The Employment Dilemma

Finding, hiring and retaining employees continues to be a hot topic and a continuing challenge. Many springmakers are perplexed. Why is there a lack of good candidates? What has changed? Which way should you go?

By Mary Bresnahan
the Bresnahan Group

Much has changed from 10, or even as few as five, years ago. Think about how far technology has come in the last five years. Did you have an e-mail address? Did you have a Web site? Probably not. We barely knew what the World Wide Web was. And, if you don't have a Web site now, you may be thinking about it. There is no doubt this new technology is the way of the future. You need to have it as a matter of doing business. As someone made the analogy, being connected to the Internet is like having a Fax machine.

Well, obviously, recruiting and retaining people is different now too. First off, we are operating with a diminished workforce. The generation that followed the Baby Boomers is smaller in population. Additionally, the Baby Boomers are beginning to retire, along with the previous generation, or have been downsized and decided go out on their own.

The generation commonly referred to as "X" has a slightly different style than what is considered traditional. These people want more flexibility in their work hours, along with more involvement and independence on the job. They learned from their parents, who were downsized, that loyalty belongs to them alone, not the company. They are looking for companies that will help them maintain and develop their skills.

Company Culture Checklist

So where does all of this leave you? To start the process of hiring, training and retaining employees, you must first evaluate your company's culture. Ask yourself the following questions. Check off each one to which you can honestly answer "yes."

Has the company changed along with manpower and the global economy?
Is the environment an open one that encourages involvement by all employees?
Does management share information about the company, including financials, with employees?
Does the company provide training for employees so they can maintain and add to their skill set, both technical and interpersonal?
Is this training a combination of on-the-job, formal-outside and formal-inside?
Does the company provide an orientation program? (Studies show that new hires that go through orientation programs typically stay longer than their counterparts that don't.)
Is the company willing to adapt to the new style of employee? Or, is the employee expected to do all the adapting?

Think about the last question for a moment. Could you have a long-term relationship with another person if there weren't some compromise, along with communication and trust? We spend a lot of our waking hours at work, so doesn't it make sense that these factors need to be present?

Now add up all your checkmarks to see how your company culture rates in today's job marketplace.

1-2 . . . Your company is 50 years behind the times. Yours is a culture that inhibits, not inspires, employees (strategic flaw with today's record-low unemployment rate). If management doesn't act quickly, there will be no need to worry about employees because there won't be any left.

3-5 . . . Your company's training and employee involvement efforts are half-hearted. Don't use lack of time as an excuse to invest in employee programs. Time and money spent now will pay off tenfold later. Start with upper managers. Get them out of their outmoded comfort zone, train them and help them adopt and apply modern management ideas.

6-7 . . . Congratulations! You know that employees are the vehicle to take your company to future successes. You've created an environment that allows them (and your company) to grow and flourish. As a result, you have a skilled, motivated group of workers that are likely to stay with you for years to come. Pat yourself on the back, but never rest on your laurels.

Breakdown of the 1999 U.S. Workforce

Baby Boomers (1946-62) 60.5 million
Cuspers (1963-64) 6.5 million
Gen Xers (1965-77) 40 million
Gen Yers (1978-83) 12 million

Source: Rainmaker Thinking Inc., a New Haven, CT-based consulting firm.

After reviewing your company culture, implement changes, as necessary, to reflect the needs of today's diverse workforce.

Next, take a close look at the job description. Does it still represent the job available? What has changed? What are the expectations? No one can live up to expectations, including you, if they are unknown. Use the description and your vision of the future as your guide. It is probably best to focus on the future, versus the past, so the person can grow into the job and responsibilities.

Keep in mind, however, that all future planning is based in the present. Therefore, the candidate needs to have a good foundation upon which to build. Pay particular attention to his or her interpersonal skills and value system. Unlike technical skills, you cannot teach an employee things like the importance of making a commitment.

Innovative Recruitment Strategies

From here, think "outside the box" to recruit candidates. Lots of people ask their current employees for referrals and offer hiring bonuses. These are still good things to do. Now, think of tactics that will attract people through word-of-mouth and visibility in the community. Think long-term because that is where the pay-off will be. Following are just a few examples:

Develop a complete orientation program. Don't try to cram everything into someone's head in one day, including benefit information and introductions; it's too much for anyone to remember. Stretch the orientation out over a longer period of time. Give the new hire a specific person he or she can go to with questions, especially about the unwritten procedures.
Place ads in unconventional places where your candidates may frequent. Some examples might be churches, auto parts stores or in the sports section of the local paper. Pass out flyers to social groups, and post them at places like the bowling alley.
Give key people business cards with hiring information on the back. Encourage them to pass the cards out wherever they go
Develop a career development program, if you don't have one. Everyone wants to grow and learn more, especially Generation Xers.
Tap into government-sponsored programs. Last year, the federal government passed the Workforce Investment Act (WIA). As a result, some of your local leaders are now responsible for providing employment opportunities. Contact your mayor and find out what is happening in your community. (Springmakers may also direct questions about the WIA to Mark Habicht of the Kirk Habicht Co. in Baltimore, MD. He is chair of SMI's ad-hoc committee on school-to-work activities - ED.)

These are just a few ideas you can use for recruiting new people. Sit down and brainstorm some more, then sort through the possibilities. If you really want to get the juices flowing, brainstorm with several other people. During these sessions, don't shoot down any crazy ideas; they may be the most creative and useful.

