Staff Retention - Winning the War

How to keep good staff once you've got them.
Brian Singleton-Green

If you just use the traditional ways to recruit staff and all you do with them once you've got them is pay them an annual salary and expect them to get on with the job, the chances are you've got a problem. You probably can't recruit all the high-quality staff you need, and may subsequently be having difficulty hanging on to the ones you've got.

A few years ago some consultants at McKinsey wrote an article called The War for Talent. They were looking at big businesses based in America, but what they said was, in parts, equally applicable to practising firms, whatever their size, whichever side of the Atlantic they're on. First and foremost, you don't have to be an especially big firm before you are caught in a war for talent as surely as the big multinationals. So how can you win it?

Try money . . .

Let's take it for granted that the basic rate you're offering is the going rate for the quality of people you want to attract. That won't be enough. But there are ways you can use money intelligently to help solve the problem. Gordon Gilchrist of 2020 Consulting gave a few tips at the firm's conference last autumn.

At the recruitment stage, you should offer bounties to your existing people for successful introductions of new staff. Gilchrist suggested a minimum of £500 a head. When he asked people in the audience what they were paying, a firm in Reading revealed that it had just raised its bounty for bringing in new recruits from £500 a head to £2,000. Another said that the rate in Peterborough had reached £7,500. Edinburgh was described as 'a nightmare'. So, know your local market, and adjust accordingly - it'll put you ahead of the game and, more importantly, your competitors.

Once you've got people in, you can incentivise them to stay. A simple technique is to offer a bonus - say, £3,000 - at the end of one year with the firm. Another is to pay performance-based incentives, but to delay their payment. There are various schemes for rewarding performance. One is to pay a proportion of the fee to staff who bring in new work: Gilchrist suggests 10%-15% for one-offs, 25% (of one year's fee) for recurring work. Or you could pay a bonus, based on a proportion of the employee's charge-out rate, for hours worked in a year above 1,200.

But there's no reason why you have to pay all the bonuses earned at the end of year one. If you spread payment over three years, you're encour-aging people to stay as well as encouraging them to perform.

Another idea is 'loan-stock'. This involves the staff member lending a modest amount to the firm, perhaps a couple of thousand pounds, on which they are paid a good rate of interest and where the amount of the principal is indexed to the firm's turnover. The main incentive here is that the indexation of the loan rewards the employee for the firm's success. And if the firm is succeeding and the employee can see the value of their loan growing, that encourages them to stick around. You could do a deal with the bank to fix a guarantee for the loans, so that the employees aren't put off by the threat of seeing their money disappear if the firm wobbles.

. . . and then the rest

One other factor that the McKinsey article emphasises is the importance of getting the top people involved in recruitment. If you're a very small firm, you might not have any choice about doing it all yourself. But if you've grown to the size where you've delightedly handed on that time-consuming chore to somebody lower down the line, was that the right thing to do? The firm's success depends on the people who are delivering the service to the client. Its future depends on the people you bring on within the firm. No doubt you have many competing demands on your time, and you can't do everything yourself, but if you're not involved in recruitment, you at least need to consider how you make sure it's done properly.

There is no magic about what (apart from money) motivates high-quality people. They want to be challenged, without being given tasks that are impossible. They want to be given autonomy, and to have their achievements recognised. And to work with people they enjoy working with. Easy? Of course not. But you've got to do it.

Some things are easy. Have you ever seen one of your most promising people leave? Did they know that they were one of your most promising people? If you'd told them, it might have made a difference.

Communication and training are both important factors in building up a good team spirit and creating disincentives to departure. Do your people feel that they know what is going on in the firm? Are you and the other people at the top of the firm in regular contact with those lower down? And would you expect any bright young accountant to want to work for a firm that didn't invest adequately in training its employees?

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