Hiring employees is expensive. Once you have good ones, you don’t want to lose them.
However, if you truly have good people, others companies will want them. To keep your strong performers, you’ll have to focus on retaining them.
The first element of this magic equation is that people need to believe that they are a part of a winning team. They want to feel that the enterprise to which they have committed themselves is succeeding -- it’s just no fun to play for a loser. Therefore, companies should take every opportunity to celebrate their successes.
Disingenuous celebrations won’t work and if a company is underperforming, management needs to acknowledge that reality. Even when a company is in trouble, if it begins to move in a positive direction, it can celebrate the progress. Celebrations communicate to employees that the company is succeeding, the first of the three things needed to motivate employees and retain them.
Employees need to understand how they are contributing to that success. They need to see that the company’s success is, at least in part, the result of their toil. How will employees know this? Their manager needs to tell them. If you can’t come up with a way that an employee is contributing to the success of the company, then you should ask if you need that position or that employee.
Finally, employees want their contributions to be recognized. Both monetary and non-monetary recognition are important.
Monetary recognition. Many companies choose to recognize employees for their contributions with monetary rewards. Used correctly, this works well. Used incorrectly, it can be a waste of money and actually demotivate employees. To make sure your monetary rewards pay dividends, follow these simple rules:
- Use bonuses rather than compensation increases to motivate employees. A salary increase, even a significant one, loses its power to motivate very quickly. High salaries don’t motivate -- they are quickly taken for granted. The expectation of compensation motivates.
- Link compensation and performance very tightly. Pay for results, not activities. The good news is that when a properly structured compensation plan produces good results, you will have money, so you can afford the monetary recognition.
- Monetary rewards should be at least 10 percent of base pay for the period. Research shows that this is the threshold for successfully motivating employees.
Non-monetary recognition. Simply saying thank you when an employee does a job well can be powerful. Instead of speaking to employees only to correct them, catch employees doing something right and praise them. When you praise an employee make sure that you are specific about what you liked and that you link their behavior to a company or professional goal.
It doesn’t have to be expensive, but a well-timed gift certificate, recognition at a company meeting, extra time off, investment in their development or even a sincere “job well done” will go a long way towards motivating employees and helping you retain them.
It’s become cliché for companies to say that employees are their most valuable asset. Cliché or not, it’s true. Make sure that your employees are recognized, contributing members of a winning team.
More From Entrepreneur