{ By treating your employees right }
Employee turnover is a vicious cycle, says Milwaukee executive search consultant Paul Pagenkopf. It’s a syndrome where the more people a company loses, the more desperate it becomes. And as anyone who has been through the experience knows, replacing workers is time-consuming and costly.
“When you end up losing your people, or can only keep them for a year or two, it’s a spiral in that you are continually behind the 8-ball,” says Bob White, an information technology recruiter on Layton Avenue near the airport. “For companies that are short-staffed and can’t keep people, it puts more pressure on everybody. One of the biggest complaints I hear is: ‘My company doesn’t appreciate me.'”
In the past, employers didn’t need to concern themselves with treating employees right. The scales were tipped in their favor. Now, with workers at every level of the economy in short supply, employers who haven’t already changed their approach need to re-think the way they view their workers, White says.
According to Marlene Haigh, a Racine-based human resource specialist, what it comes down to is: How do you create that environment that induces your employees to stay?
According to a local employment survey conducted last year, the most important thing to employees is company culture. Not perks, not benefits, not even money matters most. That’s the conclusion of BDO Seidman’s Howard Sosoff, whose firm sponsored a local study on finding and retaining workers last year.
The number one thing your employees seek is a sense of engagement with their work, and to feel that what they are doing makes a difference, Sosoff says. Employees also want a comfortable work atmosphere, one in which they have the authority to make decisions, and the flexibility to take time off when they need it.
According to Donald Dailey of PricewaterhouseCoopers, the relationship between the employed and the employer is more flexible and fragile than ever.
Entrepreneurial companies, with their energy and creativity, can take advantage of their smaller size to “cut through the clutter” of larger organizations and reach the next rung of business growth, Dailey says. By virtue of their less rigid structure, entrepreneurial companies have a better chance of creating loyalty and maintaining a sense of closeness than big corporations, Dailey says.
One company that takes this concept seriously is Lakeland Supply, Inc. The 20-employee Waukesha distributor of packaging, paper and janitorial supplies promotes a sense of team through any number of company-sponsored events, from taking employees to dinner theater in rented limousines to riding around the race course at Road America in Elkhart Lake with a professional driver.
“We are like a large family,” says president Larry Schmidt II. “We feel that people are not geared into money. They want a place that is safe, where the surroundings are comfortable and they feel part of the organization. We feel our employees are our most important customers, so we want to treat them as best we can.”
That approach not only helps retain employees, it also helps recruit them. Word has gotten around that Lakeland Supply is a good place to work. In addition to the company-sponsored events, Lakeland Supply has an on-site fitness center, and offers comprehensive benefits, including a 401k plan.
“I have [former employees] who have left us and gone other places,” Schmidt says, “and these people tell me that this is the best place they ever worked for. There is a more holistic approach to the way we conduct business. We try to touch every element.”
Employee turnover is a costly proposition. While estimates vary, Schmidt says it typically costs 150% of an employee’s wage or salary to replace that person.
Employee turnover can become a vicious cycle, says Milwaukee executive search consultant Paul Pagenkopf. In his experience, the more desperate a company becomes, the higher it’s turnover rate.
“You are getting one company raiding another, particularly in skilled trades such as tool-and-die,” Pagenkopf says. “It’s a jungle out there. But if you show me a company where the standards are high, and so is the morale and espirit de corps, then the raiders are going to have a much harder time taking your people. If you have a fun place to work, where your employees feel like they’re really part of the organization, it’s hard to put a price tag on that, but I think it’s really a key factor.”
Pagenkopf says the whole employment picture has come full-circle, from the layoffs of the 1970s, to the mergers/downsizings of the 1980s and corporate re-engineering of the early to mid-1990s. All of those strategies were essentially short-term oriented, with the goal of: How quickly does it flow to the bottom line? During that period, training was cut back, and so was research and development. In many cases, apprenticeship plans were eliminated.
Invest in your workers
Instead of discarding workers whose skills are no longer current, today’s employer has to be willing to invest in their employees through training programs, say both Pagenkopf and Julie Peck, a Thiensville executive search consultant.
“Don’t get rid of people just because their skills have become obsolete,” Peck advises. “You need to assess what needs to be done in terms of training and retraining. This requires you to look ahead, to anticipate what your needs are going to be.”
