Employee retention is no simple matter, requiring major efforts by any enterprise. Employee retention at a start-up may be even more difficult, because they are restless, sometimes young employees who seek the next challenge. Who among us does not dream of the recreation rooms at Google and the gyms reserved for Facebook employees? The human factor, especially at high-tech companies, is therefore the key factor to a company’s success, says Explore.Dream.Discover COO Nimrod Cohen, one of the incubators that is advising the “Globes”-Bank Hapoalim (TASE: POLI) Smartup2 program.
“Hundreds of studies over the years have proved a simple equation: satisfied employees, who feel that the enterprise nurtures and appreciates them (and not just in words) give more to the enterprise,” says Cohen. “Over the years, especially during the 2000 technology bubble, the employees’ fringe benefits peaked. Ostentatious flights abroad with full planes, bonuses disproportionate to the employees, coupons for prestigious restaurants, and whatnot. The bursting of the bubble by 2002 brought all of us back to earth. Since then, high-tech employers have logically realized that it is possible to hire employees while not completely emptying the company’s till with profligate bonuses.”
AOL Israel human resources manager Adi Persiko thinks that it is necessary to give employees excellent terms, but without a challenging work environment, employees will not stay for long. “It is important to understand that employees need to be allowed self-achievement, and if a company cannot allow this, employees are liable to switch to a different company that may meet this need. An employee may sometimes be dissatisfied and a smart enterprise should examine the real cause of this dissatisfaction. It is often different from what the employee says or thinks. Is it work conditions? The lack of self realization or personal development? If the problem can be solved, the enterprise should do a lot to keep the employee. Sometimes, it is the right thing for an employee to leave, if he wants to realize a dream or if another company can offer an extraordinary opportunity. In these unusual cases, we should help them to leave and release them with love,” she says.
Study funds and work flexibility
One of the ways to retain employees is to offer them improved employment terms when signing the contract. see.V business development manager Oren Ben-Shabbat says, “In general, benefits in high tech are employer provisions that are several percentage points higher for manager’s insurance, pension funds, or study funds up to a cap of NIS 15,700 a month as set by law, more vacation time of 14-24 days a year compared with the ten days mandated by law, and full pay for sick days from the first day. A start-up will give options instead of the bonuses and an extra month’s salary given by large and established companies.”
“Globes”: What do employees demand when signing a contract?
Ben-Shabbat: “Employees now entering the market are much more knowledgeable and prepared to negotiate. They know the norms and they demand them. For example, one of the commonest demands in the industry is managerial flexibility regarding work hours and combining work with family life and studies. Among the commonest demands by candidates include working four days a week and devoting one day to classes, hobbies, or their own start-up. Parents, including mothers, demand ending the workday at 4 pm at the latest and no emails or telephones from the workplace. Telecommuting has become an increasingly common option thanks to contemporary advanced communications, such as Skype. For this reason, many candidates want to combine work at the office with work from home. Many candidates are continuing their academic and other studies and are devoting more time to hobbies and their fields of interest, so they demand flexible work hours in order to attend their classes. This benefits work with overseas because of time differences.”
Why is it important to close all the terms before signing the contract?
“An employee who does not dot the I’s and cross the T’s when signing the contract will not be able to change the terms during the job. That is why it is important to find out what is acceptable at the company and examine what is possible to obtain before signing the contract.”
What happens if an employee threatens to leave?
“Here too, the attractiveness sets the tone. An employee who is important to the enterprise will receive offers of a higher base salary, bonuses, and additional options compared with what was concluded with him.”
Added value for life
“In general, the way to compensate employees is part of the salary terms. Although the salary component is important in employee compensation, it is a mistake to try and keep employees at an enterprise just by dealing with this component,” says Cohen. “Employees get used to almost any amount they earn, and there is always a chance that another workplace will offer an employee better terms, or will attract him for other reasons. Nonetheless, good pension terms, study funds, vacation days are all important to give an employee the feeling that he is valued and will reduce his temptation to go to another job.”
Another component is the enterprise mood. Compensation for hard work during long hours cannot just be reflected in the pay slip’s bottom line. An employee who feels that the enterprise sees him not just his output, which allows him to finance enjoyable, healthy, and unique habits (and not just his work habits) will be more committed to the enterprise.
“Praise by management, fancy lunches, employee health plans, a subscription to a spa, personal training, jeep trips, and establishing sports teams are examples of fringe benefits that can be found at many workplaces, but less routine things that do not necessary cost the employer a lot of money can connect the employee to his workplace in a special way. For example, creating a bicycle storage room for employees to allow them to cycle to work without fear that their bikes will be stolen,” says Cohen.
Another component is bonuses and options. “Over the years, a norm has emerged in high-tech companies and start-ups to allot options to employees, and if there is an exit the employees will also gain from it. It is impossible to know in advance what are the chances that the options will be realized and what the payout will be, but who doesn’t remember the story of the masseuse at Google, who worked without pay during the company’s first years, but became a multimillionaire when it went public in 2004,” says Cohen.
All these cause an employee to feel that the workplace is not just a means to earn a living, but part of an enterprise that improves the employee’s quality of life and that he too will reap the rewards of its success.
Published by Globes [online], Israel business news - www.globes-online.com - on August 28, 2014
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