Dean M. Peters, Consulting Editor
is an enduring paradox of business that an enterprises most
valuable asset its people -- is carried on the books at zero
value. Whether you own Joes Widget Company in the local
industrial park or you run General
Electric, there is not a single cent of balance sheet value
assigned to the quality of a your businesss management staff
and labor force. And yet, it is the people behind an
organization that drive its performance, keep the day-to-day
operations running smoothly, and ultimately determine whether
that business will succeed in a competitive marketplace.
This being the case, it behooves organizations that wish to
maximize their financial performance, and enhance their standing
within their industries and their communities, to pay close
attention to the recruitment and retention of quality human
How and where can one find good prospective employees? And
once theyve been found and hired, how to keep them? These
are daunting questions, and many a survey has been done among
manufacturing executives in which they claim finding and
retaining good employees is one of their top three concerns.
If you stop and think about it, nearly every local community
has an employer or two by which many wished they could be
employed. These companies have their pick of qualified
applicants every time a job opens up. How does this happen? What
does an organization have to do to earn itself such a reputation
among the workforce?
More careful scrutiny of such model employers suggests that
their success is based on more than simply offering a
competitive salary and benefit package. Obviously, financial
compensation is important, but there is hardly a worker on the
planet that, in the long run, wouldnt rather be paid a little
less and be happy on the job than be more highly paid and
miserable at work. So a favorable work environment has a lot to
do with reducing the rate of employee turnover. And we dont
mean just the physical environment, either. There is an
emotional environment present at every workplace that registers
with an employee as either a positive or negative factor in his
or her life.
It is in the combination of physical and emotional workplace
environments that the concept of corporate culture takes root.
The term corporate culture is difficult to define in precise
terms it means different things to different people and takes
different forms in different companies. But it should surprise
no one that companies with an admirable corporate culture enjoy
a lower employee turnover rate than those that are strictly and
myopically focused on producing their brand of widgets.
The root metaphor is appropriate here because a positive
corporate culture doesnt just happen. It has to be nurtured,
much as a seedling plant needs to be tended by a gardener, to
growth by executives. And like a plant, corporate culture has
many stems that comprise the whole. A formal corporate mission
statement can communicate to internal and external stakeholders
what the company is all about. But this is only one stem of the
culture. Other parts of the culture may be in rewarding behavior
in which employees are caught doing something right; or in
encouraging best practices suggestions from the shop floor; or
motivating employees to be involved in the community at large.
Another component to successful corporate culture might be
the establishment of innovative benefit packages. For example,
if a particular workplace employed many single parents, then a
benefit option for child day care assistance might be a great
idea. If you hire many workers with little education and few
skills, about one in five of them is functionally illiterate, so
you might want to offer them classes to bolster their reading
skills and their confidence along with it. Or, if much of your
workforce only understands English as a second language, some
help with language courses could be a good benefit. Finally, a
little personal attention to events in employees lives and
careers goes a long way. A personal touch like buying lunch for
an employee on their birthday or employment anniversary goes a
long way in letting that person know the company appreciates and
cares for them as an individual.
But lets get back to the original questions. We briefly
touched upon making your enterprise a place where people want to
work. This makes the attraction of talent a little easier, but
youll still have do some digging to get the best talent
available. The print media, the Internet, employment agencies,
and community word of mouth are all ways to find talent. But
studies have shown an overlooked source of job candidates is
your employee base. Many jobs are cheaply and efficiently filled
by one of your current employees who knows somebody. Some
companies even offer a small bonus for an employee that
recommends the successful candidate to fill an open job slot.
Once found, how is a good employee kept?
The answer is simply to treat them fairly with regard to
compensation and benefits, professionally regarding their actual
job function, and with respect and dignity when it comes to
personal matters. These matters are best handled by an
individual or department, whose job it is to oversee human
resource management. Whether your organization employs two
associates or 2,000, the attention paid to human resource
management should vary only by degree.
Why? Because it has been shown that proper management of
human resources and pertinent issues maximize an organizations
performance and profits.
Consider the problem of employee turnover rate. Researchers
have estimated that turnover costs account for between 5 and 10
percent of wage costs. If your turnover rate is higher than
normal so will be your wage costs, and this type of extra cost
wont produce a single extra unit of product.
Employee turnover adds to employers costs in four ways:
direct costs, such as money paid for job ads, search firms,
etc.; management time spent on unproductive matters; lower
productivity by both the new employee while he or she learns the
job and the experienced worker involved in their training; and
loss of capacity while a vacancy remains unfilled.
It is the responsibility of a companys senior management to
adequately control its wage and salary costs, and provide a
culture of advancement and personal growth to its employees. The
cultivation of a corporate culture and investment in human
resource professionals are part of this process, for in the long
run it is better for a company to have the respect and support
of its own workforce than for that workforce to be frozen in the
ice of its managements indifference.