The accountant’s guide to staff retention
A vast amount of research has been carried out around the cost of acquiring new clients compared with retaining those that are already on the roster.
There seems to be far fewer data relating to the cost of taking on new employees compared with keeping those already in situ.
The following list could reasonably be costed, although some estimates would be necessary.
- Higher salaries to entice new joiners
- Extortionate agency commission
- Management time during recruitment process
- Unsettling other staff, who demand pay rises or also decide to leave, perpetuating the cycle
- Familiarisation time for new employee
- Disruption to other staff while training new employee
- Other minor costs e.g. health check/new equipment
In this light, you would have thought that practices would go out of their way to keep any competent or good employees. However, sometimes, judging by their perceived behaviour, one might almost wonder whether firms actively try to lose good employees.
Rewards and recognition
Staff retention typically comes down to a series of very basic factors, some of which costs the practice a minimal amount.
The first point to make is that people like to be appreciated. This might seem to be stating the blindingly obvious but, all too often, gets forgotten in the hurly-burly of daily business life.
Most human beings are naturally inclined to take the easy course of action and staying put is the easiest of all. Therefore creating a friendly, comfortable environment is a good starting point. In many cases, it may be all that is required.
Most human beings are naturally inclined to take the easy course of action and staying put is the easiest of all. Therefore creating a friendly, comfortable environment is a good starting point.
However, when trying to please the most ambitious, extra steps may be necessary. The simplest is to provide regular praise. Making the job interesting also helps, which is likely to require delegation of challenging work.
The financial package is also crucial, although surprisingly it is often possible to create low-cost incentives that have more of an impact than big pay rises.
As an example, 10 years ago I received a very nice pen from an employer. While it cost a ludicrous amount of money, it still cost a small fraction of a day’s pay. I use it to this day and think fondly of that now-defunct firm. Had they given me a bonus equal to a day’s pay, I would (very politely) have laughed at them.
Being slightly more generous on pay than an employee expects will almost always pay benefits. Yes, this will cost you a small part of your profit but if you can make the savings of points 1 to 7 above, that must be worthwhile.
If you give an employee a 1% pay rise many will turn their noses up and look elsewhere. However, if you give them half of this amount in the form of a prize or award they will be over the moon. This could be achieved, for example, by giving them a day off, sending them to a spa or perhaps giving them a new phone.
Similarly, providing perks such as a company car or phone can have a similar result.
Promotions can also be very cheap. In many cases, promoting somebody earlier than they expect could purchase years of goodwill. The risk here is that you might antagonise other members of staff but that may be a requirement for the long-term benefit of the business.
A recent example from a Big Four practice, obtained by hearsay, concurs with my own experiences.
An employee was outstanding and had been promised promotion to partner, going through a rigorous series of tests and interviews and ticking all of the boxes.
She was told by the head of her department that the announcement would be made the following week and even got to the stage of a celebratory dinner with the family. She was therefore shocked to learn that the promotion had been withdrawn based on the whim of some even more senior individual. At the end of the day, all that she got in exchange was a promise that promotion would be considered in 12 months and a whopping pay rise.
Showing loyalty that distressed her husband, the lady stuck around and went through a similar, if reduced, process the following year. Pleasingly, she got the thumbs up from the boss again. For the second year running though, having been assured that everything was signed off she was told that the promotion was under review and might not happen.
Eventually it did, but in terms of goodwill and future relationships, this is an object lesson in how not to treat staff. Read and learn.