An employee retention strategy for all economics. (An Advertising Supplement: Staffing & Employee Benefits).

Recruiting, retaining and rewarding the right people are challenges employers face in any economic climate. Yet, all too often when the economy slows down, employers lose sight of the need to do whatever it takes to retain their best people.

Management usually knows who these people are. They are the ones producing, and sometimes pushing, more than anyone else, and keeping the company on track. These are the same people who shoulder the workload after layoffs and keep a positive attitude even when they are worried about their own jobs. Your competitors know who these people are, too, and may attempt to hire them away.

A strong retention strategy will keep that from happening and ensure that top performing employees stay with you in any economy.

There are five steps to developing a retention strategy that works, and the first place to start is an honest evaluation of your organization.

Step 1: Define your values system

What are your organization's values and vision? Where do you want your company to be in 2003, five years and ten years from now? What are the principles that drive behavior in your company? Identifying and even writing down these values, serves as the foundation for determining who you hire, who you keep, and who you reward. This value system will help your business navigate through difficult times and tough decisions.

To maintain consistency in the organization, ifs important for these values to guide the company, even in challenging situations. For example, if "accountability" is a core value, what do you do with a high-performing sales person who refuses to accept responsibility for harassing his peers? After your value system is in place and you begin to hire people who share them, you need to be prepared to enforce them. If not, you risk undermining your credibility with the very people you want to retain.

Your vision helps identify the employees who desire to move in the same direction as your business. If your vision is to be an industry leader, your company needs an executive team comprised of expansive thinkers. If your vision is tremendous growth, your company needs employees who are motivated to grow the company. In either case, top managers or employees who are focused on the status quo are probably not key employees, regardless of their skill sets.

Most of all, your values will serve as a filter for your current crop of employees. The people who sharesyour values are likely to be the right choice sfor your business.

Step 2: Establish trust within all parts of the business

We all seek security in our jobs. However, most of us recognize this is something we must create ourselves. Security comes from trust and trust comes from honesty and communication. The bottom line is that employees want to know their employer will be straightforward with them. Employees want to know when things are going well and when things aren't The last thing employees want is to be surprised by bad news, and worse yet, read it in the paper before they hear about it at work. This quickly erodes an organization's internal credibility and its ability to retain its people.

To help build trust within your organization, establish a process for sharing important information related to your business with your employees. This can be as simple as a quarterly letter from the president or a weekly email from department heads. The goal is to keep people apprised of the health of the company and aware of vital issues. In addition to building trust among your workforce, it will also help employees make positive decisions that are supportive of your organization's vision.

Step 3: Assess employee priorities

Once you know who the real keepers are, survey them to determine their priorities, both work and life related. Is your workforce comprised of risk-takers? Do they have long-term goals or value short-term incentives? The answers to these questions will help you structure effective reward programs that satisfy these employees' needs.

Step 4: Do your homework in the industry

Now that you have an idea of your internal value system and what is important to your employees, it's essential to find out what compensation and benefit programs are being implemented throughout your industry, especially at your primary competitors. This gives you a clearer view of what is commonly accepted in the industry and gives you a comparison of what's important to your employees vs. the rest of the industry.

Step 5: Create a compensation and benefits package that supports company values and employees needs

Your research should pinpoint the key areas that are important to your employees in terms of a compensation and benefits package. Map this information to your overall plans and budget so that your program adds value to employees.

Here are some areas to include in your program.

a. Cash compensation

The foundation for any compensation package is cash compensation. Most employees receive two forms of cash compensation: base salary and a periodic bonus. Your competitive analysis should help you determine ranges for cash compensation. Taking into consideration employee expectations, as well as organizational goals and budgets, you can determine a "target" quartile for base compensation for your employees.

b. Deferred compensation

Many companies offer employees long-term incentives, including qualified retirement plans, non-qualified retirement plans, and stock-based programs. These types of programs tend to reward longevity.

Qualified plans, such as 401(k), profit sharing, and defined benefit pension plans, offer many tax advantages. Employer contributions are tax-deductible, and employee contributions are made on a pre-tax basis. Participant accounts grow on a tax-deferred basis and are exempt from creditors. Qualified plans also can be structured to focus contributions on the basis of performance, age, and/or tenure.

Non-qualified plans permit significantly higher contributions, but do not enjoy the same favorable tax treatment as qualified plans. If properly structured, however, contributions to non-qualified plans grow on a tax-deferred basis. These types of plans are generally targeted towards executives and have earned the nickname, "Golden Handcuffs" due to the large payoffs that accompany long-term service.

Recently in great demand, stock-based plans have, for the moment, become less popular among employees. Stock-based plans include the various forms of stock options and stock purchase programs and can be an effective way to promote a sense of ownership among employees, when properly structured and rewarded.

c Health and welfare plans

Benefit plans may actually be more important to your people than compensation, depending upon your employee demographics. Benefits generally fall into two categories: health and welfare plans, and Work/Life programs.

Health plans include the various forms of medical, dental, and vision insurance. Welfare plans include disability plans, life insurance, and long-term care programs. A common tool used to help reduce employee costs associated with these programs is a Cafeteria Plan, which enables participants to pay for many of these costs, as well as certain dependent care costs, with pre-tax dollars.

Work/Life programs experienced enormous growth in the '90's as employers realized that employees place great value in flexibility and personal and professional growth. Examples of Work/Life programs include telecommuting, flexible scheduling, health and fitness programs, and subsidies for personal and professional development courses.

By developing a retention strategy around the right employees, you'll be much more effective in retaining your intellectual capital during any economic period. Implementing compensation and benefit programs that reward the right behavior and performance will help your best people become more productive and help attract the right people to your company.

Pat Byrnes is the founder and President of Actuarial Consultants, Inc., a Torrance-based compensation and benefits consulting firm. He can be reached at [e-mail].

Steve Speer is chief operating officer of Strategic Benefits Group, LLC, a Los Angeles-based executive and employee benefits firm. He can be reached at [e-mail].