How to Reward and Retain Great Employees

The American writer Robert Frost made his poems rhyme, at a time when most poets thought rhyming was a relic. He said he felt better rhyming the same way a draught horse feels best when pulling against a harness.

Even during a recession, great leaders want to hold onto great employees. Gerald is a commercial heating and air contractor. He stays up nights worrying about keeping his best foremen and laborers. He knows they give clients the best service. He thinks all the policies and procedures in the world mean nothing without good people. His best employees sometimes threaten to leave if they didn’t get raises. Gerald, thus, gives raises annually to the best.

Now meet William. He doesn’t worry much whether employees stay or leave his commercial heating and air company. But, like Gerald, he holds the service his clients receive in highest regard. William has created a system to measure the satisfaction of clients. The foremen and their laborers generating highest marks receive a monthly share of profits. But no foreman or laborer receives an hourly increase. Not ever. As a result, employees who earn incentive pay tend to stay; the rest tend to leave.

William’s foremen and laborers earn an average $17.52 incentive and hourly pay. But Gerald’s foremen and laborers earn $17.12. William’s company has a labor cost of 23 percent of sales. Gerald’s company has a labor cost of 26 percent, significantly more. William doesn’t worry about his employee turnover rate, and it is 12 percent per year. Gerald still worries at night, and his employee turnover rate is 37 percent.

Do you have systems in place like William, or do you worry like Gerald?

Which one is on the loose and which one is on the noose?

Robert Anderson, founder of Small Business Advocacy Center, is a writer, small business turnaround expert and business coach, with success restoring value to businesses throughout North America. SBAC can be reached at info@SBACenter.org or 970-231-2772.

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