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The Road to Retention: Hiring Right

When a new employee doesn’t work out, it’s tempting to conclude the individual lacked certain qualities necessary for success in the position. However, it may surprise you to learn that Robert Half International research has found most top executives blame themselves - or, to be more specific, their hiring procedures - when a new hire leaves the firm.

Indeed, an excellent way to manage turnover is to re-evaluate your company’s hiring practices and policies to ensure the payroll professionals you bring on board are well suited for success within your organization. Following are some guidelines:

Avoid overhiring. Many companies hire too soon, only to face layoffs when workloads ease. When a vacancy occurs, suppress the urge to fill it immediately. Instead, evaluate workloads to determine if you need to hire a replacement, outsource the function or distribute duties among remaining staff. Using temporary professionals allows you to address immediate workload issues while evaluating your department’s ongoing needs.

Identify the necessary technical and personal skills. For each position, create a job description that includes core competencies and duties. The skills you’re seeking may have changed dramatically from those the last person in the job possessed. Also contemplate what “soft” skills a person needs to excel in the position. Perhaps you require someone who is at ease with constantly changing priorities and works effectively in a charged, interactive atmosphere. You may interview a payroll clerk who exceeds all of your technical needs, for example, but who works best in a quiet, deliberate work environment. Will this person excel in your company’s boisterous atmosphere?

Be realistic. Overstating the responsibilities of a particular job may convince a desirable candidate to accept it, but the employee isn’t likely to stay long if the projects are not what he or she was promised. It’s best to be candid about the firm, the position and the opportunities, both short and long term.

Ask your employees. Studies show individuals hired on the recommendation of someone already with the company have a high rate of retention. Current employees know your company and are unlikely to risk their reputations by suggesting someone who isn’t a good fit. You may also consider offering bonuses to encourage your staff members to submit referrals.

Rehire a former employee. The advantage of rehiring former personnel who left under favorable circumstances is that you know exactly what level of work to expect and that they fit well within your company’s work environment. So, as much as possible, remain in contact with ex-staff members and take opportunities to interact with them at industry events or when traveling for business. Some larger firms even establish or support alumni groups, through which former employees can maintain strong ties to the company.

Make compensation competitive. To attract talented professionals, your company’s salaries, raises and benefits should match or exceed industry standards. Other effective recruitment tools include stock options, profit sharing and equity incentives that make your employees stakeholders in the firm’s success.

Provide progressive extras. Consider offering nontraditional benefits and perks that address employee’s concerns regarding quality-of-life issues. Programs such as flexible work schedules, telecommuting, educational assistance, parental leave and additional vacation time can help you attract and retain the best people.

Start off on the right foot. Make sure newly hired employees are fully aware of their duties, as well as the company’s organizational structure, goals and long-term objectives. You may want to pair the individual with a seasoned employee who can provide insight on everything from the company culture to helpful contacts in other departments. Continually evaluating your firm’s orientation program by soliciting feedback from those who have gone through it will ensure the process remains an effective way to help staff hit the ground running.

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Making a Job Offer

Salary negotiation is a critical step in the hiring process, largely because candidates with the most in-demand skills are likely already evaluating other employment opportunities. Following are some suggestions to help ensure your offer is as attractive as possible:

