Employee Incentives - In This Economy?

Employee Incentives - In This Economy?

A recent article in Forbes Magazine quoted David Lacey, Vice President of Human Resource Business Development at VIST Insurance as saying "the costs of replacing talented and effective employees far outstrip the expense of retaining and developing new employees. Recruiting and training new employees acts as a drag on earnings from 3 to 6 months until the new employee is performing at the expected level or better."

Three to six months can translate to $75,000 dollars for smaller companies. Various studies indicate a cost of between 70 and 200 percent of that employee's annual salary to replace them and get the new worker up to speed.

No company, in a good economy or a rough one, can afford to watch that money walk out the door.

So what do you do?

First, don't be snagged by the common myths surrounding employee retention and incentive programs. For starters, people don't most often leave a company for better pay. That's what they might say in an exit interview, but typically that's just because it's the easier response to make. More often, studies show, employees leave because they didn't feel challenged, appreciated, supported by Supervisors, recognized, or free to be a part of decisions.

When considering upping your retention game, don't be fooled into thinking that people don't want more responsibility. What they don't want is more work when they're already swamped due to lack of staff. But giving employees an opportunity to expand their knowledge, create variety, and develop their skills is a tremendous satisfier. People feel higher levels of satisfaction when their position is enhanced and/or expanded which, research confirms, translates into higher levels of achievement.

Another great avenue to consider to retain those top performers is how much more people are seeking a better work-life balance than in the past. Flexible hours, work from home options, comp time and more relaxed dress codes are options to employers that don't have the same impact on the bottom line as the standard bonus programs, gift card incentives and free trips employers tend to rely on. In fact, studies have shown that incentive such as those do little, if anything, to improve performance, loyalty or increased revenue.

When employees feel respected, valued and able to influence how work gets done, morale increases, loyalty solidifies and that translates to better service of your customers. And isn't that what it's all about?