once in a while.”

As for health or retirement benefits at Performance Prototypes, “No we haven’t got there yet,” he says, “but we’ve talked about doing it and it’s coming.”

Feedback Loophole: Are Formal Employee Evaluations Worth the Effort?

businessMany small businesses forego formal annual employee evaluations. But, you should think twice.

By Sherron Lumley.

For many small business owners, employee reviews rarely get a second thought, and when they do they all too often fall into one of two versions—“Way to go!” or “What were you thinking?” For some, their reticence to formal reviews involves the time required. For others, it’s the potential for confrontation and an uncomfortable employer-employee relationship. And then some believe they’ve already identified their top-quality and sub-standard performers, so why bother? However, the reasons for doing a formal year-end evaluation outweigh the drawbacks.

Performance management is the way a small business owner takes his or her goals from strategy to reality by communicating with employees. One of the most important elements of this is the annual employee evaluation. It’s a vital opportunity for feedback that promotes better teamwork by motivating and encouraging employees and offers insight for improving the business. Put simply, it aligns your day-to-day operations with the larger goals your company aims to achieve.

 

“Employees always want to know what management thinks of their performance,” says Harvey Baron, founder of Remantech, a custom manufacturing technology company in the Pacific Northwest. “It also lets the employer know why some departments are doing well and why others are not.”

Callout.pngHere is a look at three of the key objectives of the formal year-end review process:  better outcomes through two-way feedback, increased employee satisfaction and retention, and documentation of employee performance and achievements to support compensation decisions and for legal purposes.

Improving employee performance through two-way communication

“If the criticism, if any, is constructive there should be a marked improvement in the employee’s attitude and work,” says Baron. “Sometimes an employee doesn’t even know everything that’s expected of them,” he says, noting that employee evaluations are valuable because they establish measurable goals for the employees and provide an opportunity to review the job description.

And to really make the most of it, Baron recommends thinking of the review process as a two-way street.  “When I allowed my folks to also evaluate their immediate supervisor, I was able to get a more complete picture of the employees’ performance,” he says.

Today, the big trends in evaluating employees involve comprehensive performance management and two-way communication, building commitment, and enthusiasm. It’s a way to decrease turnover, motivate self-improvement and develop trust, says Barry Silverstein in his best practices book, Evaluating Performance.

 

Increasing employee satisfaction and retention

BayView Building Maintenance employs over 80 part-time and full-time employees who provide janitorial and building services to high security commercial office and medical facilities in Oregon and Washington. The company’s high rate of employee retention is a selling feature to their security-sensitive clients, who count on seeing the same familiar service staff year-round. The employee performance evaluation process contributes to Bay View’s success by promoting a positive and rewarding environment where attractive compensation is directly linked to better performance.

 

According to small business founder Denise Coy, listening to the employees is important for several reasons. “Not only does it tell us how they feel about their job and if they are happy, but it also lets us know if they have any questions,” she says. “It tells us if they are right for the job and if they can advance,” she adds.

 

Creating a paper trail

Discount Fabrics in San Francisco is a family-owned business founded in 1967. “For several years, things were very comfortable and business was easy,” says owner Linda Blake. “Because the stores were run by either family or people that had been with us so long they were treated like family, most employees were long-term and there were not evaluations or written schedules and very little was put into writing.”

But now that Discount Fabrics has grown to include three stores, many more people are working for the company and it experiences higher employee turnover. Consequently, the three-generation family business has begun conducting written performance reviews. Documented schedules, time cards, evaluations, and write-ups became a necessity.

“Truly I feel the written evaluations are much more helpful to management than to the individual employee,” says Blake, who says it is an important part of a comprehensive employee file, serving as a record of an employee’s performance and history with the company business to support management decisions. The year-end review establishes a paper trail for legal purposes and is also used by Discount Fabrics to fairly determine employee bonuses, benefit eligibility, and compensation.

Seasonal Survival: 8 Tips For Getting Your Seasonal Business Off On The Right Foot

by Reed Richardson.

For those companies that are open only a few months during the year, all the normal obstacles to achieving small business success can be multiplied several times over. Yet a common misconception is that seasonal small business owners have it easier, spending half the year simply relaxing rather than working hard on their ventures.

“People think I make money all winter long and then just go golfing all summer, but that’s a big myth,” explains Davey Pitcher, whose family has owned the Wolf Creek ski area in southwestern Colorado since 1976. “Like most other small businesses, we have expenses year-round, but our cash flow comes in over just 160 to 170 days. So it becomes a management challenge to prioritize resources the rest of the year.”

And because seasonal businesses must cram a full year’s worth of revenue into just a few short months, getting everything in place for a fast start often can make the difference between finishing in the black or running in the red come closing time. In an effort to help you do just that, we’ve gleaned from entrepreneurial experts and real small business owners eight pieces of advice you might consider to get your own seasonal business off on the right foot.

1. Start thinking about tomorrow today

Sometimes, the best time to start preparing for your next opening day occurs the moment you close for the season. For example, Pitcher and his maintenance crew began dismantling one of Wolf Creek’s ski lifts on the last night of the 2010–11 season, while the gear oil in the machinery was still warm from hauling skiers up the mountain earlier in the day. “Because the part we had to replace was so expensive—$150,000—and because the lead time on ordering it was so long—close to 8 months—it was imperative that we start the process of preparing for next season as soon as we could.”

