14 Steps to Motivate and Retain Employees

A Guide for Small Businesses with Limited Resources

Employee retention is essential to maintain customer relationships and minimize recruiting and training costs. The keys to employee satisfaction and retention are founded on strong leadership and sound management practices. By mastering these arts, you should have happy, loyal employees and customers, resulting in growth, profits and personal gratification.

#1: Operating Systems
The foundation of an efficient and effective workplace is the structure, discipline and consistency provided by well-conceived systematic operating methods. World-class companies like Disney, McDonalds and Ritz Carleton all have well defined operating methods. A policies and procedures (P&P) manual is critical to ensure that employees understand what is expected of them and know how they should handle the myriad of duties and responsibilities in the day-to-day operations of the business.

#2: Employment Agreements and Job Descriptions
Legal agreements are often a “necessary evil” to ensure there is a “meeting of the minds” as to exactly what the parties agree to when they enter into an employer-employee relationship. The agreement should specify the term, termination, duties, responsibilities and compensation.

#3: Training
New employees will need orientation before going to work in your business and then on-the-job training. Training should include a review of your policies and procedures, with special emphasis on key subjects, such as customer service and your company philosophy and culture. Retraining should be done each year.

#4: Tools to do the Job
Employee costs constitute a major expense in most businesses. Not giving your employees adequate tools to do the job is “penny wise and pound foolish.” Employing current technology can greatly improve efficiency and employee morale. Don’t forget to provide the little things that make employees’ jobs easier. Providing adequate tools to do the job will increase employee productivity and satisfaction.

#5: Workplace Atmosphere
How your employees feel about their jobs is greatly influenced by your workplace atmosphere. Extravagance is not necessary, but you should provide a pleasant place to work. Little things like a fresh coat of paint make a big difference. Don’t neglect the break room and the rest room. The impression you make on your employees is just as important as the image you project to your customers. Keeping the workplace clean and uncluttered requires the cooperation of all employees. Employees’ attitudes are affected by their work environment; make sure it is positive!

#6: Support
Your employees need someone readily available to help when they have questions or encounter problems. Adequate staffing to properly serve all customers is also essential for employee morale. Your people should not feel like they are left on their own.

#7: Company Culture
World-class companies always have in common World-class cultures. Leaders of such businesses recognize that profit is a byproduct of meeting the needs of customers and employees. A business also has a responsibility to give back to the community and most employees want to make meaningful contributions through their work. They also like to take pride in their work and deliver quality products and services. And they need to continue to learn and grow professionally. A good company culture enables employees to combine their strengths to meet these mutual needs as part of a dynamic team.

#8: Compensation
A performance-based compensation plan should encourage employees to behave in ways that will attain the company’s goals, while also meeting your employees’ personal objectives. Company goals usually include growth, profitability, quality service, efficiency, effectiveness, image and reputation. To attract desirable employees, your pay scale should be competitive. The pay plan must also be objective and fair to all employees. Rewards should be commensurate with contributions.

#9: Benefits
Even if your profit margins are thin, you can provide benefits that are not cost-prohibitive, or even free. Providing more benefits puts you in a better competitive position to attract and retain employees. A profit sharing plan based on growth in profits is a win-win. You could offer a 401k plan or a pre-tax benefits savings plan. Group life and disability insurance and other benefits can be provided through the Greater Richmond Chamber. Group discounts on products and services are also extended through the Chamber. Your company can become a member of a credit union to enable employees to qualify for benefits. Little perks, like buying pizza for the staff on a hectic day, help to make your employees appreciate their jobs. Be creative!

#10: Recognition
Numerous studies have documented the fact that money is not the primary motivator for most workers. In fact, people who are motivated primarily by money may not be good employees. Recognize your people frequently for their good work and they will repeat the performance frequently. Praise must be sincere and should be distributed equitably, if warranted. When possible, praise people publicly in meetings or employee newsletters. Be sure to give credit and rewards for good ideas that benefit the company. Reinforce the right behaviors. Avoid saying “Great, but.” Look for key measures to recognize employees, such as production or customer retention. Come up with contests to recognize your people. Give recognition certificates, plaques and prizes other than money, such as tickets for movie rental or sports events, or gift certificates for merchandise or dinner. A tangible reward makes a more lasting impression. Praising your best performers (the top 10-20%) will raise the bar for your weaker people. The goal is to encourage behaviors that build your business and recognize your people for practicing those behaviors as often as possible.

#11: Communication
Lack of effective communication from superiors is often the greatest cause for employee dissatisfaction and premature departure. The best managers listen to and communication frequently with all employees; and they make it easy for employees to tell them about problems and concerns. Communication should include training, group and individual meetings and, most important, daily dialogue with employees. As the manager, you must make the time to regularly talk with everyone. E-mail is a good communication vehicle, but the phone is more personal; and neither can replace face-to-face meetings. Employee newsletters can enhance communication. Keep communication simple, provide adequate information and give examples for clarity. Show your trust in your people and make them feel included by sharing financial and other inside information. Management can make much better decisions by getting input from front-line employees. If your people know their voices are heard and feel like they are part of the decision making process, they will be much happier, loyal and more likely to support new programs.

#12: Empowerment
Engage your employees to make decisions; give them the authority to act in the best interests of the company. Provide training in resolving customer problems and then trust them to make the right choices. Give your people some time to think and plan by building in some slack time through adequate staffing and by providing support. Don’t criticize employee mistakes. Recognize that making decisions naturally results in making mistakes. If you criticize honest mistakes, your people will stop making decisions. Failure is also OK, because it is a normal part of the road to success. Nothing is more gratifying than to see your people develop the skills and confidence necessary to act independently and make sound decisions that are in the best interests of the company and your customers.

#13: Leadership
Much has been written about leadership and you should make the time to learn how to be a more effective leader. Here are ten basic keys: (1) Integrity: always tell the truth and always keep your promise, even when it hurts. (2) Trust: You must first demonstrate your trust in people by making yourself vulnerable before you can expect them place their trust in you. (3) Respect: If you really don’t care about your people they will sense your lack of concern and will not respect you. (4) Fairness: Treat all employees fairly and equally (including family members) regardless of your personal feelings. (5) Vision: To be a true leader, you must have an unfaltering vision, be able to communicate it to your people, and get them to understand and share in your vision. (6) Optimism: You must always be positive and confident that the company will succeed; but you should also be realistic. (7) Decisive: A leader must make decisions and stick with them as long as they make sense. Consensus is not always better than an individual decision, particularly in a crisis situation. Remember, “The buck stops with you!” Trust your intuition. Intuition draws upon your experience, stored knowledge and information you may not even realize you have in your head. (8) Example: You must “practice what you preach” or you will have little credibility. (9) Teamwork: Insist on mutual respect, courtesy and cooperation among your people. This fundamental attitude was crucial in shaping our nation and is also essential to build your company. (10) Authority: Remember that authority is not vested in your position as “the boss.” Authority resides with the people who report to you and they have the power grant it to you or not.

#14: Having Fun
People like to work in an environment that is enjoyable; they can get burned out if the work environment is totally serious and strictly business. Great companies like Southwest Airlines have come up with creative ways for employees to have fun. If you’re not naturally good at getting people to have fun, designate a key employee to assume this role and be your official or unofficial cheerleader.

Copyright 2006, Peoples Income Tax, Inc.

About the author:

Charles E. McCabe
Chuck is founder and CEO of Richmond-based Peoples Income Tax, Inc. He has an Executive M.B.A. degree from Pace University, New York City, and has taught small business management at Virginia Commonwealth University.

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