Retain Top Performers in a Tough Economy

UPDATED: March 13, 2012
PUBLISHED: March 13, 2012

While big multinationals make headlines when their executives leave, smaller businesses can be especially hurt when top performers jump ship. “Turnover in a small business has a much greater impact on loss of customer loyalty,” says Keith Ayers, head of Intégro Leadership Institute and author of Engagement Is Not Enough: You Need Passionate Employees to Achieve Your Dream. “Smaller businesses typically have a small, loyal customer base who get to know the staff well and get special attention. Then that staff member leaves, and with them goes not only the relationship, but also the knowledge of that customer’s likes and dislikes and special needs.”

In tough economic times it can be difficult to find ways to keep valued team members—not to mention inspire them—when there is little extra cash to use as a motivator. Fortunately, money is much less important to employees than many managers believe, says Mary Hladio, a human resource consultant based in Cincinnati. “All the research shows that the reason people leave a job has nothing to do with money,” she says. “It has to do with the opportunities they get, the culture of their workplace or the manager. There is a reason why firefighters are firefighters and teachers are teachers—they do it for a bigger cause.”

The most important thing a company can do is create a place where people want to work, experts say. Such an environment is a place with a purpose bigger than any individual and where people’s ideas, feelings and personal lives are respected.

Ayers says programs and tactics are less effective in retaining and inspiring employees than genuinely trusting and valuing them. “When leaders see their employees as partners in their success and start treating them that way,” he says, “morale and loyalty skyrocket.”

To inspire passion and allegiance, Ayers says you must fulfill these four employee needs:

– Do meaningful work. To help people meet this need, create a mission statement with core values and reference it frequently, Hladio says. This statement should have a common theme that ties the history of the business to the future. It will also outline what employees should aim for in daily decisions. “This gives each employee something to strive for that is bigger than revenue or a paycheck or the customer,” Hladio says. Give each employee a framed copy of the statement.

– Be respected. “All people need to be respected for who they are, not just for what they do,” Ayers says. When people feel respected, their natural desire to learn and grow is ignited, and they want to increase their contribution to the organization. Hladio promotes building respect among the employees by creating flexible work schedules, allowing employees to build their professional lives around their personal lives. “This requires a level of trust that the work will get done,” she says. Hladio also suggests creating a cross-training program in which employees spend a day or a week learning the tasks of people in different departments with whom they frequently interact. “Now someone in production understands what it means to work in operations, and their contact there is Bob or Cindy, not just some anonymous person,” she says.

– Be an insider. Employees want to be involved in problem- solving and decision-making. “This lets them know they are truly valued,” Ayers says. Create a process by which employees contribute ideas to make the business better—a designated email address, a peer-review process for choosing and rewarding the best ideas, and a culture in which managers solicit employee input to solve problems.

– Be on a winning team. In addition to celebrating the company’s financial goals, find other ways to celebrate as an organization. One of the most important ways to support employees is to celebrate their individual successes, including the occasional choice to leave the company, Hladio says. It’s wise to give departing employees a warm send-off party, gift or thoughtful note from managers and executives. But it is equally wise to consistently create an environment in which employees are cross-trained, and no single individual is solely knowledgeable about a process or client. “If the controller suddenly leaves, they can be confident that an administrative assistant knows how to run reports,” Hladio says. This ensures that departing workers feel free to leave their old positions, and the remaining employees are confident that the gap will be filled.

“Companies need to learn that their employees leaving can be a win,” Hladio says. They might return later with new contacts, skills and enthusiasm; they can help facilitate new business for their previous employer in the new position; and top team members can help build a company’s reputation as they move on to bright futures. “If employers can celebrate that, it creates a stir among the workers who do stay that they are supported and valued,” she says.


First Person

Company: MarketReach, cold-calling services for major corporations

Source: Amanda Puppo, CEO

Tactic: Treat employees as people.

Proof it works: In two years, the company has grown to 10 employees and $450,000 in revenue, with expected 2012 revenue of $1 million.

