Best Retention Policy? A Strong Recruitment Policy
Solution providers may not have the budgets for corporate laundry service, a diverse array of free meals from on-site restaurants, or annual trips to exotic locales, but that doesn’t mean channel businesses don’t spend a lot of time and resources ensuring they keep their top talent happy and engaged.
In fact, retaining high-quality employees consistently rates as one of small- and midsize business owners’ top challenges across a spectrum of industries, multiple studies have found. And even though some industries have apparently neglected employee satisfaction, the channel’s complexity, competitiveness, and ongoing need to adapt to change means solution provider executives must consistently keep a close eye on employee happiness.
Over the past three years, more employers have focused more on controlling expenses than employee satisfaction and retention, according to the ninth annual MetLife Study of Employee Benefits Trends: A Blueprint for the New Benefits Economy. Simultaneously, fewer employees voluntarily left jobs, even if they were unhappy, because they were afraid they could not find another position. As a result, however, employee loyalty is at a three-year low—and employers appear unaware of this trend, MetLife found. In fact, employers assume employees remain as loyal as they did pre-recession, the study indicated.
"The widening gap in loyalty perception is a sign that employers may be taking employee retention for granted. They are not paying attention to serious cracks in the loyalty foundations of their workforce; cracks that can expand to threaten their ability to retain the key talent they’ll need most," according to MetLife.
In 2010, 72 percent of human-resource professionals said their companies’ benefits packages had been damaged because of the recession, Baseline reported.
Now positions are opening , the economy is picking up, and employees feel freer to move around, that lack of employer loyalty poses a danger to companies that haven’t paid attention to employee satisfaction. So how can solution providers ensure their quality employees are satisfied? And what benefits can smaller companies reasonably provide to workers to keep them happy and productive?
After all, it’s expensive and disruptive to replace high-quality employees. It costs Asynchrony Solutions an estimated $100,000 every time someone leaves, said Bob Elfanbaum, general manager at the VAR, which was acquired last year by Shafer Corp. That figure includes recruiting fees, training time, lost productivity, and the challenges of integrating a new person into the company and team, he told Channel Insider. Historically, Asynchrony Solutions’ turnover is at about 5 percent, he said.
"I think you can rationalize spending a lot of money on culture if you believe there’s a huge cost to turnover," Elfanbaum said. "We deliver solutions; we don’t deliver bodies which is a big difference. Because we provide solutions people aren’t truly replaceable."
Satisfied employees also translate into improved customer service, better products, more productive staff, and faster time-to-market, studies have shown.
Forging a Cultural Alliance
For many solution providers, ensuring employee satisfaction starts at the beginning: During the interview process when both employer and candidate are assessing each other.
"The best retention policy is a strong recruitment policy, to recruit the right candidate up-front. We highly encourage the clients we work with to be highly thorough in their interviewing process," said Todd Billar, director of channel development at VARStaffing, a recruitment agency that solely works with the channel, in an interview.
Several solution providers agreed they have not offered positions to candidates who looked good on paper but who may have clashed personally with their organization. "We have turned away people who are very good technically, but they didn’t come across in the interview that they would fit-in culturally," Denise Messineo, senior vice president, HR, Dimension Data Americas, told Channel Insider. Dimension Data’s voluntary turnover is between 10 percent and 12 percent, she said.
Unlike larger organizations that typically include layers of management, small VARs can attract individuals who want a voice in the company’s direction, said Jess Colburn, CEO at Applied Innovations, in an interview.
"We’ve got some guys who’ve been with us for 10 years. At the end of the day, that comes down to involving them with the company and the decisions of the company. You want to make them part of the company, not just someone who clocks in and just leaves. When you’re competing for top talent you’re competing by culture. They’re not just here for a pay check. The top ones can work anywhere they want," he said. "If it’s just an employee they’re coming in just to surf the web. They’re coming in just to get by. You need to identify them and get rid of them. You bring in smart people to energize other smart people."
