As an investment, the break-even point for an employee is about three-and-a-half years. That means that person's cumulative contribution to profit equals the investment in hiring, training and paying him or her After that, you begin to earn a profit.
The benefits of retention are big. Studies indicate the value of a stockbroker is 155 percent higher when retention is 10 percent better. Keeping good employees longer offers a huge payoff in productivity and customer retention.
So, how do you keep them longer?
Better retention is the result of a systematic, disciplined approach to selecting, challenging, developing, managing and rewarding employees. Let's look at each.
* Select carefully. Be clear about the skills needed. Cultivate sources of good candidates. Screen out "untrainables" with tests and rigorous background checks. Next, conduct multiple interviews, use behavioral interviewing techniques and give a realistic job preview. Finally, arrive at a consensus to select the best applicant.
* Challenge often. One of the best ways to keep employees is to provide meaningful, challenging work. If you have it, share it. Employees like being productive; so turn them loose.
* Develop fully. People tend to stay if they are learning new skills. Keep them learning.
* Lead well. People join companies and leave managers. Make sure your managers are great leaders who listen to and effectively coach employees to better performance.
* Reward generously. Ensure that base pay is competitive, then create generous bonus plans tied to measurable results and business objectives.
* Keep the stars and keep them happy. There's a bigger payoff if you focus retention efforts on your star employees. Create personal retention plans to keep them on board. Supply challenging work assignments that help them reach their goals. And reward performance generously.
* Start now. The benefits of improved employee retention begin immediately. Improved performance and reduced turnover can be seen and measured. And, perhaps most important, you'll keep your star performers. Begin today so they won't be tempted when the headhunter calls tomorrow. Don Lodge is a founder of Catalyst Consultants LLC, a firm that helps organizations define success and improve performance. He can be reached at (412) 325-1777 or email@example.com.