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Building Employee Loyalty Best Practices for Keeping Staff

With the national unemployment rate of more than 10 percent, it may seem antithetical to be concerned with employee loyalty. Seriously, where would they go even if they wanted to leave? Well, they may not be able to jump ship immediately, but make no mistake, when the economy recovers, all bets are off. That means that the untold hours spent recruiting, onboarding and training your best employees may be lost. That’s difficult to bear for the largest of companies, but for channel partners that are mostly small businesses, this can be extremely disruptive. If yours is a five-person shop, one defector can mean a 20 percent workforce reduction. That deficit impacts your whole team profoundly, and puts pressure on you to fill the gap. In the same way that it cost less to keep an existing customer than to find a new one, the same can be said of employees. Only here, the costs are not only financial, but a lot of pain and suffering. Fortunately, just as you can build customer loyalty, there are things that you can do that engender employee loyalty. A search on Amazon.com returned nearly 7,500 books on the topic of employee loyalty. Clearly, there’s no shortage of advice. For this article, however, let’s look at a few creative things that channel partners are doing to help keep employees happy.

Share the profits. You can offer traditional financial benefits like 401K plans — and some agencies, like master agency ADVODA Communications Inc., Greenwood Village, Colo., do — but there are other ways agents are letting their employees share in the fruits of their combined labor.

ADVODA, for example, gives each of its 20 employees part of an annual bonus pool. Their individual stakes correspond to the number of years they have been with the company, explained ADVODA President Ron Dunworth. So, a new employee gets one share while a founding employee would have eight since the company was formed in 2002. All shares are added up and divided into the bonus pool and distributed. A byproduct of this program, said Dunworth, is headcount control. He said since the staff knows that adding employees reduces their shares, they often will work harder as a team to avoid new hires until absolutely necessary.

Agency ARG, based in McLean, Va., has a similar revenue-sharing program. ARG CEO Greg Praske explained that all of the company’s employees except owners are eligible. Each employee receives a portion of the total incentive amount, which is based on the company’s revenue growth, that is based on a percentage of their salary. Commissioned employees, who already have incentives on revenue growth, get a smaller percentage while managers, who have a greater ability to impact growth, have a larger one. At the end of 2009, ARG dispersed $150,000 to 35 employees. “It kind of keeps everyone pulling in the same direction,” Praske said.

Solicit and value employee input. ARG, for example, includes all hands in its planning and goal setting. Praske said the company hosts a three-day retreat at a resort every year that is part business and part bonding. This annual event is followed up by quarterly one-day off-site planning meetings and monthly in-office staff meetings. “I think that helps with retention if people feel like they have a say in the company,” Praske said.

While ARG has taken a programmatic approach, smaller agencies can find similar results (e.g., engaged employees) with less formal meetings. David Goodwin, principal and co-founder of agency ATC Inc., which has two sales support employees in its Ohio office, has found success with impromptu meetings. “They could be two minutes or an hour,” he said “I’m sitting down and talking with them about how to better run the company.”

Being a smaller organization can be an advantage you can exploit in this regard. “At a big company, a manager or owner may never see employees or have conversations with them,” Goodwin said. “I have almost daily interaction with these guys. We go to lunch regularly. We share ideas. I take them on [customer] meetings. I ask for their feedback.”

Understanding the company’s goals and progress toward them also can keep them invested in the outcome. This can be particularly true at small companies where it’s difficult to see how to climb the ladder. “We are hitting the hockey stick growth curve. They know that,” said Goodwin, of his two employees. “They know that if they land some of the deals we are working on, we will need more people and they will have more responsibility and they will be making more money.”

Support employees’ personal goals. ATC’s Goodwin subscribes to the philosophy of Mathew Kelly, author of “The Dream Manager:” organizations can only excel if their employees can realize that same opportunity. “We got the book and we all read it and we sat down and we had a ‘Dream Session,’” Goodwin said, explaining that they shared their personal goals and wrote them down in a “Dream Book.” “At least annually, we talk about how we are doing on [achieving] our dreams and we add more dreams.” The objective for Goodwin, the employer, is to figure out ways to help them toward those goals and it also provides him with information on what motivates them. With one employee a single guy and the other a family man, the incentives for each can be quite different.

ADVODA took a very practical approach to helping some of its employees achieve a very specific goal — to quit smoking. Dunworth said about half of the staff were smokers, but the company sponsored a contest, awarding $500 to each person who quit smoking. The contest was a success; and now the ADVODA office is non-smoking.