  • Act quickly. After you’ve selected a prospective hire, make an offer as soon as you can. If you delay, you may find your top candidate has already accepted a position with a competitor.
  • Carefully consider your employment offer. Before entering into negotiations with a candidate, ensure you have a strong understanding of compensation trends in the field. The offer should be commensurate with the candidate’s level of expertise and in line with the industry and your firm. Consult resources such as the Salary Guide from Robert Half International for up-to-date data. Businesses that can’t provide high starting salaries should consider offering other incentives - such as stock options, profit-sharing arrangements or additional vacation days.
  • Clarify the details. It’s best to initially offer the position to your candidate of choice over the phone. Waiting to meet with him or her in person could cause an unnecessary delay, during which time the individual may accept a position with another firm. Follow up the phone call with a formal letter that specifically outlines the person’s title, pay and other aspects of the offer, including benefits. Also let the individual know if there are any contingencies associated with the offer, such as the completion of a successful background check.
  • Provide encouragement. When presenting the offer, be sure to highlight the many reasons someone would want to work for your company. Discuss staff recognition programs, bonuses, advancement possibilities and unique aspects of the corporate culture. Elements such as these, especially work/life balance initiatives, are particularly important to employees today.
  • Know when to end negotiations. When faced with a candidate who’s reluctant to accept an offer, try to uncover the source of the hesitation. Consider, though, the potential impact of any changes required to address his or her concerns. For example, providing a salary that exceeds someone’s potential contributions can ultimately affect your firm’s overall compensation scale. Likewise, persuading an applicant with serious reservations about the job to join the firm can backfire if that individual has second thoughts after starting with your organization.
  • Maintain communication. It’s important to stay in touch with the candidate after an offer is accepted. Make occasional phone calls to the new employee to answer any questions he or she might have about the company or position. Also consider sending a packet with literature about the organization so he or she can start with the firm on the right foot.

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Determining Competitive Compensation

News flash: Money still matters to today’s workers. While this may come as no surprise to most employers, it’s important to keep in mind when you’re trying to recruit new employees. Indeed, to attract the top talent, it’s crucial to offer salaries that match or exceed current standards set by other firms in your industry and area. Of course, offering competitive compensation to your employees also is key to retaining them, especially in today’s market, where skilled payroll professionals are in strong demand. Following are some tips for developing a winning compensation plan:

Go beyond direct compensation. Consider extending a profit-sharing plan or equity incentive program to all employees in your department. This gives them another reason to remain with your company: They will be able to capitalize on the firm’s future success and have a vested interest in its continued strong performance.

Re-evaluate salaries frequently. What you offered a new hire just six months ago may no longer be competitive. Consult online sites and publications such as the annual Salary Guide from Robert Half International and the Bureau of Labor Statistics’ Occupational Outlook Handbook to track salary trends. Also touch base with members of your professional network to see what issues are impacting compensation at their firms.

Develop a solid benefits program. An attractive benefits plan can help you recruit and retain the best employees. Offering flexible work hours, telecommuting options and other perks that allow staff members to better balance their personal and professional obligations can be cost-effective, and highly valued, benefits options for employers unable to significantly increase wage levels.

Bonuses vs. Incentives: When and How to Use Each
Many managers think bonuses and incentives are the same, but the truth is they’re not. While both can be used to instill employee loyalty, boost motivation and aid retention efforts, the difference between these rewards lies in how - and when - they are offered. Unlike bonuses, which are provided after a strong showing, incentives are offered to a person or group before a project even begins. Following are tips for implementing effective and inspiring bonus and incentive programs: 

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Bonuses

Managers should view bonuses as a way to reward high-achieving professionals for a job well done. Bonuses, which serve as a token of gratitude for employees who have gone beyond the call of duty, can be based on individual, team or company accomplishments. While a bonus can be built into an employee’s compensation package - an annual stock options grant, for example - spot bonuses are awarded in direct response to a single instance of superior performance and can be particularly effective, and they should be given within a day or two of an achievement. These instant awards not only show recipients you greatly value their work but also highlight to other employees the performance and productivity levels you seek.

However, for a bonus program to succeed, you must make sure your standards are uniform. For instance, the reward could backfire if you give a $300 bonus to an employee for quickly implementing a new payroll procedure and give someone else $150 for a similar accomplishment the following month.

And don’t forget that to serve as an effective motivational tool, a spot bonus must come as a pleasant surprise. If you offer them too frequently, and employees come to expect them, this form of reward can lose its impact.