We are a small business that hires part-time workers. We compete well on pay, but we don’t offer benefits. To grow, we have to find other ways to be competitive and attract and retain the best employees.

One of the most important things a small business can do to retain and inspire its workers is to show you care. I do simple things like write thank-you notes when someone does something above normal duties and leave little holiday goodie bags on everyone’s desks with personalized notes. Also, once quarterly I’ll tell everyone to drop their work, and I’ll kidnap them to do something fun like apple picking or going to the movies. It costs so little, but people enjoy it so much.

As a sales organization, one of the most important things we do is set realistic sales goals. When you overinflate your expectations, right off the bat you’ve lied to people. Furthermore, 95 percent of employees are not going to make those numbers; they’ll be disappointed, they’ll go home feeling like garbage and you’ll have high turnover. People want to be spoken to straight. They want to feel good about what they do.

I also make a point of going around and getting to know people—find out what is going on in their families, with their hobbies. I keep a good memory bank and follow up by asking how their softball game was or how their house-hunting effort is going. I also note when people are having a hard time in their personal lives and give them a day off. Especially with hourly workers, telling someone they can take paid time off really goes a long way.


First Person

Company: M5 Networks, phone system technology

Source: Heather Bennett, Chief Learning Officer

Tactic: Create an environment of learning.

Proof it works: The number of employees grew from 107 to 212 in one year, with plans to add 100 new employees in 2012. Revenue was up 35 percent in 2011 over the previous year.

We celebrate when our people move on to other jobs; it’s always sad, but it means that they’ve larneed something here they can take someplace else. Some of our engineers have gone on to design popular video games, and what engineer doesn’t want to do that? When someone leaves for another position, we all go out to celebrate. We also go out after each monthly meeting so people from all the departments can get to know each other. Sometimes we spend the after-meeting party doing a really fun activity like a class at trapeze school or games at a pingpong venue.

We aim to inspire all of our workers every day and keep their desire to learn strong. In the technology industry, we need our employees to be able to learn something new this week and next week be really good at something else.

Our most recent and successful effort was our Battle of the Bands event. The idea was to apply learning skills to something non-work-related so everyone could understand how learning happens. We brought in music teachers one day each week during work hours, and employees formed bands and chose instruments to learn. Then we had a concert, and 150 people came out and played. Everyone had a really great time.

We’ve also recently tweaked our policy about giving workers stock options. Now employees can earn options by coming up with a really great idea.


First Person

Company: Shoplet, online office supply retailer

Source: Tony Ellison, CEO

Tactic: Empower workers to be part of the success.

Proof it works: Since 2009 revenue is up 40 percent, and headcount is up 45 percent to 65 people.

We believe that no idea is a bad idea. We encourage each employee to submit three ideas each week for improving business; this can be a tiny change or a major one. Everyone gets together and analyzes all the ideas and chooses one idea of the week and one of the month. The winners get movie tickets, restaurant gift cards or monetary awards. But I’ve noticed that the recognition is more important than the prize. It makes people feel listened to, that they have an impact on their work. As a result they are more creative and help us to be innovative. One idea came from an employee who realized that most office products were purchased for a company by one person at that company—the same person who bought break room and restroom supplies. As a result, we started offering break room and bathroom goods, which has been hugely successful for us.

We also include our employees in all of our goals—be they financial, strategic or long-term. Each employee has profit-sharing, but they are also encouraged to take part in our vision for the company. We share our goals at weekly and monthly departmental meetings, as well as quarterly town hall meetings. There are concrete steps that each employee can take toward the goal, and management opens up to employee suggestions for meeting that vision. For example, one of our goals is to grow the sales of environmentally friendly products. One of our employee-generated ideas was a clock on our homepage that counts how much our customers have helped reduce their carbon footprint by buying our green items. Innovative ideas like these help small businesses thrive despite pressure from major competitors and a down economy.

Emma Johnson is a business journalist, gender-equality activist, and founder of the world's largest community of single moms, Emma and her best-selling book, The Kickass Single Mom, and her organization, Moms for Shared Parenting, have been featured in hundreds of national and international media outlets.