Retaining Employees Makes Sense in Any Economy -- Companies can utilize numerous techniques to help retain their high quality employees.

We have all heard the stories of dot.coms offering outrageous perks in their eagerness to recruit and retain employees. Perks such as amazing stock options and expensive cars were common "benefits" offered to sought-after employees at these high-flying companies.

Many of the high flyers and their excessive benefits packages have crash-landed, but the basic idea of working hard to retain valued employees remains sound, no matter what state the economy is in. Why? Because employees no longer feel the kind of loyalty to a company that they once did.

Before the recession of 1990, employees traded loyalty and stability for independence, according to Carol Szatkowski, president and CEO of placement specialist Clear Point Consultants. But, today, employees are responsible for their own careers, and they want to call the shots and protect themselves from future displacements.

"People have a contract mentality whether they are a part-time consultant or have a full-time job," Szatkowski said. "This mentality says, 'I'm only as good as my skills and I have to be aware of my place in the corporation.' As a result, employers have a difficult time generating loyalty. The workforce as a whole is suspicious of the employer's intentions and its power." Consequently, people will change jobs, no matter what the economic climate, if they see better opportunities.

The high price tag for recruiting and training new employees represents another powerful reason for companies to work to retain their employees. According to the Saratoga Institute in California, the average exempt position remains vacant for 75 days, and it costs a minimum of a year's salary to hire and train a new employee. Philip Brewer, president of employee retention consulting firm KeepEmployees Inc. (Fort Collins, CO) estimates the cost at 1.5 times a person's annual salary.

The costs of recruiting and hiring include advertising for the new position, staff time for entrance interviews, and additional screening costs such as testing. Once a new employee has been hired, additional costs are incurred including travel and moving expenses, employment administrative expenses such as medical exams and drug testing, as well as orientation and training costs. These hard costs do not include the time needed to bring a new employee up to speed, helping that person understand a new corporate culture, and reestablishing relationships with vendors and customers. While non-exempt employee costs might be less in quantitative terms, the qualitative impact upon the organization can be just as significant.

In the electronics assembly industry, the competition for qualified employees is stiff. Companies working in the contract manufacturing sector continually compete for engineers, technicians and operators from an inadequate pool of personnel. In addition, the competition is fierce for lower wage employees-those who work on the production lines in these factories.

In this arena, electronics manufacturers compete against each other and also against places such as fast food restaurants, which might even offer superior opportunities. For example, at McDonald's, employees have access to education grants and manager training programs.

The benefits of retaining employees involve more than saving direct costs. Consider how a high turnover rate affects the quality of a product line, the company's overall productivity, employee morale and customer relations. A pool of loyal, talented and highly trained workers not only ensures that a company continues to manufacture high quality products, but also that it maintains excellent relationships with both customers and vendors.

Why Employees Leave

Thomas Staffing reported recently that 21 percent of survey respondents indicated that employee retention represents a significant corporate challenge. In their responses, companies said that the retention problem has actually increased in the last few years, with new employees being the ones most likely to leave. Surprisingly, Thomas reports that many companies make no effort to reduce employee turnover or to even find out why employees do leave. A shocking 65 percent do little or nothing to reduce turnover.

Unfortunately, contract manufacturers may not be as aggressive as they could be when it comes to retaining employees. These companies have grown so fast that many have never had time to build the kind of infrastructure necessary to support retention mechanisms. As they have expanded, they have focused primarily on the revenue side of their business and have not developed many programs that would make them kinder and gentler places to work.

To retain employees, companies must understand why employees, whether they are highly trained engineers or inexperienced line workers, leave in the first place. Surprisingly, most studies show that compensation does not rank as the most important reason.

One important reason employees jump jobs is that they do not feel they receive the kind of support they need to do their jobs properly, according to Wyatt International, the Gartner Group and Fortune. Geoff Rulland, a human resources specialist in recruiting at electronics assembly manufacturer Plexus Corp., attributes this factor to a lack of communication between employees and their managers. "Sometimes people feel that their managers aren't accessible and that the lines of communication aren't open," Rulland said.

