In the service industry, employee-related expenses account for 50 to 70 percent of total expenses, which makes it critical to bring in the right people and ensure your investment is a good one.
“The cost to hire people is significant, from advertising to interviewing to the onboarding process,” says John Harabedian, Managing Director of the Retirement Plan Services division at Tegrit Group. “If you are only retaining 50 percent of the people you recruit, that’s a huge cost to the company that needs to be reduced.”
The benefits of recruiting and retention strategies aren’t just cost-related.
“If you’re growing and you’ve got a strong culture, you’ll be known as a good place to work, which enhances the company’s reputation and image in the community,” he says.
Smart Business spoke with Harabedian about recruiting and retention practices.
Why does a business need recruiting and retention strategies?
Not having a recruiting strategy often leads to reactive hiring. If someone terminates employment, a manager who hasn’t thought about a replacement strategy might make a quick decision to hire someone who seems qualified but isn’t.
You always want to look for loyalty in your employees, that is the key to customer retention as well as cost savings. Customers value continuity; if you have the same person on the account for a long time he or she will know the client well and the chances of the client having a great experience are significantly enhanced.
What are some best practices for recruiting?
Your human resources department should have an active ongoing recruiting process for key positions, even if those positions aren’t open. You interview people as resumes come in, for future position openings. Then if you have to replace someone you already have two or three people in mind — you know what their situation is, if they need to move and their salary requirements for example. This makes positions easier to fill, especially for specialized, technical jobs, and ensures your company does a better job of finding the right people.
You need to define your corporate culture and find people who fit into it. A strong work culture engages employees and provides them with opportunities, which is crucial to keeping them satisfied.
In addition, good employees typically surround themselves with similar-type people, so employee recommendations can be a critical source for hires with the same work ethic and values. You can incentivize your staff with a cash bonus for recommending someone who gets hired.
An internship program is another excellent recruiting tool where both the intern and employer can evaluate each other before making a long-term commitment. You can start an internship program using younger employees who recently graduated with connections to local universities. Then in the second year, once you hire interns permanently, you can use them as spokespeople for the next graduating class. However, a successful internship program is predicated on interns having real work to do. You need to make interns feel like full-time employees by letting them have one-on-one time with managers, attend meetings and do client-based work.
Once you’ve recruited the right employees, what can you do to ensure they stay?
The defection of good employees is all tied to the culture. You need to put people where they have a passion. You don’t want to leave people in jobs they may have entered into if that is not what they want to do long-term. If you can get a person excited about what they do — if they can contribute and have some creativity in their role — they are much more likely to stay with the company.
A growing organization has to recognize you are always looking five to ten years down the road. Not only who are my managers today, but also which employees can become directors or fill other senior level positions? Internal mentorship programs identify key performers with significant potential. And you don’t have to be shy about who is in a mentoring program and who isn’t as it might motivate others.
Keep in mind what influences employees today. Younger employees put an emphasis on family and outside activities that you wouldn’t have found 20 years ago. You may need to be more creative in allowing staff to work remotely or have flexible schedules. You also might have to help older managers adjust to the mindset and values of younger staff.
How do you evaluate your recruiting and retention strategies?
Your HR department should always be looking for feedback from staff as well as evaluating the job application website you use to see if they are the most appropriate.
You can also rate your employees to find out how your retention strategies are working. For example, you can rate staff as (1) key performer, don’t lose; (2) good performer; and (3) average or acceptable, and any employee who is rated below three you would want to actively manage out. Then evaluate which employees are leaving — how many were ones, twos and threes?
Although the recession has created a double-effect that works for the employer — the talent pool is deeper with more people out of work and with fewer jobs more people are staying put — this kind of situation is only short-term. You need to invest in your employees and ensure the company has a wonderful culture in which they can grow and eventually take on more responsibility.
John Harabedian is the Managing Director of the Retirement Plan Services division, for Tegrit Group. Reach him at 330.983.0520 or firstname.lastname@example.org.
Insights Retirement Plan Services is brought to you by Tegrit Group