The best way to keep staff is to pay them more when they complain and then they will stay. Right? Wrong.
Surprising as it may seem, more money is rarely the answer when it comes to staff retention, according to Jay Hedley, Sales Director at the business profiling house, CIO Group, which carries out staff surveys.
“Many organisations often throw money at people to keep them on board – only to find that they leave anyway a few months later because management has not dealt with the issues causing the disengagement and dissatisfaction that the employee may well be feeling,” he says.
Unless managers either call in experts who can interview staff and draw up a plan to change the problems driving the disaffection, or undertake this themselves, they will only be addressing the symptoms of the malaise instead of the causes, he adds.
Staff retention is the “hottest issue” in the workplace at present and staff attrition rates of up to one-third per year are occurring in some firms,
he says.
“An attrition rate of between 18 and 28 per cent is not uncommon throughout medium to large-sized organisations,” says Hedley. “And I’d say in SMEs it’s even worse, because you’re having to deal against the big boys.”
Annual staff turnover of 15-20 per cent across most industries is considered acceptable and manageable, says Adam Kolokotsas, NSW State Manager of Tanner Menzies Executive Recruitment. “If you can keep it there, you’re doing pretty well.”
One way that SMEs can fight back, he says, is to offer flexibility of time to staff and a family-friendly approach. “People gravitate to smaller organisations for the things they don’t get in larger organisations,” he says. “Flexibility of time is a big one for SMEs. They may not be able to afford the big salaries, but maybe you can hire someone for four days a week instead of five so they can look after their kids. This can be quite cost-effective.”
Overall, the main reasons most employees leave their workplace is either due to poor management or unfulfilled promises made early on in their employment, says Kolokotsas.
“But what is also a struggle for some organisations is that they’re not perceived by their staff as having a competitive brand in the marketplace.”
The good news is that mounting a staff retention strategy is not that difficult and can save a lot of time and money over the long-term. The simplest of strategies may work. According to Kolokotsas, offering impressive-sounding titles, especially to younger Generation Y staff, can often be the solution.
“We’re finding more organisations giving impressive titles,” he says. “These really appeal to Generation Y and that’s something we’ve learned in recent years.”
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