Promote healthy lifestyles. In the same way that supporting employees’ individual goals can help bind them to the company, so can concern for their general welfare. “We encourage [our employees] to work out and be healthy,” said ADVODA’s Dunworth. But it’s not just lip service. The company pays for memberships to a local health club and allows employees a longer lunch hour (75-90 minutes) so that they have time to go to the gym.

In addition, ADVODA covers 100 percent of the health insurance premiums for its staff and half of the premiums for family members.

ARG also pays for its employees’ health insurance, but with a twist. The company enrolled in a plan with a high, $1,500 deductible, but then gives each employee a $1,500 health savings account that will cover that. Praske said this enables the company to lower its overall costs while providing a more valuable benefit to the employee. He added that in 2009 only nine of 39 employees exceeded their deductible, so it was a fiscally smart move, too.

Create a positive work environment. The way people treat each other in the work place goes a long way toward ensuring their long-term happiness. Speaking respectfully and dressing professionally are two easy things that agents can do consistently. ARG extends this philosophy to its business practices, or what Praske calls “SPIRIT values.” “Our objective is to be the most respected agency in the country,” he said. “We really work hard to keep to that and let that drive everything. I think that’s one of the big things that people stick around for.”

How does that manifest itself in the ARG workplace day-to-day? Praske said one example was when a prospect made sexually aggressive comments to a female salesperson. Rather than tell her to ignore it or turn the lead over to a male peer, ARG walked away from the opportunity. “It may cost you that opportunity, but it brings you back plenty in people being willing to work harder for doing it the right way.”

In addition, the company recognizes employees that follow its core values. “We ask everybody to catch somebody else honoring the SPIRIT values and recognize them [in a company blog]. It gives good reinforcement,” he said.

Offer flexible working arrangements. Being in the telecom business, agencies have the right connections to set up virtual offices for their employees. ADVODA has done just that, and three of its employees work remotely all the time. “Every one of our employees has the ability to work from home. The internal folks can do about 90 percent of what they [would] do in the office,” Dunworth said. He added most employees like to come into the office since it presents a collaborative environment, but the home office option is helpful for employees when the Colorado weather foils the commute or when they need to time shift — working early or late to complete their work due to personal appointments, etc.

ARG also has technologically-enabled telecommuting, though Praske admitted the company hasn’t found a way for everyone to work from home all of the time. “One of the things we did this year is allow people on Fridays to work remote to avoid the Friday afternoon traffic,” he said. “That’s been a big plus.”

Goodwin said flex time is one of the perks that ATC offers its employees. “They know what needs to be done,” he said. “If they want, they can take off a day or leave early or come in late.”

Play together. It might be overstating it to proclaim that “companies that play together, stay together,” but creating a sense of belonging can be helped by extending the relationship beyond the workplace. D&M Enterprises Group, for example, hosts a variety of events for its six employees and their families. This past summer the company hosted a family day at a minor league baseball stadium, said president Steve Gerhardt. In February, employees and their guests will be going to Atlantic City, with D&M picking up the transportation, dinner, hotel and even gambling money, he said.

Buy lunch. If you don’t have the cash flow for box seats, lavish parties or trips, buy lunch. Especially in these difficult economic times, your employees might appreciate the gesture of “Free-Pizza Friday” to save them from another brown bag lunch or fast food bill. D&M has taken this strategy to the extreme — it purchases lunch for its employees every day. “While this certainly is a financial windfall for the employees, it is also self-serving for the business,” Gerhardt said, noting that while each employee saves about $35 a week, the company gets more productivity from its employees when they don’t leave the office in the middle of the day.

Commit random acts of appreciation. Not everything you do to create loyal employees has to be programmatic. In fact, said Goodwin, some of the more spontaneous gestures are most well-received, in part because it’s not motivated by obligation but by performance or gratitude, etc. At ATC, this means a lunch or dinner invitation, cash or gift certificates and sharing vendor perks like tickets to a ballgame. “There’s no program for that. It’s genuine appreciation. If they do a good job, I try to reward them,” Goodwin said.

D&M’s Gerhardt also is in this camp. Like many companies, D&M holds season tickets to local team events and concert venues to give out to prospects and clients; Gerhardt frequently offers these to his employees instead. He also gave out Kate Spade bags to his all-female staff on Administrative Day and has on occasion hired a masseuse to keep the stress at bay. How about a mini-keg on tap or a martini bar? D&M’s got that, too.


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