2. Keep ’em coming back (your employees, that is)

“One of the most important things seasonal business owners can do to be successful is to keep their employees coming back each year,” explains Moren Levesque, a professor of business strategy at York University’s Schulich School of Business. “One way to do this is, just before the end of the season, you offer to share some of next year’s profits with your key employees if they commit to returning next year. Or, maybe even make that same offer for next year at the start of this year’s season to get them to buy in early.”

David Gretzmier, who used to own two complementary seasonal businesses in Fayetteville, Arkansas—a lawn care company and a Christmas-light decorating venture—took a somewhat similar approach. He says he gave his employees “convenience pay” that was roughly half of their regular hourly wage during the slow periods in the early fall and late winter. This extra income stream, he found, prevented them from looking for additional work and helped him retain a higher percentage of his employees year-round. Though he was essentially paying them not to work, Gretzmier says the strategy paid dividends in the long run, when the time and opportunity costs associated with not having to train new employees and better customer service were factored in.

3. Don’t assume what worked last season will work this season

“The most dangerous aspect of running a seasonal business is that it detaches itself from the market for a while,” notes Yuval Deutsch, an entrepreneurial studies professor at the Schulich Business School. “Because of this, businesses that, say, closed last spring should get out there early before they re-open and collect information on what the market is doing now.”

Even those small businesses that rely heavily upon a repetitive customer base or that are in fairly traditional industries might want to undergo a more in-depth strategy review before opening their doors this year, says Deutsch. “Especially in today’s volatile financial conditions, re-opening a seasonal business that’s been dormant for nearly half the year can be in many ways similar to launching a brand new start-up,” he explains. “You may want to re-do your entire market research in the off-season to see where your advertising focus should be.”

4. Business owners need time to mentally change gears for opening day

“For me, there is definitely a period in the weeks before opening day where I have to change my mindset,” explains Pitcher. From working a hectic six out of seven days during the season, he acknowledges that his operational pace does slow to working one out of four days in the middle of summer, with a long family vacation usually scheduled for early August. “But once I get back from that, I’ll have more regular meetings with my staff and start seeing lots of things that need to be taken care of,” he says. “And the panic button gets pushed once we have that first freeze and I wonder why we still have all this junk in the parking lot,” he says, laughing.

5. Open seasonally, market daily, learn constantly

When Gretzmier decided to start his Brite Ideas lighting franchise to complement his lawn care business (which he subsequently sold off a few years ago), he expected to easily convert many of his 300 lawn care customers into clients of his new venture. But Gretzmier says he quickly learned that the rudimentary marketing methods he used for his existing lawn care business didn’t carry over—his first winter he only had 10 takers for his lighting service.

“When you’re in the lawn care business, you can basically knock on doors while wearing dirty jeans and sign up a customer that will last 10 years,” he explains. But because his new Christmas-light decorating service involved one rather large upfront fee—anywhere from $800 to $4,000 for the set-up—rather than a series of smaller, weekly $50 payments, potential customers were more hesitant to come on board. “Instead, I had to spend thousands and thousands of dollars all summer long to get new lighting customers,” he says. “It took direct mail postcards, which had a response rate of only about one to two percent, getting references, and showing up on someone’s doorstep wearing a nice jacket before I got the sale.”

6. Unravel that red tape now to stay in the black later

Whether you run one, two, or several seasonal businesses, there will always be some amount of paperwork and regulatory requirements to fulfill. To stay on task during your business’s selling season, why not tackle the red tape before you open the doors again? As one might imagine, a ski resort that also includes a restaurant and bar will have a plethora of licenses, health and safety inspections, and insurance policies that must be updated or redone each year. And while many of them must be complete before the first skier schusses onto a lift, others could be done in-season. “Still, I try and have Wolf Creek fully licensed by mid-September of every year,” Pitcher says. Doing it this way, he adds, allows him to open as soon as the snow cooperates and, for a seasonal business, squeezing in just a few extra open days can sometimes be the difference between a good year and a great one.

7. Start pulling in revenue before you open your doors

In another bid to extend the revenue-generating period, Wolf Creek starts selling full-season passes in early October before the mountain typically opens to skiers. This injection of pre-season money, Pitcher explains, is often instrumental in bridging the gap between the end of last year’s revenue and the start of opening day, and allows Pitcher to handle any unexpected, last-minute maintenance issues.

For his part, Gretzmier’s four-month-long holiday lighting business is now reliably profitable, yet, just as before, he’s started to look at ways to bring in cash during the off-season. Rather than return to running a second business, though, he’s started going after wedding and event lighting projects during his off-season to bring in the extra revenue and keep his company’s name and message more current.

8. Try to avoid going ‘all in’ early on

To hedge against making a potentially disastrous miscalculation right out of the gate this year, Deutsch also recommends that seasonal small businesses should thoroughly revisit any long-standing vendor relationships and purchasing strategies prior to opening day. “The way things are in this economy, it may be a huge mistake to buy an entire season’s worth of inventory upfront,” he points out.

Instead, Deutsch says a business owner might be better off waiting a while to see what customers are buying before committing all of his or her capital. Once there’s enough data to identify some sales trends, a business owner could then devote any held-back cash to purchasing and marketing those products that are selling well. “If all your competitors are stuck with lots of high-end product, but only the low-end stuff is selling, the ability to transition your business’s focus to that latter segment could become a big advantage.”