Retention in a Recession

Towers Perrin recently reported the results of a “pulse” survey showing that, unlike past downturns, companies are reducing the number of layoffs as a cost-savings measure and choosing to instead cut bonuses and salary increases. However, the report goes on to say: “While cuts to bonus and salary increase pools may be preferential to mass workforce reductions, organizations recognize the importance of rewarding key talent.”

Many companies are so focused on retention, even in this recession, because they cut their workforces to the bone during the past downturns. Competitors see the negative work environments often fostered by downturns as a premium opportunity to poach top talent. To counteract this effect, company leaders thinking strategically, work to change the tenor of the work atmosphere to one of encouragement, praise and appreciation through frequent and timely recognition of exceptional efforts.

Just look at the savings through retention of top talent, even in a recession. VIST Insurance recently conducted a survey reported in the International Business Times. David Lacey, vice president of human resource business development at VIST said:

"For example, over the course of a year, if a small company loses three long-time employees, each making $50,000 in cash compensation, it will cost the company a minimum of $75,000 to prepare the new hires to be effective and productive. Even if they are replaced at the same salary, it will take an estimated six months for the new employees to be up to speed and as productive as the prior employees. Also, the company will incur the additional expense of advertising the positions, recruiting fees, and training. Quite often these expenses are sizable and can equal the $75,000 referred to earlier. For a fraction of that amount, the company could've had an Employee Retention and Development Program in place and seen most of that $75,000 added to the bottom line as an increment to NOP (Net Operating Profit)."

Margins are currently cut to the bone. Protect your investment in your current employees. Show them you appreciate their efforts. Tell them how their specific efforts are helping the team and the company achieve strategic goals. Share those successes broadly and publicly. Globoforce’s strategic recognition solutions are designed to fulfill these needs.