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Incentives

Incentives are another effective motivational tool. These are especially useful if employee morale is sagging, and you want to fire up your team. If your staff members have had problems reaching certain goals, are inconsistent in their performance or are finding it difficult to see the benefit of a crucial and challenging assignment, offering an incentive can generate both buy-in and excitement. Also, because most professionals tend to be goal-oriented, creating a friendly, performance-based competition can go a long way toward elevating productivity.
The keys to developing an attractive and useful incentive program are clarity and simplicity: The more complicated the guidelines, the less effective an incentive program will be and the more time it will take you to develop and manage the initiative. Set specific, attainable, quantifiable goals and clearly communicate them to your team. In addition, be precise in describing the exact reward for reaching the objectives.

Also, don’t assume that cash is the only reward employees value. Gift certificates, lunch with the department’s key managers or extra time off can serve as effective motivation, especially if budgets are tight.

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Managing Effectively

As a manager, you have a direct impact on the well-being of your employees. While maintaining an open-door policy and listening to the concerns of those you supervise are important acts that help establish a positive working relationship with staff members, there are additional steps you can take to motivate and inspire your employees. Following are some tips:

Know their career goals. Determine each person’s career aspirations, then work with your staff members to identify ways to help them achieve their objectives. Perhaps you can pair a new employee with a more experienced colleague to help the new person learn a company-specific software program. Or you may consider offering a worker who is interested in pursuing continuing education the flexibility to attend courses at a local college. Be sure to touch base regularly and let staff members know you’re personally invested in their success and professional growth.

Offer personalized praise. When staff members excel on projects, let them know - and cater your kudos accordingly. One employee may enjoy public praise while another might appreciate a handwritten thank-you note. Your staff will appreciate that you’ve paid attention to their preferences.

Be sensitive to stress levels. After a sustained period of heavy workloads, intense pressure and tight deadlines, your employees may feel burned out. Signs of burnout include missed deadlines, increased absenteeism and changes in behavior or personality. When you notice employees are nearing their limits, consider bringing in interim workers to help ease the strain.

Be fair. While this may seem to be an obvious point, not all managers follow this maxim. You can’t expect your employees to remain loyal if they think you’re playing favorites or inconsistently enforcing rules and policies. You may have to closely examine your behavior toward each team member to determine whether you treat everyone equally. For example, are you more lenient with one employee when she delivers a project late?  Do you spend a considerable amount of time asking a certain staff member about his weekend plans?  While these differences may appear subtle from your perspective, they could be very noticeable to your staff and lower morale.

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How to Criticize Constructively

Offering helpful critique can be challenging: If delivered well, criticism will affect change without upsetting the work environment or damaging relationships. However, if handled poorly, it can result in unhappy employees who may eventually leave the company in frustration. Following are some points that will help you deliver critique in a constructive and positive manner:

Gather all the facts. Avoid jumping to conclusions or making assumptions about a missed deadline or poor-quality work. Instead, determine what went wrong and why, and then identify what the employee should do differently in the future.

Do it in private. No one wants to be reprimanded in front of their coworkers. You are much more likely to have a positive, effective discussion of an issue with a staff member if you ask him or her into your office and broach the subject diplomatically.

Criticize the work, not the person. Often, how you critique someone is just as important as what you say. For example, it’s better to say, “The report you prepared was not up to the firm’s standards” than “I’ve never seen anyone as careless about details as you are.”

Be specific. If you don’t clearly define the issue, an employee isn’t going to change his or her behavior. Avoid making broad, vague statements about productivity or performance. Instead, focus on what is wrong by saying something such as, “Because the report you submitted was a week late, it affected the entire team’s ability to meet the project’s deadline.”

Let the employee respond. After you’ve described the problem, allow the individual to explain or defend his or her actions. You may learn that he or she was asked by a senior executive to produce an additional report at the same time one was due to you. Or perhaps the individual is simply overwhelmed with projects. Whatever the case, it’s important to let the person give his or her side of the story.

Don’t ignore chronic problems. If an individual’s performance or behavior doesn’t change after your constructive criticism, it may be necessary to take action. Staff morale suffers when you keep someone on who doesn’t contribute to the team equally or produce quality work.

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