Line workers may have similar frustrations. For instance, an employee, when confronted with a malfunctioning piece of equipment, might tell you that, "My machine broke. I told my supervisor, and now it's his responsibility." An hour later, the machine is still not working and the employee's supervisor has not solved the problem. This employee does not have the autonomy to make something happen and feels frustrated. While this might be an extreme example, the consequences can be enormous because, at a typical contract manufacturer, an hour of down-time has significant profitability ramifications-$200,000 to $300,000 per line-and represents a serious dilemma.

Some employees leave because they feel unrecognized or undervalued. Others do not seem to fit in or are not completely comfortable with the corporate culture. When managers do not take a personal interest in their employees, the workers do not feel like they are a part of the larger organization.

Finally, most studies of retention indicate that many employees leave because of few opportunities for professional or career development. Clear Point's Szatkowski explained that many people leave a job because they are not being challenged; they aren't learning. "These people are dissatisfied with the work itself and will look for better opportunities elsewhere," she said.

Help Employees Fit In

Contract manufacturers, or any company, can use several methods to avoid the high cost and disruption caused by employees leaving their organization, especially those who leave after only a brief tenure.

Communicate a clear understanding of the corporate mission, as well as how all employees fit into that mission.

Doing so will smooth the way into an organization for any new employee. You can communicate the corporate mission by providing a thorough orientation program. Too often, a company hires new employees, gives them a bunch of forms to fill out, subjects them to a short talk by some human resources assistant who tosses company policy at them, and, the next day, sticks them into their jobs. In contrast, more successful companies describe their organization to new employees, communicate information about their corporate culture, convey the corporate mission and strategy, and then illustrate how new employees support that mission.

Some companies use rather innovative techniques. For example, one manufacturer presents a 15-minute video clip from the CEO and then conducts a conference call with a high-level manager. Others present a combination of human resources people talking with employees in an open dialogue and discussion, as well as requiring readings from a handbook. The key is to make the event more of an experience than just filling in forms and taking home a corporate handbook.

Another way to orient new, and even experienced, employees in a contract manufacturing organization involves providing an overview of the actual manufacturing process to everyone. For example, one company has developed an Internet-based training program that includes an overview course on surface-mount technology. In a two-hour, self-paced experience, an employee can take this course and quickly learn a common set of terms and definitions, plus derive a strong sense of what it means to be involved in electronics assembly.

Although the course is intended for manufacturing operators, it would also be perfectly appropriate as an orientation device for a receptionist, a member of the building maintenance staff, or a person in sales, human resources or marketing. Such a course even provides a solid foundation for an engineer. Few engineers who are straight out of school have had any practical experience in electronics assembly, so, in just a few hours, they get the basics of how their new company's products are made.

No matter how you administer it, when new employees finish their orientation program, they should emerge with a clear concept of what the company does and how they fit into that particular mission.

Establish truly open communication with all employees.

Whether you use well-known techniques such as Open Book Management or just keep everyone up-to-date with where the company is headed, you must keep the lines of communication open. For example, when the company prepares its quarterly announcement for Wall Street, it can also present this information to its employees. In doing so, managers can explain what's going on with the business in terms that everyone can understand.

Give people greater responsibility at all levels.

Getting employees involved in the responsibilities of their jobs not only helps you retain that worker but also has clear benefits for your company. The earlier example of the employee who takes no action when a machine goes down illustrates the importance of empowering employees to act. Nordstrom, the highly successful chain of upscale retail outlets, has a one-rule personnel manual that says, "Rule #1: Use your good judgment at all times. There will be no other rules."

One approach to giving greater responsibility involves the deployment of self-contained work teams or work units. In these teams, people work across a line, sharing responsibility and control. When they have problems, management empowers them to solve those problems on their own.

Recognize everyone's contribution, both monetarily and non-monetarily.

