Employee Retention as Canadian Businesses

Employee Retention

As Canadian businesses begin to better understand the costs of employee turnover, they seek to find ways to improve employee retention. Attracting and training new employees can cost up to 6 months' salary for hourly positions and 18 months' salary for management positions (Go2HR.ca, 2008). There are several reasons why employees leave. These include lack of recognition for good work, lack of opportunities for advancement, lack of training or skills development opportunities and the inability to use skills and abilities already acquired (Ibid).

Notice that benefits and pay are not on this list. Other surveys have similar results. In a recent survey on employee retention, only 31.8% of respondents said that pay was key to retention. More important were the people they worked with, opportunities for advancement and training and having exciting, challenging work (Ward, 2009). Clearly, while pay is important it is not the most important component of employee retention. It is worth noting that improving pay and benefits in an organization the size of ours will prove to be an expensive venture. Rather, successful Canadian firms are turning to lower-cost initiatives that more directly address the key issues that lead to high turnover.

The first step, therefore, in reducing turnover is to address these issues. At the most basic, employees want to be recognized for a job well done. This need not be public -- they just want to know that somebody has noticed. Management should be proactive at delivering praise when it is warranted. Beyond that, creating the sense of opportunity is critical. This can be accomplished in a few different ways. The first is to adopt a policy of promoting from within where reasonable. This allows internal candidates to feel as though they have a good chance at earning a promotion.

Likewise, internal communication programs should be enhanced. At FedEx Canada, for example, the company has multiple internal newsletters to keep employees abreast of the firm's moves. The costs for a monthly or even semi-monthly newsletter are minimal. Given our firm's resources, we could reasonably follow the lead of firms like FedEx and develop an intranet to enhance employee communication. Employees expect the company to make use of technology, in particular to communicate promotion opportunities and firms that do not make use of technology can expect to lose their best people (Ho, 2007). By posting opportunities on an intranet, the firm allows the employees to feel as though they have more control over their futures. FedEx Canada has an intranet for job postings. Because the company's operations are scattered throughout many regional centers, this program affords employees the option of finding promotion in other geographic locations.

An intranet can also provide learning opportunities. Training can be conducted through intranet programs, adding to the challenge and the sense of opportunity that the company enjoys. The human resources department has already developed a number of courses, many of which can easily be adapted to an intranet format. Investment in intranet technology for human resources and employee communication purposes is the single-most important means by which we can improve employee retention, because it addresses the most significant drivers of turnover (Ward, 2009).

There are other low-cost means by which the firm can improve retention as well. One not yet discussed is fostering a team-like environment. With 41.8% of workers driven by having a positive work environment and strong interpersonal relationships, the benefits of building greater camaraderie among workers are obvious. This can be done inexpensively. At FedEx Canada, team meetings are held each morning for each workgroup. The meetings are short, and are used to cover basic issues, but by bringing employees together physically and discussing the issues of the day in a "team" sense, the idea of teamwork is promoted. Employees will naturally talk to each other as they come together and disperse.

Although the role of benefits in employee retention is often overstated, it is worth nothing that there are many initiatives that can be undertaken. For example, the provision of daycare, flextime, sabbaticals, stock options, and menu-based benefits packages are all utilized by companies to promote retention (Hannay & Northam, 2000). A Monster.ca survey revealed that 88% of workers would appreciate a corporate wellness program, including nutrition and fitness training. It is worth noting that healthier employees would lower our prescription drug and absenteeism costs as well (Monster.ca, 2009). Clearly, the more we do for our employees, the less likely they are to leave.

This report has highlighted a number of different options for improving employee retention. The options that most directly address the issue are relatively inexpensive and have been implemented by a number of successful firms in Canada. It costs little to improve employee communication and foster a better sense of camaraderie and teamwork among our workers, and the cost of an intranet system is little compared to the cost of losing three workers. While the most expensive of options may be of little relevance to a company our size, they are worth noting in case future growth renders those options more feasible at some point down the road.