Retention in a recession Featured

8:00pm EDT March 26, 2008

The big R word — recession — has reverberated through the halls and executive suites of companies across the country. Businesses need to reduce expenses and also ensure their long-term viability.

“During tough times, companies look at cost-cutting techniques,” says Mari Pichardo, director of human resources at Tampa Bay WorkForce Alliance (TBWA). “If approached incorrectly, these cost-reduction measures can oftentimes negatively impact employee morale and security.”

Smart Business spoke with Pichardo about the direct and indirect costs of losing employees and cost-effective strategies to increase morale in tough times.

During times of economic uncertainty, how can you keep employee costs down?

Retention is key. Retaining quality employees will keep your operations running smoothly and save you money in the long run. When you carefully observe and proactively address issues, you have a better chance of top performers staying within your organization. A purposeful manager will keep the pulse of his or her team through formal and informal surveys, impromptu discussions and even break-room conversations. Information gleaned from that can help you determine if growing frustrations merit further action. Conduct exit interviews to determine the reason for employee separation. Try to go beyond typical parting answers to ones that give you valuable information on how you can improve your retention efforts.

What are some of the drivers of the high price tag on employee turnover?

To succeed, some of the best companies employ strategies that minimize employee expense while increasing productivity. The ones that do it well invest in their highest commodity — the workers. The expense of replacing an employee is usually estimated to be one-third of his or her annual salary. Although that ratio varies by employer and position, every time an employee leaves the company either by choice or by downsizing, the company bears a significant cost.

These expenses include temporary staff, overtime, loss of productivity, lost customers, recruitment, training and HR, and the hiring managers’ time.

What are some creative, inexpensive ideas for boosting employee morale?

Fostering a comfortable and inspirational atmosphere doesn’t cost much, but the return on the investment can be immense. Happy employees who feel a part of the team are less likely to look elsewhere. Here are some ideas for creating this positive environment:

  • Encourage and support innovative and creative ideas from everyone on each new project.

  • Encourage fun at work; host regular social activities to foster unity among the staff. Invite spouses and significant others to company functions.

  • Value the family time, not just the employee. In summer, consider half-days off or early dismissal on Fridays. Not having to fight traffic eases the mind and leads to productivity.

  • In winter, a bonus is good, but just as good may be a day for personal shopping and holiday preparations.

  • Consider bringing in dinner for employees who work late on a project.

  • Provide easy access to dry cleaning or car-detailing services. Your employees still pay for these perks, but they greatly appreciate the convenience.

What are some ways to get the most out of your employees?

Respect your employees’ lives outside of the office. Your expectations for excellence can be balanced with your staff’s freedom and personal lives. The company’s priorities and the employees’ need for balance don’t necessarily have to compete. Results are what matter most. Whenever possible, providing flexible hours or allowing employees to work from home shows them that you value the lives they have outside the office. It’s relatively easy to permit employees to work from home by using different types of mobility programs. If the nature of your work isn’t conducive to working remotely, consider flex scheduling.

Also, insist that your employees take vacations. Studies show that employees who take time off experience less stress, lead a healthier lifestyle and have a lower risk of heart disease. Furthermore, employees that have more balance between life and work are less likely to suffer burnout.

What else can companies do to demonstrate that they value employees?

Build a loyal employee. Loyalty develops from respecting an individual’s abilities and helping that person to become even better. Encourage management to identify and nurture talent within the company by allowing all employees to develop their professional skills and realize their full potential. Subsidizing professional advancement courses builds loyal employees and gives you the chance to consider your internal talent pool for positions critical to your company. This investment increases employee satisfaction and saves money on employee start-up.

MARI PICHARDO is director of human resources at Tampa Bay WorkForce Alliance. Reach her at (813) 740-4680 x263 or