Generac Power Systems Inc. has expanded rapidly. In doing so, the Waukesha manufacturer of generators and industrial engines has received any number of people who lack necessary technical training, says Generac human resources manager Stephanie Borowski.
“It’s an unskilled workforce you’re hiring from, so it becomes a matter of providing in-house basic training for people who have only worked at Burger King before,” Borowski says. We have our own Generac University.”
Generac also provides ongoing training for its existing employees, from the shop floor, to engineering to computer skills, Borowski says.
Another strategy that pays dividends is cross-training your employees, Pagenkopf says. By teaching them additional jobs or skills within your company, you get more flexibility and more productivity from your workforce, he says.
At the Pfister Hotel, executive chef Josef Zimmerman has established an informal training program for the kitchen staff. A kitchen employee begins by learning basic knife skills and working hotel banquets. Eventually, the trainees work on the cooking line for banquets. As they become more comfortable with food preparation, Zimmerman starts them on smaller menus. Once they’ve mastered their technique, those employees become ready to assist Zimmerman, a European-trained master chef, with the meals served in The English Room.
As a result of that in-house training program, many members of the Pfister’s kitchen support staff have climbed the culinary ladder. The internal promotions have resulted in retaining a staff of satisfied employees.
Structuring a creative benefit plan to the employee’s advantage can sometimes mean the difference between keeping or losing a key employee. Lakeland Supply’s Schmidt came up with an employer life insurance program for a 30-year-old employee. By matching the employee’s contribution, he will receive $1 million by the time he reaches age 59, or, $1.5 million by the time he reaches age 75.
“If someone really cares about our company and goes the extra mile, we want to show them that same dedication,” Schmidt says. “This way, if [the employee] stays with us until retirement age, all of the benefits come back to him.”
Offer incentives
A number of Milwaukee area companies are finding that offering employees trips as part of their overall compensation is not only a good way to reward employees for a job well done, but that it promotes team-building and the ability to reach company goals.
“A lot of companies reward their employees with cash and merchandise,” says Louise DeMarco of Incentive Experts, a subsidiary of Salentine Travel in Mequon. “Cash goes out the door to pay a bill, and merchandise is just that. Trips are very motivational. It builds loyalty within your company and gives employees an opportunity to do something they never would have done before.”
Two years ago, DMC Inc., in Pewaukee, made headlines when it took all 97 of its employees to Walt Disney World in celebration of the company’s 10th anniversary. The trip combined pleasure with training at the Disney Institute.
“If we are successful, we are willing to give that back to the company,” says Jeff Nowak, president of the Pewaukee direct-response advertising firm. “I think if more businesses try to look at bringing some fun into the workplace, it makes it easier to create a team atmosphere.”
According to Jackie Salentine, employers who use incentive travel generate a three-to-one return on their investment, with some of her clients achieving a five-to-one return. She arrives at that ratio by taking a company’s expected annual sales increase compared to the additional increment they receive when they reward employees with travel.
“It’s a really good way to institute behavioral changes without being a watchdog,” Salentine says.
According to Bill Troyk of Roadrunner Freight near Mitchell International Airport, offering employees trips is an alternative means to money for rewarding them. Roadrunner limits the trips to its terminal managers and their spouses.
Roadrunner lets employees select the destination. The first year, the company took employees to New Orleans. Last year, 45 people went on a Caribbean cruise. Next month, it’s Cancun for four nights and five days. The trips generally cost Roadrunner about $75,000, and employees are asked to contribute $500 if they bring their spouse.
“People talk about it for two to three months after,” Troyk adds. “You can use this as a tool to sell the job to people who are being promoted, and it’s also not a bad recruiting tool.”
Not all companies can afford to take their employees on vacation. At Value Computer Accessories in Pewaukee, a distributor of computer connection parts, Jenni DeGlopper rewards employees for meeting goals by letting them go to the movies on company time. Another monthly incentive is allowing employees to leave two hours early if goals are met.
DeGlopper decided to implement the incentives in lieu of annual Christmas bonuses, which got handed out regardless of the company’s performance. Now, if the sales goal is reached, everyone at the 18-employee company gets $100.
“We are tying it to performance,” DeGlopper says. “It has helped me achieve some company objectives, and it gets people talking together and working together. It’s amazing. You get warehouse people asking where the sales are at for the month. It gets everyone involved and helps keep people motivated.”
