The Hidden Costs Of Employee Turnover
Retaining good staff is a tremendous asset to any business. The experienced employee has accrued an extraordinary set of assets that disappear when the employee leaves your business. These six knowledge assets include:

1. Relationships with customers. Strong, on-going relationships between clients and staff is one of the most powerful ways of building customer loyalty.

2. Effectiveness. The long-term employee is likely to have learned how to perform their work duties with great effectiveness.

3. Efficiency. Long-term employees generally know how to utilize the least amount of time and resources to accomplish their job responsibilities.

4. Solving problems. Problem-solving skills developed over time provide a large repertoire of responses to assist the employee in resolving new issues as they arise.

5. Orientation and basic training are in place.

6. Staff relationships and teams. Established, well-functioning relationships between key team members and other employees enable stronger and more precise communication.

Basics of Employee Retention

In addition to a concise business strategy, retaining experienced employees is fundamental in running a successful business with growth and profit as its foundation. Treat people fairly and with respect to creating long-term loyalty, adding a bit of special care for your staff.

Advanced Retention
Even well-managed businesses loose good employees. To address this issue, it is helpful to understand the main factor that drives employee turnover: the desire for a higher income. As their life grows, the employees' financial needs grow as well—often faster than a business can provide opportunities for advancement. This is particularly true in the service industry, whose business model does not include the productivity leverage to afford higher wages at the front line. Thus, many service workers are destined to dead-end jobs that will never provide the income they desire. This, in turn, leads to an endless migration from one dead-end job to another with none providing the desired financial rewards.

A Solution To Break The Cycle

Business Week recently featured a cover article regarding the growing gap between the wealthy and the poor in the U.S. The article addressed the distinction between those who own assets versus those who earn wages. Homeowners are asset-owners, seeing the value of their homes increase over time. While owning assets enables a person to build wealth, earning wages does not (for more depth on this subject, refer to the book, Rich Dad, Poor Dad).

It is surprising to learn that many renters pay as much per month in rent as a homeowner pays for the mortgage, taxes and insurance on their home. It is also generally apparent which homes are owned and which are rentals by looking at how the home and its surroundings are cared for. Homeowners know their home is an asset and maintain it as such.

The solution: Enable your staff to become homeowners. Enable them to build wealth, pride and ownership by owning a home. This will create extraordinary loyalty to you and your business. Here are the steps and strategies:

1. All employees are eligible when the following conditions are met:
   • Three years of employment with no disciplinary actions or unsatisfactory reviews. (Perhaps the three-year period can be reduced if they have taken no sick leave or have not been tardy or absent from work).

   • The employee is out of credit card debt (refer to Transforming Debt Into Wealth by John Cummata, included on this web site).

   • The employee has a savings program i.e. a balanced budget with a regular surplus.

   • The employee has taken a course in financial planning such as Suzi Orman's video series.

2. A calculation is done to establish the amount of mortgage, taxes and insurance an employee can afford. This, in turn, determines the top price the employee can pay for a house or condominium. This number is based on the amount the employee is currently paying in monthly rent, plus the savings record (1c).

3. The down payment for the house is what the employee typically lacks. Additionally, the renter often lacks the confidence and the knowledge about how to buy a house. Here is how to handle this area:
   • The bank wants a down payment to reduce its risk. You must now work with your banker or lender on how to provide this for the employee at little or no cost to you. You, as the business owner, might guarantee the down payment pledging assets you have to reduce the lender's risk.

   • Alternatively, you might opt to make the down payment and have the employee repay you directly at a reasonable interest rate.

   • Over time, you could take 10 percent of the company's increased profits and place them into a revolving fund for guaranteeing down payments rather than providing individual incentives or bonuses.

   • You must be aware of late payments and potential defaults so you can take action early to address any potential problems.

   • You could become a joint investor in an employee's real estate where you are paid out when the property has sufficiently increased in equity to enable a second mortgage to 'buy out your equity' and when the homeowner/employee has the monthly income to cover the second and first mortgage. This agreement could have a time limit within which the pay out occurs.