The technology boom is lifting and the employment market is opening up. One of our main challenges is not only recruiting but retaining employees. How much are you willing to invest to keep your employees focused and happy? This is a major question on the minds of CEOs and managers worldwide.
If employers want to make a real and lasting change that affects profitability, they need to design systems and processes to sustain the results they are looking for. This requires investment of resources. We all say the major resource is our workforce - employees. Organizations that have been able to invest in education, training, growth and skill development have found a significant payback to these investments.
Just how does one invest in employees and what are the benefits of doing so? Firstly, consider continuous training to develop skills. Technology is a major driver of constant change and the need for upgrading of skills. Also, with the large influx of Hispanic and Latino populations, training in English language skills brings a financial and emotional investment that demonstrates caring.
Other investments are sharing financial data to the extent of educating the workforce on how they affect the bottom line (open book management), special interests (kitchen Spanish), personal development (Dale Carnegie and Leadership Forums), demonstrating value and appreciation ("Thank you," "Well done" and "I appreciate your work"), health and wellness (stress management) and value-centered leadership (walking the talk).
I have often asked CEOs who their main customers are. Typically they answer "the external customer." However, when confronted with the idea that their workforce is really their main customer, they begin to see the significance of the question. What they come to realize is that the way we treat our internal customers (workforce) is the way we treat those outside our companies.
By investing in our workforce we create healthier work environments. These environments typically are the ones who have invested heavily in their employees. We know that when people feel appreciated they are more productive, loyal, effective and service-oriented to the external customers.
Denis Kravetz found in 1987 that companies that invested heavily in their employees had significantly higher annual sales growth by 55 percent, higher annual profit growth by 76 percent, 50 percent higher profit margin, 56 percent more annual growth and a 54 percent greater annual return. He also discovered that of the 20 companies surveyed that had higher People Management Practices (PMP), 80 percent were still in business 10 years later. Of the companies with the lowest PMP scores, only 30 percent were still in existence 10 years later.
People are not easily replaced. With the shortage of qualified workers here and not expected to get better any time soon, the cost of replacing employees is often comparable to that of investing in a new car. Recruiting, hiring, benefits and administrative costs all put an organization upside down on their original investment. Studies have shown that replacing an employee can cost upwards of three times the original salary. When good people leave an organization they take its training and knowledge, and often times relationships, with them. Can we afford to let all this go?
Further research shows the top five reasons for employee departures are employee/manager relationship, inability to use core skills, not able to impact the organization's goals, frequent reorganizations and lack of control of their career, and inability to "grow and develop." All these speak not to money but to human relationships, personal improvement and ability to make a difference. All these give employees a feeling of being a part of something greater than themselves along with a sense of purpose. Isn't this what we want in our companies?
Companies that really believe their employees are their most valuable assets are treating them as such. What are you doing to invest in your most valuable assets?
Reed Daugherity is the director of the Small Business Development Center (SBDC) for Clatsop Community College in Seaside. Daugherity writes from his experience as a consultant and his work with local businesses. You may contact Daugherity at 738-8535.