NFIB

Forget Cash--It's Recognition That Will Keep Employees Loyal
03/ 28/ 2002

by Ivan Sylvester

Here's some good news on the employee retention front: small businesses are better positioned than large corporations to successfully hold on to their valuable employees.

And you don't have to spend a fortune to do it.

That's because it's not money but recognition that keeps talented employees happy and productive.

"Too often we find companies throw more money at a person to get them to stay," says Adrian Gostick, co-author with Chester Elton of Managing with Carrots (Gibbs Smith, $18.95). "That's not what they're missing--it's feeling appreciated."

Studies have shown that there are three influences on employee retention: compensation, benefits and work environment. Pay and benefits are pretty much set by your industry and the market. Once you match those, the way to set yourself apart is through an environment that regularly rewards employees.

Recognition comes in two forms: informal and formal. Gostick and Elton say the informal type--a congratulatory e-mail, a thank you note--should be happening every week. The formal type--longevity plaques or performance gifts--can occur less frequently. What's important is that they need to be presented in a public ceremony that gives the gift--even if it's just symbolic--importance.

"We are a society of symbols," Elton says. "In a small business, the tangible things go a long way for people, whether it's a watch or some kind of plaque."

To make it work, you need to establish a recognition program at your company, no matter how small, and set aside money for a celebration or gift.

"Really, what we're talking about is communication," Elton says. "When you take the time and spend the money, it shows you care."

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This article originally appeared in the November/December 2001 issue of MyBusiness Magazine, NFIB's member magazine.

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