If you can't remember the last time you gave your best employees a raise, you could be riding for a fall. Recently released Bureau of Labor Statistics info shows that, while hiring remained much the same in February 2015 as it had the previous year, the "quits rate"--people voluntarily leaving their jobs--was 17 percent higher than it had been the year before.
As employees gain confidence in the strengthening economy, they may be tempted to look around for better paying opportunities, and small companies with their smaller budgets and fewer perks may be at particular risk. At least that's how it looks from new research by the search firm Robert Half. In a survey of 2,200 CFOs from across the United States, 25 percent reported that they'd lost a key employee to a better paying job in the previous year. Small-but-not-tiny companies seemed to be at greatest risk, with 27 percent of those with 50 to 99 employees reporting they'd lost a key employee to higher pay, and 28 percent of those with 100 to 249 employees.
But even if your company is smaller (or larger) than those, there's definite cause for concern, especially when it comes to those with desirable skills, according to Paul McDonald, senior executive director, Robert Half. "Professionals with in-demand skills have more opportunities available to them," he says. "If they don't feel appreciated--or well-compensated--in their current job, whether it's a small company or large one, they know they have other options, and increased leverage when it comes to raises."
To make matters worse, he says, executives are finding it challenging to find the right candidates for professional-level roles. "Companies that aren't worried about losing employees--particularly those with in-demand skills--should be."
The time to take action is before an employee has decided on a new job, not after, he adds. Here's what smart employers should do to keep key employees from leaving:
1. Do your best to offer competitive compensation.
As a small company, you're at a natural disadvantage compared to larger organizations which have deeper pockets and typically offer a wider array of perks. You should still offer your best employees competitive salaries to the best of your abilities. If your top performers haven't seen a raise in a while or don't have a regular annual salary review, it's time to take a look at what you're paying them. To get an idea of what's out there in the market place, consult industry sources, reports from professional associations and Bureau of Labor Statistics reports.
Also, don't forget to do the easiest research about which benefits and incentives most motivate your employees--just ask them. Bosses often don't know what the people who work for them would most appreciate. Once you know what they are, "Do your best to accommodate their preferences," McDonald advises.
2. Be honest about your financial constraints.
If you're paying employees less than they might be able to make elsewhere, they may think it's because you don't value their work, are stingy, or greedy. You don't want your best employees thinking this, so it's smart to share some details about the real reasons for those limitations. "As much as possible, if you can't offer a raise or compete on compensation with a larger company, be open about why," McDonald says. "Tell them when you hope to be able to match salaries in the marketplace, and then do your best to follow through."
3. Make the most of the perks you can offer.
"Small companies especially must identify alternative perks, such as extra vacation days, remote work options or flexible schedules to keep their best and brightest from jumping ship," McDonald says.
When it comes to items like these, a small company may have an advantage over larger ones, since you likely can simply offer a perk or benefit without having to negotiate around official company policies. Luckily for you, surveys show most employees care more about perks like these than they do about getting a raise. Use your small size to advantage, and get creative.
4. Ask key employees if they are happy with their jobs otherwise.
If you can't give them the raises you know they deserve, perhaps there are other aspects of the job or the workplace that you can adjust to better meet their needs. And if they're unhappy about any aspect of their jobs, finding out now may give you the time to make a change before they decide to leave. Perhaps most important, by asking the question you will show that you value them and their work.
Of course, this only holds true if you listen to what they tell you and do your best to make any changes you can that will make them happier. If you can't, be honest about why not. Asking for employees' input and then doing nothing in response is worse than not asking at all.
5. Watch out for warning signs that an employee is thinking of leaving.
Pay close attention to anything that shows that a formerly enthusiastic employee has stopped caring as much about his or her job. This can include chronically missing deadlines, forgetfulness about commitments or meetings, or an increase in errors. Other issues, such as a crisis in the employee's personal life or a health issue could create the same effect--but whatever the cause, you need to find out. Also, if an employee begins taking unusually long lunch breaks, and begins showing up for work in nicer clothes than usual, that's a telltale sign that the employee is going on job interviews.
6. Address the issue head-on.
If you suspect an employee is going to quit, don't hang back. Ask the employee directly if he or she is thinking of leaving. If the answer is yes, you can either try to encourage the employee to stay or start planning an orderly transition out. Keep in mind that some people will lie about their plans, so if someone tells you they're staying there's no guarantee that's true.
7. Leave the door open for boomerangs.
When valued employees tell you they are leaving, make sure to let them know you'll be happy to hire them back if things don't work out. At the very least, the employee will leave with a good feeling about you and your company. And he or she just may be back. Every new job is an experiment, and some of them don't work out. If that happens to one of your former employees and you allow that person to return, you'll have a much more grateful and loyal team member than you did before.