The costs to a company of high turnover in skilled employees can be significant, affecting both gross revenues and expenses. Recently, one of our advisors from the Kansas SBDC sent out a request to the rest of us for suggestions that he might pass along on how to improve employee retention for trades and construction companies. Amongst us, we generated a number of tips that can be grouped into four general categories: hire right, manage well, reward, and look forward. While this article was written with construction and trades in mind, many of the recommendations for employee retention are broadly applicable. Kansas SBDC advisors throughout the state can work with small business owners on bullet items listed under these headings and/or help identify further resources for assistance on matters that impact employee retention. (This is just an example of the types of services that we offer to help Kansas small businesses thrive.)
- Avoid poor hires. Understand the desired skills, qualifications, and characteristics that you are looking for in a future employee before you advertise, interview, and hire for a particular position. Try not to hire out of desperation. In addition to creating problems, an employee who does not perform well can cause good workers to leave your company.
- Use existing employees as a source of referrals. Someone who is a good performer and quality team member is likely to understand what it takes to be an appropriate fit for the company and will value the opportunity to contribute to hiring efforts.
- Set appropriate barriers for entry. Setting barriers too high will make it difficult to hire, but setting them too low might make existing employees feel undervalued – or worse, worried for their safety. Pre-employment (and on-going) drug screening, e.g., may be important for your company.
- Utilize available resources. For example, KansasWorks can assist with functions such as employee recruitment, assessment and screening.
- Practice good employee onboarding. Educate new employees about potential hazards and safety precautions. Explain your company values and work culture. Explain to new employees how they fit into the company and why their work is important. Encourage communication.
- Communicate expectations. Convey clear, detailed, accurate information about what is expected with respect to what is supposed to be done, to what quality level, and by when. It is frustrating for employees to be corrected or have their work re-done by employers when the performance expectations were not clearly set.
- Allow managers to manage. If you have chosen good managers, then support their decisions and don’t intervene unnecessarily. Interference causes confusion and frustration.
- Have clear processes. For example, having a clear process on how to make changes (to make a customer happy) after a job has been bid helps employees on a job site know what to do so that they feel more effective.
- Pay attention to company culture. Practice leadership skills that create a positive culture.
- Get rid of bad employees. Poor attitude, inconsistent job performance, lack of attention to details and instructions, or general unreliability in one employee can decrease productivity and undermine morale causing other employees to quit – or even worse, create hazardous work conditions or unsafe products.
- Care about safety. There are many reasons for caring about employee safety, just one of which is that employees have no reason to feel loyal to a company that does not make this a priority.
- Offer competitive wages. Information about wages for specific occupations in locations throughout Kansas is available from the Kansas Department of Labor. To illustrate, according to KDOL, in 2017, there were 1,460 construction trades jobs in the Manhattan area. Compensation was $28,559 annual salary ($13.43/hr.) for entry level positions. The mean annual salary was $40,921 ($19.67/hr.). The median salary was $37,636 ($18.09/hr.). For experienced workers, annual salary was $47,103 ($22.65/hr). More fine-grained information is also available, e.g., for dry-wall installers, electricians, plumbers, roofers, cement masons and concrete finishers, and so forth. It is wise to know what is reasonable and competitive compensation and there are resources available for acquiring this information.
- Offer benefits. Even if your company is too small to be required to offer benefits, this is something worth considering. Health insurance and retirement plans are highly desirable. Flex time and paid vacation days also appeal to many workers. Try to figure out what benefits you can offer that your employees would most appreciate.
- Acknowledge contributions and work well-done. Buy lunch now and then or a pizza after work. Give a gift-card or a bonus for hitting certain benchmarks or for potential job candidate referrals.
- Be a good coach. For example, help an employee see how staying with his/her employment might play a major role in achieving his/her dream of homeownership.
- Show how a particular job might fit into a path of career advancement and taking on leadership roles.
- Support opportunities for your employees to upgrade their skills.
- Don’t get stuck in time. Stay abreast of workforce trends, new technologies, and improved processes so that employees take pride in the company and are not frustrated by competitors moving ahead.
- Manage your finances responsibly. A company that is poorly run financially can give employees cause for concern and reason to look for work elsewhere out of worry for their future.
- Have a succession plan. Employees might worry about what would happen to the company if the business owner or key manager were to leave the company (e.g., to retire or pass away). Having a plan for how the company will continue and move forward can reassure employees that the business has a future.
- Consider an Employee Stock Option Plan. Due to the cost, this is not an option for every business, but in the right circumstances, it can enable a small business to retain employees, include them in important decisions, and grow the company. According to the National Center for Employee Ownership, “ESOPs are most commonly used to provide a market for the shares of departing owners of successful closely held companies, to motivate and reward employees, or to take advantage of incentives to borrow money for acquiring new assets in pretax dollars.”
It is important for small businesses to be proactive about retaining valuable employees. In addition to the expense of hiring and training, turnover costs in terms of loss of knowledge, productivity, time, energy, and morale can be detrimental to a company. By appreciating potential effects of turnover and – pardon, the pun – effectively employing practices to support employee retention, small businesses should be better positioned to hold on to their valuable skilled workers and to be better for it in the long run.
Related Posts & Links to Further Information
Note: thank you to the Kansas SBDC Advisors who contribution suggestions and participated in the conversation that led to this post.
Laurie Pieper, Ph.D.
America’s SBDC Kansas