Electrical Association

Retain the Best

Written by Travis Hoaglund

Losing a key person to a competitor can be financially devastating to your business. You may lose customers to the competition as well if they liked that employee's service. It is important to keep your valuable employees satisfied, motivated-and, working for you! Competitive salaries and a solid benefit package are essential, but benefits alone may not be enough.

What is the true cost of replacing an employee?

When an employee leaves and needs to be replaced, not only is there loss of that employee's production, there is also a cost in recruiting and hiring a new employee. Training costs may include the expense of any training seminars or lost production from employees that need to train the new employee. Experts estimate that it can cost anywhere from one to three times the salary to replace a person.

Hire right the first time

Improving employee retention begins with hiring the right people. Are you continuously recruiting, even when there are no openings? Having candidates identified and wanting to step in as needed can give you a huge competitive advantage. Better hiring decisions are usually made when managers are not under the gun to hire a replacement ASAP. Work through area schools and other networks and constantly be on the lookout for great people.

Don't skip steps during the hiring process. A business that fails to perform a criminal background check could unknowingly hire a convicted felon. Other employees may leave rather than work with this type of individual.

Annual summary of benefits

Business owners spend hard-earned dollars to provide a competitive benefit package. You clearly know the cost of providing employee benefits, but do your employees recognize the value that these benefits provide? When was the last time you provided each of your employees with an "Annual Summary of Benefits"? Consider developing a one-page list of benefits you provide and then quantify for individual employees the value of:

• Medical Benefits
• Life Insurance
• Dental Benefits
• Disability Benefits
• Sick Leave
• Vacation
• Retirement Plan
• Holidays
• Workers Compensation
• Social Security

By doing this consistently, employees will associate more value with the benefits provided and will be less likely to move to a competing contractor. Your Federated representative has a handy tool that helps make this an easy process. Request the "Valuing Employee Benefits" form (SF-421) and you'll be on your way!

Exit interviews

Despite your best efforts, you may still lose a good employee to a competitor. One suggestion is to establish an "exit interview," a process of asking the departing employee a number of questions, such as:

• What did you like best about working here?
• What did you like least?
• What thoughts do you have on our benefits package?
• Why are you leaving?

Learn from your experience and you will be well down the road to retaining your best employees.

This article is intended to provide general recommendations regarding risk prevention. It is not intended to include all steps or processes necessary to adequately protect you, your business, or your customers. You should always consult your personal attorney and insurance professional for advice unique to you and your business. © Copyright 2009 Federated Mutual Insurance Company. All rights reserved.