Simple Steps to Employee Retention

Now you have a new employee. The focus needs to change to retaining him or her. Orientation is one avenue already mentioned. Here are some other ideas you can put into practice to keep the grass looking greener on your side of the employment fence:

Present challenges in the job so the employee can stretch and develop abilities. Sure, he or she will make some mistakes, but that is how people learn. If an employee is not challenged by the work, he will leave to find the challenge elsewhere.
Sincerely celebrate the successes! This could be done with a simple "Thank you" -- a phrase that's certainly not said often enough in our society.
Share the company's goals with the employees. Decide how much authority employees can have to make decisions to move the company closer to its goals (empowerment).
Set up work teams to deal with special projects. This is an easy way to further develop your employees.
Most importantly, do whatever you can to build trust, something we have far to little of in today's work environment. This coincides with open and honest communication. Most often, you cannot communicate too much information. One caution: make sure that whatever you communicate is well thought out so you are not seen as "wishy-washy," which will defeat your trust-building efforts.

Again, I suggest you sit down and brainstorm employee retention.

Finally, remember that what happens in your internal culture seeps out onto the street. If it is good news, others will hear and come to you looking for a job. If it's bad news . . .

In a 1999 American Society of Training & Development survey, companies that trained 90 percent of their exempt employees and 80 percent of their non-exempt employees were able to attract and retain employees more successfully than companies that didn't. (See "Build a Better Work Force," page 00, which discusses two training programs for springmakers - ED.)

The shortage of workers is projected to continue for approximately the next nine years. Hopefully, you can do a better job at recruiting and retaining people than other employers around you can.

The Payoff

Put a proactive plan in place, and you'll find you are making money on your investment. A rule of thumb says it costs 1 ½ times a person's salary to replace them. (For some positions it is as much as three times their salary.) Therefore, if a person's salary is $30,000 it will cost you $45,000 to replace him. This includes hard and soft dollars. Even if you loose only two people a year at this wage, it will cost you $90,000. Any company could do a lot with $90,000.

Having a solid orientation program that includes information about the company (past and future direction), initial training, a job description, information about expectations and career growth, a person the new hire can go to with any questions and an orientation activity checklist will help ensure that your recruiting and hiring efforts were not in vain. Now you have an asset that can grow and develop within your organization and consequently make you money. If you can provide a growth-conducive environment, you will decrease your turnover.

Additionally, your absences (sick days) will decrease. Figure you have five people out in one day with each person earning an average of $12/hr. ($12 X 8 hr. = $96 straight pay X 5 people = $480 for the day) Now consider you are behind in production because of the absences. So, you have to pay 10 people to work 4 hours of overtime at time and a half to makeup for the lost time. (10 people X 4 hrs. = 40 hrs X $18/hr. = $720). Now you have an additional cost of $720. Add this to the original $480, and one day with five people absent cost you $1200. What happens if you have five people out everyday? You can do the math. Five people out for 2,010 hours in a 40 hour work week for the year equal $120,600 without overtime and $156,780 with overtime. That's more than you pay for some pieces of equipment! Your customer is not paying you anymore for the product you are producing for him. Over time that's a big bite on the bottom line. Not only are you not paying for time that someone is not at work, but it will influence your health benefits (money paid out for higher premiums, etc.)

Now let's consider morale. When people are continuously coming and going, a reputation develops that your company is an undesirable place to work and is a revolving door. Therefore, you will have a harder time attracting new employees, and those who do start working for you will not stay long. Placing an advertisement in one newspaper for one week could cost approximately $1,000. If there is little to no response, it is lost money. You usually don't run an ad for one week in one paper. How many ads do you run a year, in how many publications? (Not to mention what you could pay a recruiter ¾ if they could find someone.) Your money is better spent setting up a good orientation program or training.

The ripple effect will cut into your ability to maintain production and to attract new business. These factors certainly do affect the bottom line. It could be your livelihood on the line.

Following some of the suggestions given in this article will keep you on a track of making money by providing the best environment while giving you the basis for developing good people. If I add up the examples given here (estimating four positions advertised a year, for two weeks each time in four publications at an estimated cost of $14,000 and five people out for 2,010 hours in 40 hour work week for the year), I have spent $405,200/yr. Isn't that a startling figure! Looking at your company culture, developing an orientation program, doing things to retain employees, such as training and a career development program, will cost you a lot less and have better projections for the future.

Life is full of choices. If you choose to ignore the current and future business and employment environment, you can make up this money by having your sales people work harder and your current staff working overtime consistently until they quit or get seriously ill due to the unrelenting stress. Alternatively, you could try to raise your prices, but we know how far that will go, particularly in the automotive industry).

These suggestions are for the long-range thinkers who appreciate the value and importance of people to their operation. Machines and companies cannot run without the people who push the buttons, setup the equipment, do the problem solving and provide service to your customer. Your customer is internal as well as external. Treat him well and you will have repeat business. You and your company will be the ultimate winner. Good luck in meeting this challenge!

This article appeared in Springs, Winter 2000

Mary Bresnahan is the president of the Bresnahan Group, a consulting firm specializing in providing solutions to people issues for small- and medium-sized companies. The Bresnahan Group has experience in all levels of training including, Training the OJT Trainer, team building, employee involvement programs, recruiting, employee relations, and human resources law.

Bresnahan was instrumental in the design, development and implementation of the SMI University Coiler Setup Training Program. She has written several articles for business publications, including Springs, and holds a master's degree in organization development. Bresnahan may contact her by phone at (630) 653-1933 or e-mail at bresgroup @ 4u.net.

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