For years, organizations assumed that departing employees could always be replaced.  Some have treated employees like replaceable parts because replacing one worker with another was relatively easy. 

But this is only true when the supply of workers is greater than the demand for their services.  Statistics already predict the demand for labour through to 2013 will exceed supply by 35 million jobs.  Soon, there will be more jobs than talented people to fill them and this will endure as the new status quo for years to come. 

With a talent shortage looming on the horizon, it makes sense for managers to implement employee retention plans now so they can keep their top performers in the future.  In a recent global study by Accenture, the greatest number of respondents, 35 per cent, selected "attracting and retaining skilled staff" as their highest priority for 2005.  Small businesses have to be particularly concerned about employee retention because the loss of one employee at a small business can be equivalent to the loss of five or six employees at a larger firm.

However, the goal of employee retention is not for managers to hang on to all of the employees at their firm.  The strategies related to retention are reserved for those employees who´ve been earmarked as "top performers" by their managers.  After all, it can cost a company close to 150 per cent of a top employee´s base salary to find a suitable replacement.  Accordingly, figurative walls must be built around these individuals, and they must be kept fully engaged with their work, lest they decide to leave voluntarily or are lured away by another firm.

So, how do managers go about cultivating an engaging workplace?  Here are three ways for small businesses to "get engaged" with employee retention and engagement:

1. Start at the ´grassroots level´ with the relationship between managers and employees. 

This relationship is the fundamental driving force behind any initiative related to improved retention and engagement in the workplace - it is the single most important element in an employee´s overall employment experience.

Employees are acutely aware of not only how they´re treated by their managers, but how their managers interact with and treat other employees as well.  In a small business setting, the manager-employee relationship is particularly crucial since the level of interaction between both parties will be high, given that the workplace itself is smaller.

2. Mind your professional p´s and q´s. 

The manager-employee relationship must also remain professional, even though the lines are easily blurred between professional and personal interaction in a closely-knit, small business setting.  Retention of top employees depends on the manager´s professionalism to set the tone of the workplace and engage employees with their work.  Responsibilities like giving regular performance feedback and recognizing employee achievements are made easier and better respected if the manager´s professionalism isn´t compromised.  

A manager´s professionalism also makes it easier to get rid of poor performers.  Despite being in the early throes of a talent war, it´s still less about keeping all of your employees and more about retaining your top performers that cannot be replaced.  Good performers won´t stay in a workplace that tolerates poor performers.  It´s incredibly disengaging to work with individuals who aren´t pulling their weight, or with a manager who isn´t doing the same by not showing poor performers the door.  This is particularly true in a small business environment, where underachievers have no place to hide and ultimately stand out.  Managers that shirk their difficult responsibilities and don´t live up to their title won´t be able to foster an engaging work environment.

3. Don´t show them the money.  

Copious amounts of coin aren´t necessarily the best way to keep top employees engaged with their work.  This bodes well for small businesses, which may lack the luxury of using money as an "employee retainer."  Top performers assume that they can make the same salary anywhere they go, so they´re looking beyond their paycheques for the "value-added propositions" of their current positions.  Career management assistance and flexible work arrangements are two good ways to keep employees engaged with their work because they demonstrate a manager´s interest in what employees think, feel and require.  Employees must be attracted to, committed to, and fascinated with their work and workplace, and this is only achieved if their connection to their companies is more emotional than financial.  

The threat of losing top employees from your firm is the new reality of today´s talent starved job market.  Small businesses in particular will find it difficult to survive the upcoming talent war if they can´t hold on to their top performers.  But with good employee retention and engagement the employee will be less likely to believe that a better employment opportunity exists elsewhere.  Managers must play an active role in cultivating this mindset or they stand to lose their top talent to other firms. 

Tim Rutledge is a veteran Human Resources Development practitioner with a background in financial services, manufacturing and health care.  He specializes in employee retention and helping clients create engaging employee experiences at work.  Tim joins IQ PARTNERS´ Toronto offices as Partner, Retention Services, and Director of its new Centre for Employee Retention and Engagement Services (CERES). 

Tim holds a Ph.D. degree from the University of Toronto.  He is a former trustee of the Toronto Board of Education, and past president and business co-chair of the Toronto Training Board.

About IQ PARTNERS Inc.

IQ PARTNERS Inc. is a retained Search and HR Services firm that helps intelligent companies hire better, hire less & retain more. Its services include Executive Search, Qualification & Assessment, Employee Retention & Development, Career Management, HR Consulting and Contract HR Services.  IQ PARTNERS operates at the mid-to-senior management level and specializes in Marketing, Communications, Media, Technology, Legal and Financial Services.  IQ PARTNERS has offices in Toronto and Ottawa, and is a member of the Aravati Global Search Network. For more information, please visit www.IQPartners.com.