“People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.” Mary Kay Ash.
Staff recruitment, satisfaction, motivation and retention are often overlooked as being part of the ‘soft’ skill set of lesser importance than the real business of generating revenues and earning profits. But ask any owner of a small or medium-sized business what their greatest challenge yet most valuable asset is, and they’ll all agree – it’s their staff. What would it mean to your business if your employees were as committed to achieving success as you are?
Recent surveys confirm what most owners of small and medium-sized businesses already know only too well – their number one concern, above even cash flow problems or a lack of sales, is finding and keeping the best people. And in an employment market that is experiencing the impacts of an ageing workforce, skills shortages and a new generation of employees that is more mobile, more demanding and less loyal to employers, employee retention is becoming one of today’s hottest competitive issues. The ability to attract, retain and motivate people to peak performance means being able to attract and retain business – and it is a major source of competitive advantage. In fact, it can mean the difference between success and failure.
It costs too much to not invest in your employees
Employee turnover can represent significant costs to businesses in terms of:
- recruitment and training
- disruption to the team dynamic
- disruption to relationships with customers, suppliers and other third parties
- disruption to business continuity
- and a variety of other direct and indirect costs.
One estimate suggests that businesses lose at least two months of productive time through recruitment, training, loss of momentum and other factors when a staff member leaves. And it is said to cost anywhere from two and a half to three times a person’s annual salary before the business is back up to speed again – not to mention the cost of the intellectual property and business knowledge that just walked out the door. In short, losing staff means replacement costs, foregone opportunities and even increased competition if that’s whose recruiting your best performers.
Employee incentive schemes as a strategic business tool
Recruiting staff is an expensive, time consuming and often
haphazard process. And in a job market where the best candidates are often interviewing you, rather than the other way around, businesses need to find ways of differentiating themselves through innovative and attractive terms of employment.
Specific strategies aimed at attracting, motivating and retaining employees can deliver valuable payoffs. Employee incentive schemes that get your people thinking and acting less like employees and more like business owners are an important tool. Their primary objective (and the reason for their success) is to align your employees’ financial objectives with those of your business – and that translates into a major competitive advantage. The table opposite shows how SMEs have benefited from increases in net profit, and decreases in staff turnover and absenteeism following the introduction of employee incentive schemes.
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