While the health-insurance debate continues in Washington, D.C., many solution providers offer some kind of coverage to employees. Moving beyond the typically expected benefits of health, dental, and life insurance, however, there are additional perks that small and midsize companies can extend to their workers, including several low- or no-cost options, Julie Stich, senior information/research specialist at the non-profit International Foundation of Employee Benefit Plans told Channel Insider.
- Teleworking or flexible work arrangements
- Employee discount programs
- Mentoring and career-development
- Nap room or comfortable rest area
- Food, such as ice cream sundae day or a monthly pizza party
- Casual dress code
- Gardening area on company grounds
- Volunteer opportunities or community-giveback through employer
- Team or organization participation and sponsorship, such as bowling or softball
- Lunchtime speakers from local hospitals or financial organizations, who often appear at no cost, to discuss wellness or financial issues
- On-the-spot recognition awards with small monetary gifts such as tickets to local events or movies
- Bring-your-pet to work day
"Benefits have always been important. Over time, employees have always considered the employee package when they consider whether they’re going to accept a job or stay with their current employer. People are starting to feel a little freer about moving around if they want to," Stich said. "In the recession, no one was thinking about these kinds of perks. In fact they were cutting back on things like 401K-matching."
Channel organizations recognize the importance of providing employees with competitive benefits.
"To differentiate itself in the marketplace, as well as to attract and retain top talent, Tech Data believes it’s imperative to provide an engaging environment that includes a holistic offering of high-value employee programs," Caryl Lucarelli, vice president of human resources at the distributor told Channel Insider. Tech Data recently achieved a perfect score on the Human Rights Campaign Foundation’s Corporate Equality Index 2012, which means it is a "Best Place to Work" for lesbian, gay, bisexual and transgender (LGBT) equality.
For example, Tech Data provides up to 16 hours of paid time-off per year for employees to volunteer to the non-profit of their choice; gives adoption assistance; reduced gym membership, and a commitment to career development through professional development, membership in professional associations, ongoing certifications and access to emerging technologies, eLearning, career planning, peer networks, job shadowing, stretch assignments and mentorship programs, Lucarelli said.
Career development plays a big role at smaller channel organizations, too.
"We have things like mentoring programs to bring new people in," said Asynchrony Solutions’ Elfanbaum, noting that the company also proactively seeks-out feedback from all employees—and acts on it.
Because Dimension Data is a multi-national organization, it provides some employees with the chance to work abroad for a while. The solution provider also reviews human resource practices and holidays from all its locations in an effort to standardize across the world when possible.
"There is the ability and opportunity, depending on your particular skill, to work in foreign countries for short periods of time for those who want it. Working in a multi-national company, there is that opportunity," said Messineo. "What we try to do is take some of the best practices from each of the companies where we operate and do what we can, from a budgetary standpoint, and match those up."
To ensure it provides high-quality benefits that it could not achieve alone, 11-employee Sage ERP VAR xkzero uses a third-party Professional Employer Organization (PEO). Through PEO Insperity, xkzero gives its employees health insurance, along with consumer product discounts, free professional training (in applications such as Office, SQL, and Crystal Reports), and 401k plans, company founder Paul Ziliak said in an interview. Since being founded in 2005, none of the VAR’s staff members have quit, he said, and the company has not lost a client in two years.
"We had one year when we tried to do everything on our own and that just sucked. Just from the very beginning, shopping for insurance was just a miserable, miserable experience, only topped by getting the insurance and having to deal with the insurance company as a very small company. It was eye-opening. Nobody has any complaints about health insurance now, because we’re part of a large company now. Dealing with the 401K on our own, disability insurance, some life insurance components—it was not helping us grow," said Ziliak. "I could not do it nearly as well as a PEO organization could do. The employees are thrilled."
In addition, xkzero workers have access to discounted movie tickets and other perks typically associated with much larger organizations.
"We couldn’t offer those benefits on our own," Ziliak said.
While smaller solution providers may never have the financial wherewithal to compete with the fantastical benefits provided by Facebook, Google, and others, with careful planning and nurturing channel organizations can create a culture of empowerment, professional development, and caring that allows employees to flourish and grow—benefiting employer and employee for years to come.