Building retention while building the firm

From startup to mature firm, retention plans combat unwanted turnover

Given the high costs of losing an employee — hiring and training replacement staff, decreased productivity due to the loss of experience and knowledge — companies would do well to make retaining workers the first item on the corporate growth plan list.

Companies that spend more money on retaining employees are those that ultimately grow, an increasing number of studies have shown. Where to spend, however, depends on the maturity of the company — where it is at in its progress from “infancy,” “pre-teen,” “teenage” through to “adulthood.” Here are some suggestions on how to keep employees committed at each level of growth to ensure the organization successfully reaches adulthood and thrives.


For young companies, good retention incentives are critical to cement long-term employee loyalty. Such organizations should consider the following practices, which cost little:

A “work-sharing” system: Partner every new hire with a mentor who oversees her proper training. This also provides an opportunity for management to keep track of the new employee’s work in progress.

An open-door environment: Ensuring that the management team is approachable not only helps make employees feel valuable, but also ensures that from early on, management and staff are on the same business track.

Supporting family values: Maintaining a balanced life is a paramount issue for employees today, and companies that support this will have increased success in retaining staff. Such support may include offering time-off for family affairs, and including partners (and children) in company events.


At this next stage of the organization’s maturity, management should begin to allocate funds for new HR programs that reinforce the company’s image as a caring employer. Some examples include investing in:

Training new mentors: With the work-sharing system now firmly entrenched, the company can turn those who had been its new hires into mentors themselves, to instil best practices in new recruits. Not only does this help retain new hires, but it also makes staff members feel they are important to the company early in their careers.

Ongoing communications: Having established the open-door access to management policy, managers must work hard at maintaining a two-way flow of communication. Tactics may include regular town hall-style meetings, all-staff breakfasts, newsletters, bulletin boards and e-communications.

Walking the talk: There are times when managers may need to supplement verbal praise with generous deeds to reinforce that the company is a great place to work. Offering employees time off, a corporate lunch or a special gift for going above and beyond the call of duty on a particular project can go a long way in securing employee loyalty.


By now, with a more formalized structure and a fledgling HR department, the company must adopt a new approach to employee satisfaction that can include:

Job re-structuring: To ensure that employees stay stimulated and excited about their jobs, management must continually keep their work interesting and goal-oriented. Establishing clearly-defined career paths is critical for employee satisfaction.

Growth opportunities: Whenever a new position opens up, first post job opportunities internally, and reward employees for recommending co-workers for jobs.

Employee recognition: Periodically, employees need to be reminded that they’re doing a good job and their work is valued. Offering staff recognition via corporate awards, company memos or ceremonies, or trips for top producers, increases one’s corporate allegiance.

Employee input: Employees appreciate being asked for their opinions — which can be done via opinion surveys — particularly if their feedback is acted upon.

Professional training: Out-of-office training programs not only enhance the skills and expertise of employees, but also add value to the company’s resources.

Financial remuneration: Money talks. Even with all other employee retention tactics in place, better pay, benefits and performance bonuses are a must to keep staff happy.


To ensure success, the fully mature company must continue to implement the tactics of the previous stages, and add a degree of sophistication, such as:

Focus groups: Employees feel they are indispensable when they’re involved in helping resolve company issues. An internal focus group is an effective way to garner feedback.

Value-added extras: Incentives which increase employees’ commitment may include stock options, training programs on investing, gift certificates and hard-to-obtain tickets to sports events and shows. Consider also cash allowances for commute time, dry cleaning and other work-related incidental expenses.

Other tactics may include giving star performers “stay-on” bonuses for completing projects in a timely fashion, launching an “Employee of the Week Award” to honour front-line workers, running “thank you” ads in newspapers to thank employees, and providing on-site daycare to help ease family strains.

The models presented here provide an easy rule-of-thumb for companies bent on growth.

Since no two companies are the same, however, the tactics used will need to be adapted according to each organization’s unique situation.

Open doors, open communication

Take, for example, a software company which recently found itself suffering serious communication breakdowns between staff and management. Production and other problems were proliferating. The company had never instituted an open-door policy that would have encouraged on-the-spot problem-solving. Instead, it relied on a long drawn-out conflict-resolution procedure.

To quickly counteract the situation, company management acted on a recommendation to eliminate all barriers to communication for part of the day. From 9 a.m. until noon, no formal meetings are scheduled, replaced instead by impromptu gatherings and problem-solving sessions.

The company president then took it one step further and had all office doors removed for 30 days. It didn’t take long for both staff and management to get the point. The problem-solving sessions ultimately flourished.

This example, like many others, demonstrates that it’s never too late for a company to implement an employee-retention plan. The best place to start is at the beginning, and let the plan — and the company — grow from there.

Rod Graham is director of client services for the The Innovation Synergy Centre in Markham, a not-for-profit advisory centre helping small- and medium-sized companies access experienced business specialists. He can be reached (905) 248-2727, [email protected] or

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