An organizations #1 investment is its people, their relationships and their ability to work together effectively towards the success of the organization. That perspective gets lost sometimes, particularly in tight economies like the one the United States is in now. Organizations look to trim costs, and employees increasingly feel the threat of having their jobs outsourced, or being replaced by foreign workers on visas, although a study published last week determined that foreign IT workers utilizing H-1B visas weren’t necessarily more talented or smarter than the average American IT worker (not including this guy). A counter argument could be made that the foreign workers, mindful of their status, might be more focused and diligent in their work than their domestic kin.
But considering the tepid recovery and fiscal cliff that Congress so blithely jumped over last week, whose mind couldn't be on their job right now? The US Labor Department released its February jobs report today, disclosing that unemployment dropped to 7.7%. Although it's good to hear the rate moving down, it's been over four years since it's been that low. Businesses still have their pick of potential workers, and strong hands at the bargaining tables.
But turnover has its price too, including lost productivity, replacement training and recruiting costs. A recent study by the Center for American Progress discovered that the average cost of replacing a mid-range employee (earning less than $50K per year), came to 20 percent of that person’s annual salary. As the pay scale rose, the situation grew dramatically worse. The cost of losing an executive could cost an organization up to 213 percent of the employee's salary. If you replaced a skilled project manager earning $90K a year with a less experienced PM for $50K a year, it could take your organization over 4 years to recoup the costs of the transition.
So what’s the best course of action for organizations that want to retain quality employees, but can’t necessarily offer higher wages to ensure their loyalty?
Provide a work experience that pays for itself.
- Recognize Achievements: This is probably the easiest and most effective means to keep people motivated. For employees who value their own work and contributions to the organization, recognition of their effort and performance can go a long way.
- Good Communication: Managers and supervisors should be clear with employee about their expectations, the employee’s position and progress within the company, and provide straightforward, constructive feedback about their performance.
- Allocate, Allocate, Allocate: Make sure your employees are being utilized fully, but not overloaded. Spikes in activity are normal, healthy even, but a sustained campaign grinds down employee morale, and with that performance and work quality.
- Encourage Development: Training seminars and educational seminars aren’t free, but they both reward employees and benefit the organization through improved performance. Make sure to record the skills and education credits earned in the employee files.