Business & Technology

Business & Technology
Keeping Workers When Profits are Scarce

Keeping Workers When Profits are Scarce

It wasn't long ago that companies were throwing massive bonuses and perks at employees in hopes of keeping them from the clutches of competitors.

But today, with unemployment hovering around 10%, it's safe to say the retention game has changed. The bonuses, where they still exist, aren't as big, and the perks look more like a Starbucks gift card than a monthly clothing allowance.

Still, employers that think they no longer need to work to retain employees in a tough economy could be flirting with disaster.

"For most firms, their human resources are very critical to organizational success," says Steven Yoho, Dean of the College of Business at South University. "This is true in good and bad economic times."

In a recent study, human resources consulting firm Mercer found that 37% of organizations globally say they will continue to hire key talent even as they reduce their workforce overall.

"There is always a market for high potentials," explains Loree Griffith, a principal at Mercer, in a news release.

And if those high potential employees don't believe they are valued, they will find somewhere else to go.

Another reason for firms to be mindful of employee engagement: Those that stay put can cause problems if they are unhappy. Studies suggest that employees with low satisfaction are more likely to engage in a range of unproductive behaviors such as being productive only if watched or being motivated primarily by money, Yoho says. Those same employees might criticize the firm and devote their energy to looking for another job, he adds.

"Consultants have found that disloyalty can dampen performance by as much as 25% to 50%," Yoho says.

Holding onto key people and keeping them happy doesn't have to mean raising salaries or carving out bonuses from dwindling corporate profits. More and more, companies are finding creative ways to offer rewards and keep employees engaged.

In a recent white paper called Human Capital Planning 2010, Mercer suggests that today's dramatically changed business environment offers the perfect opportunity to "reset the baseline" and get companies to take a fresh look at how to engage and reward talent in the pursuit of organizational goals.

Mercer notes, of course, that the task is daunting. Employers must focus their limited resources toward reengaging key talent in ways that will drive performance and profits.

"The struggle lies in determining the right mix of market competitiveness versus affordability in order to retain and engage key talent," Mercer goes on to say. "This requires a heightened emphasis on prioritizing key talent and differentiating how they are rewarded."

But how?

While pay is an important factor in recruiting an employee, career development is the top driver of retention for most organizations, says Denise Fairhurst, senior consultant at Towers Watson.

In its recent Global Workforce Study, Towers Watson found that the top drivers of employee engagement include: a desire to improve skills and capabilities; having input into decision making; and recognizing excellent career advancement opportunities.

Because budgets are still tight, providing such opportunities can be challenging for companies. A recent Tower Watson survey found that 30% of employees said they'd seen a reduction or elimination of training. Still, some companies seem to at least be thinking about employee rewards and engagement holistically, and how they can maximize every dollar spent in each area, Fairhurst says.

"Every organization has approached this in a different way because every organization is in a different situation," Fairhurst says. "Those that have been successful are those that have taken a step back and said, 'What do we need to do?'"

Employees also value honesty and integrity, the survey found.

Yoho agrees. "To attract and keep good people employers should be ethical and demonstrate integrity," he says.

A big component of honesty is open communication. Some of the best executives are quick to point out that good communication is the lifeblood of any enterprise, large or small, Yoho says. Communication clearly links to credibility and employee job satisfaction, he adds, because if employees don't believe in the messenger, they won't believe the message.

Max Caldwell, a managing principal at Towers Watson, suggests that leaders get in front of their employees to talk about what's happening in the business — especially during uncertain times.

"Formal communication is helpful, but what really matters is presence, listening, empathy, and authenticity – leaders need to get out of the executive suite and walk around," Caldwell writes in a recent blog post. "Doing so can be as inspiring for the individual leader as it is for employees."

Undoubtedly, it's been a tough time for many workers. They've been asked to take pay cuts, furloughs, or fewer hours. Their workloads, meanwhile, aren't shrinking — in many cases they are growing as employees inherit the responsibilities of colleagues who were laid off.

While managers can't control the external economy, there still are steps they can take to make employees want to stay.

"For those employees who remain, it seems that ongoing employee job satisfaction will be somewhat tied to their ability to reinvent or expand their skill," Yoho says. "In these economic times, employees — like employers — must adapt to changing market conditions if they are to survive and prosper."

Written by freelance talent for South Source.

© South University