Grow a Business Inside Out
Why create an employee contribution plan
June 24, 2015
Generally the term “employee contributions” refers to a company-sponsored paid benefits program, typically some type of retirement plan. We aren’t talking about those employee contribution plans, instead we are referring to the act of contributing time into the development and retention of employees. Generally speaking, managing employees is the most time-consuming undertaking any business owner or manager has, from hiring to termination of employment. Employment statistics show that employees can cost more than their salaries and it costs the employer even more to replace them. Entry-level employees have been estimated to cost up to 50% of their annual salary to be replaced and mid to high-level employees could easily quadruple the cost of their annual salary to replace them. This doesn’t take into account the time, energy, and headaches associated with finding new employees or the possible demoralization costs among other employees who may become resentful after a work companion leaves. It’s here where most companies lose the largest portion of their initial investment. The cost of a “bad apple “or bad attitude could result in thousands of dollars lost and hours of mislaid productivity. Even then, there are still other uphill battles incentivizing employees to leave their companies.
Forbes reported last year that staying employed at the same company for over two years on average could make employees earn about 50% less in their lifetime. These claims aren’t without support. Numerous studies done by countless talent management and staffing companies report the same thing. So what keeps employees in their jobs, doing them well and happy? The Harvard Business review did an article on this very thing back in July 1973. The two things keeping employees back then were job satisfaction and environment. Flash forward to the year 2012, the American Psychological Association’s “Workforce Retention Survey” conducted by Harris Interactive produced similar results. 67% of employees stayed because they enjoyed their work, 67% also reported their job fits well with other aspects of their life, 56% felt connected to the organization they work for and only 59% claimed pay as a reason why they stayed. What did we gain from this? Money incentivizes a smaller group while environment and job satisfaction are still top reasons why employees stay at companies.
Surveys like these remind employers why companies invest in employee retention and development programs. There is an abundance of strong evidence supporting the development of employee programs and these program’s influence on companies overall organizational performance. Many businesses find it difficult identifying exactly what these programs should look like.
Here are a few things to identify:
Promotions or Special Assignments: Often times, this is associated with large raises and increased responsibilities. The truth is, money is not a good motivator but, autonomy, mastery and purpose, are. Often endorsements are simply a title and responsibility change, for example a technician who has been working at a pharmacy for a year who has maintained a strong work ethic and enrolled the most patients in a pharmacy’s medication synchronization program may have earned the lateral title of Med Sync Project Manager. Creative promotions where recognition is at the basis are likely to be more successful in the long run.
Recognition Programs: These are some of the most used and highly regarded, easy-to-do programs any business owner can introduce. These programs aim to recognize and reward work and behaviors that further the company’s mission, goals and values.
Team Building Activities: We often forget how much time we spend with our colleagues. Some even become like family. For this reason, it’s important to get everyone to spend time with one another outside of the work environment. Doing this correctly will help strengthen the ties of the team.
The Little Things: Even the little things will go the extra mile to create the right culture. Think of bringing in bagels on Mondays or teaming up with a local dry-cleaning facility to offer a laundry delivery service for team members. Also, allow employees to dress up for holidays or participate in a casual-dress Friday routine. These things may seem small and insignificant but they go a long way bettering the work experience.
Need more suggestions or have questions about creating your own employee development plan? Use the form below to get in touch with us:
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