Clearly, money remains an important motivator. Earning a fair and competitive salary continues to rank in the top five reasons why people remain on the job. However, in comparable job categories in which companies pay the same wages, some organizations look for non-monetary compensation as a way to retain valued employees.

Plexus' Rulland attributes its success in retaining employees to its excellent benefits package. While many elements of the package are the same as offered at other companies, Plexus offers its salaried employees vacation and personal days, 401K plans and insurance benefits from their first day of work.

For other employees, a strong motivator might be recognition as an employee of the month, with associated perks such as special parking spaces and announcements in the corporate newsletter. Others will value increased opportunities such as attendance at off-site conferences. For line employees, other types of benefits can be included, such as GED programs, educational grants for college degrees, or flexible working hours.

Giving employees equity, such as stock or stock options, binds them more closely to the company and increases their loyalty. Making sure people are aware of what it means to be an owner of a company is an important part of the process. According to Rulland, Plexus offers its employees no-interest loans to enable them to purchase home computers. Naturally, the employees like this perk because it enables them to upgrade their personal computer skills as well as gain home access to e-mail and the Internet. Plexus benefits by having a workforce with improved computer skills as well as shifting the time people spend on the Internet to home use. The cost of hiring new employees far exceeds these and other creative approaches to compensating workers.

Encourage managers to take a personal interest in all employees and provide them with honest, open feedback on a regular basis.

The manager who takes the time to understand his or her direct subordinates and their families creates loyalty among those people. In their book, Contented Cows Give Better Milk-The Plain Truth About Employee Relations and Your Bottom Line, authors Bill Catlette and Richard Hadden say that employees "who are cared about and enabled are more committed." Treating people right motivates them to work better, faster, harder and with less turnover.

In addition, providing good, honest, open feedback helps employees understand where they stand and improves their performance. Feedback does not mean just doing an annual appraisal. It means creating an open and ongoing dialogue between a manager and those who report to him or her.

Understand the personal needs that people have and help to fill those needs.

Your company can offer ways to help people manage what can sometimes be a stressful personal life. In two-wage-earner families, people juggle many responsibilities. Recognizing those challenges and helping people meet them demonstrates a company's commitment to those workers.

Many companies have developed creative ways to assist their employees. For example, BankBoston offered its workers a Snowy Day program. When schools are closed because of a snowstorm, the bank offers, at no charge, a safe refuge for its employee's children. The employees really appreciate this kind of backup childcare. This program also means that BankBoston's employees do not have to miss a day of work.

Other companies offer what are called personal services. They either outsource these services to companies or handle them in-house. Because Americans spend an estimated 22 percent of their time handling household responsibilities, services companies will do the grocery shopping, launder clothes or deliver and pick up dry cleaning, take care of pets, meet contractors or repairmen at the house, and perform a wide range of other services. Other companies provide on-site dry cleaning, car washing or financial services.

Some employees may wish to enroll in special interest courses ranging from personal enrichment courses to others that provide new skills and additional opportunities. Many online companies provide distance-learning courses directly to the employee's desktop or to workstations in training areas. Employees can get a GED degree, an MBA, additional management training, or training that can be applied on the job.

Some companies offer industry-specific training. For example, one electronics industry company delivers a comprehensive curriculum of 29 online courses designed to train operators involved in printed circuit board assembly. Using video, audio and multimedia simulations, this company's software trains new operators and experienced ones on a wide range of machines. Using this type of system makes it easier for operators to learn new skills quickly.

Conclusion

In both fat and lean times, the electronics assembly industry must have a loyal, hardworking workforce that guarantees high quality products and service. Companies may not choose to employ all the techniques described here, but a commitment to retaining high quality employees will pay off in many ways.

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Howard Kamens is vice president of Training Solutions, e-mail: [e-mail] and Michael Prokopis is vice president of Consulting Solutions, e-mail: [e-mail]; both with Cookson Performance Solutions, Foxborough, MA.

http://www.circuitsassembly.com

Copyright [copyright] 2001 Miller Freeman LLC