How to retain staff – without breaking the bank

It’s getting harder to afford financial incentives and bonus payments for staff, but this is not the time to lose your high performers. As LEON GETTLER explains, there are ways to motivate and retain staff without spending a fortune.

By Leon Gettler

It’s getting harder to afford financial incentives and bonus payments for staff, but this is not the time to lose your high performers. There are ways to motivate and retain staff without spending a fortune.

As the economy slows, the question of how to motivate and retain staff is becoming increasingly difficult for entrepreneurs. With sales and profits sliding, there is little spare cash for financial incentive schemes and big bonus payments. A recent SmartCompany poll revealed 30% of businesses will not be able to offer their employees a pay rise to compensate for inflation.

But an economic downturn is the worst time to lose your high performers – this is not the time to abandon attempts to motivate and retain your staff. In fact, successful organisations are those that treat a downturn as an opportunity to refocus strategy while keeping their employees fully engaged.

It is worth remembering that in 1985, in the middle of a recession, Ireland-based low-cost airline Ryanair launched into a highly competitive market. It had one aeroplane and an innovative business model. It now has a fleet of 133 and is near the top of the European short-haul market.

It is also worth remembering that money might not be the glue that keeps the best and the brightest. A survey of workers by British consulting firm White Water Strategies, conducted early this year, found that saying “thank you” often had the same impact on job satisfaction as a salary hike. The research revealed that praising staff had the same motivational kick as a 1% pay rise.

But few companies did it well. According to the survey, one in three employees reported that they were not thanked at all when they did well, while a further third said they were not thanked enough.

Brigit Esselmond, a talent and engagement consultant at global human resources consultancy Hewitt Associates, says that a few simple words might be more effective than a pay rise when it comes to retaining staff.

“When we look at Australian organisations, we find that pay is not one of the key drivers of engagement,’’ Esselmond says. “There will be other things organisations can do to inspire stronger levels of engagement. It can be a simple pat on the back, or maybe a more formal recognition program.”

This is one of the key strategies at SalesForce, the company that sees itself reinventing the boom industry of call centres. Starting out as a small business with a staff of 40 in 1995, it now boasts a growing workforce of 6000 around Australia, New Zealand and Malaysia, a turnover of $243 million in 2006-07 and a client list that includes JetStar, Transurban, FlyBuys, Medibank Private, Whirlpool and Foxtel.

Staff turnover rates at call centres can be as high as 100%, which is hardly surprising, given that call centre staff don’t earn more than $33,000 to $40,000 and the job is stressful. But while the staff attrition rate at SalesForce varies from outlet to outlet, the company says it can be as low as 5% but never higher than 30%.

SalesForce strategies are aimed to counteract the effects of low pay and disengagement.

The purported aim is to encourage individuality, initiative and risk-taking, community and fun. Instead of performance appraisals, employees spend 15 minutes each fortnight with a manager. Employees’ achievements are celebrated with certificates and acclaim.

And it is not just for high sales or meeting KPIs either. Achievements outside the company, whether it is on the sporting field or in the arts, are celebrated. Employees wanting to get ahead are encouraged to take courses at the company’s internal college and receive a diploma in call centre leadership. Workers with unique skills are encouraged to conduct their own courses at the company for other employees, in anything from belly dancing to digital photography.

Kevin Panozza, the company’s founder and managing director, says it is about setting a clear direction, and living up to it in every way. That is what keeps the staff engaged. “SalesForce has a clear vision about what sort of people we work in our environment and we give them clear expectations.”

Stuart French, the SalesForce head of team development, says money is not the thing that keeps employees from walking. “Money is one motivating factor, but more people are motivated by the opportunity of success rather than a fear of failure, which is a common issue that comes into the workforce. The key is not to have a one-blanket approach to deal with individuals, and know what buttons to push with each.”

Some companies, like BAE Systems, have systems in place where they provide points for employees who put in over and above what is required of them, whether that is extra hours or initiative. Employees can cash in their points to pick up wines, vouchers, homewares, travel packages, car hire, home phone plans, laptops and PCs.

This form of reward and recognition is faster than when it’s done in an annual performance appraisal or quarterly review. Employees with 20 years service receive a 700 point voucher, 30 years service 800 points and 40 years 900 points.

Trish Reaburn, BAE’s human resources manager, remuneration and benefits, says: “People aren’t waiting for six to 12 months to be told they are doing a good job. The beauty of it is that it gives them a bonus, but it gives us the flexibility.”

The systems are flexible too. David Jackson, a director of Solterbeck, a Melbourne-based company that designs the points systems’ software for different companies, says there were several variations of these schemes, including some where employees could send each other thank-you cards or cash them in for carbon credits or as a gift to charity. The choice is the company’s. “The points have a currency and the client decides the currency value,” he says. Solterbeck’s clients include ANZ, Optus, Vodafone and pharmaceutical companies.

Global human resources specialists at the Hay Group say companies also need to look at the demographics of their workforce to identify the forces that would keep employees.

According to Hay, Generation-Y employees, who joined the working-age population in the 1990s, respond to packages with time off and flexibility, job sharing and opportunities for interesting projects that would give them exposure.

For Generation-X employees, who entered the workforce in the 1980s, the remuneration elements can include mentoring, sponsoring an MBA and leadership development.

For the baby boomers, born between 1946 and 1964, the perks could include superannuation, equity and reworking their salary package to reduce tax.

Hay Group’s research shows Australian mid-size to large organisations are now providing a range of different non-cash rewards. In the area of leave, some are allowing staff to take sabbaticals or purchase extra annual leave in a way where the pay cut is spread over the year, and so painless.

Other leave benefits include flexible working hours, “mental health” days, birthdays off, extra sick leave, study leave and carer leave. Smart companies also provide good maternity and paternity leave conditions.

Other inexpensive retention strategies include career planning, childcare facilities, elderly care services, concierge services, shopping and dry cleaning delivery, desk massages, yoga classes, running clubs and lifestyle coaching. Some even provide house cleaning, gardening services and dog walking.

Companies can also look at extending people’s careers in other ways, providing them with, for example, opportunities to do volunteer work for charity groups, working on a special project or serving on boards.

Wendy Nicholls, the Hay Group’s manager for reward information, says companies need to make sure that staff are well aware of these benefits. “At times, when you can’t give them cash, it’s more important to make them aware of what they can get access to,’’ Nicholls says.

“There are a number of companies where they do have access to benefits, but the employers are not very good at communicating that to staff,” she says. “It’s important for them to understand the total remuneration. It’s not just about the cash at the end of the day.”

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