Ent 600 Week 6 Blog Discussion

“Keeping Top Performers and other Hiring Dilemmas”

Employee turnover is expensive in any business. According to Christina Merher from PeopleKeep, it can be anywhere from several thousand to 1.5x or 2x the annual salary.  It all depends on how you measure cost and what factors go into the study. Some studies might include the revenue loss from vacancy if it was a profit center or the time the new employee takes to reach the revenue targets of a previous employee.  Either way it is a lot of money.  Needless to say, an emphasis should be made on keeping your top producing employees.

According to Eric Herrenkohl in “How to Hire A-Players,” it is important to not take your “A-players” for granted.  This is includes recognizing their valuable contribution to the business. Having a conversation with the employee is the first step. This lets the employee know that they are being thought about and appreciated. Let them know you are interested in their future plans. This conversation can provide valuable information on their thoughts about their future. A manager would want to find out whether or not they plan to stay with the company. It also helps for future planning. Although it may look static on a piece of paper, an organizational chart is more like a chess board.  Changes will be made and the owner or manager needs to be ready. By having employees in the organization on the “bench,” this could help backfill vacancies.  Valuable employees appreciate knowing that their career has direction. According to Valerie Bolden-Barrett from HR Drive, lack of career development was the top reason for employees leaving their company in one study.

In today’s economy, jobs are plentiful.  I know business owners that have problems with employee turnover. Another hiring manager will offer a small raise in pay and they will leave their current job. If the employee is indeed an “A Player,” then you will want them to know their value to the organization and how their career will reap long term benefits by remaining loyal.  

I heard many people say that they have left their job because they did not like their boss. Open and honest communication should be made between manager and employee.  Concerns about the job can be addressed immediately this way.

“Each time a startup hires a new employee, it faces a choice between hiring a specialist, who can usually be counted on to do a specific task well, or a flexible generalist or jack-of-all-trades, who cannot do any particular task as a specialist could but can move across multiple tasks more effectively than a specialist would.” (Herrenkohl, How to Hire A-Players,2012)  

In the beginning of a startup, usually generalists are hired. There are multiple tasks to be handled, but the cash flow has not begun yet. As the company grows it is important to make sure those early hires are moved into a specialist role.  Identifying their natural talents and moving them into such a role will increase employee satisfaction. In addition, one can usually perform one skill very well as opposed to multiple tasks mediocre.  As the startup matures, there is likely to be specialist positions that are established. This changes the recruiting dynamic completely.  Now the hiring manager needs to look for a candidate that is proficient in that functional area.

As the specialist becomes more proficient in their area, they expect more compensation which is another reason why there tends to be more specialists in a mature startup.

I have created a plan for NC Aerial Images in this entrepreneurial planning course.  This plan looks great for a mature company that has been in business for many years.  However for a hypothetical startup, it seems unrealistic.  That is because timeliness is important.  An owner needs to be ready to bring others into the business if the situation is correct. If there is not enough cash flow, then an employee may not be feasible, but perhaps the meeting the right person can be involved other ways such as an investor, advisor, or even partner.  A Founder needs to remain flexible and think long term, but at the same time understand budgetary concerns of the business.

References:

Employee Retention Now a Big Issue: Why the Tide Has Turned, Josh Bernsin on LinkedIn, August 16, 2013

Employee Retention – The Real Cost of Losing an Employee, Christina Merhar, PeopleKeep, February 4, 2016

How to Hire A Players, Eric Herrenkohl, 2010

HR Drive, Study:Turnover Costs Employers $15,000 per worker, Valerie Boden-Barrett, 

August 11,2017