There may not be a greater management challenge in building the value of your business than engaging and retaining your employees.
It is not unusual to hear business owners, with frustration, express as one of their greatest ongoing concerns the engagement and retention of their employees. And it’s costly if you don’t do it right. A few years ago, The Society for Human Resource Management (SHRM) reported that on average it costs a company 6-9 months of an employee’s salary to replace the employee. For example, for an employee earning $60,000 per year, the costs of recruiting, training, etc. would be in the range of $30,000 - $45,000. These figures are probably higher today.
Business owners typically understand from experience that low employee engagement and high turnover are financially expensive, but sometimes they’re not aware of how costly these challenges can be to the business culture they have worked so hard to establish (which is also financially expensive). We’ve all heard the Peter Drucker quote, “Culture eats strategy for breakfast”, implying that the culture of your company always determines success regardless of the impact of your business strategy. So, culture is clearly very important for building and protecting business value, and a key driver of a strong culture is employee engagement and retention.
Low employee engagement and high turnover are costly on all fronts. What can a business owner do about it?
Our firm does not currently have a practice area or special expertise in employee engagement and retention, but we have observed some common practices among business owners who have a track record of success in it.
Clearly established vision, mission, and values that are continually communicated and modeled by leadership/management, which serves to facilitate a strong corporate culture.
Clearly defined growth and succession plan that involves the retention of key employees.
Clearly defined and communicated employee incentive (rewards, retention) plans that are aligned with corporate goals for growth.
Employee expectations are clearly defined and communicated.
Employees are held accountable and receive regular feedback on their performance.
There is an employee selection and onboarding process in place that is well-defined, disciplined, and values-based.
For most small business owners, employees represent their greatest asset as well as their largest expense. And hence, it is imperative that employee engagement and retention should be a high priority in managing toward a sellable business with maximum value. It should be so valued by the business owner and management that it is seen as a significant aspect of the business culture by the employees.
So, if you are in need of assistance in this area, it is well worth the investment of time and finances to get professional help as soon as possible. The right advice can save you both money and time.
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