Just like the real estate market sometimes it’s a buyer’s market and sometimes it’s a seller’s market.
Employment is cyclical too.
When unemployment is high, employers have all the power and can often put the company first in capital deployment knowing that if they lose an employee, there is a long line of qualified others to take their place.
However, when employment is tight (as it is now) and near or at full-employment, the ball swings in favor of the employee—they know there are ample opportunities out there if they were to leave. For top-notch, talented employees, they can often write their own ticket during a hot economy where there are more job openings than there are people to fill them.
What’s an employer to do, especially small and medium businesses that don’t have the deep pockets the large companies have? There are a number of things you can do:
- Offer employees more perks.
- Use HR best practices.
- Lower other costs to generate more money to redirect toward your employees.
Offer More Perks To Improve Retention
This can be a small thing, like switching to gourmet coffee or offering free soda, or it can be something big, like treating your employees to a catered-in lunch once a week or once a month. Have a weekly employee drawing, the winner of which gets to pick the restaurant or caterer to supply the lunch.
Wellness-related benefits will also go a long way for both you and your business. Most small businesses cannot afford to sponsor gym memberships for their employees but occasionally they can bring in healthy smoothies or a trainer for stress management or for yoga to help elevate your team.
Offer Productivity-Based Rewards
Don’t forget merit or productivity-based rewards. Gift certificates, company logo-wear or swag, and time off are all good ways to show your valued employees you appreciate their efforts and consider them important and vital to your company’s success.
Appreciation & Recognition Goes a Long Way
Another perk: a simple “thank-you.” Never underestimate the power of appreciation and letting someone (publicly) know it. Get down on the line once in a while and find out from the foreman who’s doing a great job among their teams and publicly thank them, make them feel as important as they are to your company and to its success. Let them know you appreciate them going the extra mile, and by all means, let them know that if they ever have any ideas for improvements in productivity or safety in their jobs, you’ll be all ears.
Speaking of improvements, offer a bonus for any productivity, safety or other valuable suggestions that an employee suggests and the company ends up implementing.
You win three times:
(a) The employee feels more important and typically will put in extra effort,
(b) You receive increased productivity, which helps improve your bottom line, and
(c) You motivate others to take a closer look at how they are working and to make additional suggestions. In other words, you get another opportunity to put more money on your bottom-line or apply back to your valued employees.
Another perk your employees are going to want to see is some sort of employer-offered retirement plan. According to Fidelity –a giant securities brokerage firm:
There are 4 types of retirement plans that small-business owners might consider:
- Simplified Employee Pension Plan (SEP IRA).
- Savings Incentive Match Plan for Employees (SIMPLE IRA).
- Self Employed 401(k) plan.
- 401(k) plan (better for larger companies given setup costs, administration, fiduciary responsibilities, etc.).
Next, we will focus only on the first 3, which are generally more suitable for very small businesses—typically, 100 employees or less.
Why have a small-business retirement plan?
There are 3 compelling reasons:
- Your plan not only helps secure your future—it may be the primary way your employees can help secure theirs.
- Offering a small business retirement plan helps make your business competitive when it comes to attracting and keeping good employees.
- There are potential tax benefits to offering a plan because plan contributions for the business owner are deductible as a business expense.
This article does not pretend to come from tax experts or advisors, so please contact a CPA, attorney or HR expert for assistance in picking and setting up an employee retirement plan.
Ask your employees for perk suggestions. I’ll bet you get 100% participation AND some great ideas. You might even add a bonus to this too. Depending on the suggestion, maybe you can offer a bonus for the best idea or allow the employee to take time off their regular duties to plan and implement their idea. They’re going to love you for this one!
Leverage Best HR Practices
What exactly are HR best practices? Who knows? Most small and medium businesses probably have no clue. They can’t afford a full-time HR person or department and the cost to keep them up-to-date on the latest in HR best practices. Many of them will choose (or have no choice) but to just wing it. Winging it is not the solution; in fact, it’s not a solution.
Keeping your fingers crossed and hoping you don’t screw up your hiring, firing, and everyday HR issues aren’t going to work in this age of litigation and constantly changing rules. Your company needs a professional HR talent and ideas, whether you can afford it or not.
How can you have something you can’t afford? Easy, by purchasing it by the drip. Of course, many small businesses can’t afford an HR professional or staff. That could easily run you $60,000 or more, and most companies just can’t afford that. The solution: only buy what you need. Hire a part-time, outsourced, freelance HR person or company.
You Are Going To Love This
A freelance HR assistance is easy to find and easier on the pocketbook. They can provide such things as an employee handbook, employee record tracking systems, best practices, and be at the end of a phone call for almost any need you may have whether it is hiring, firing, or ideas to retain and reward key employees. You can obtain all this for a fraction of the cost of a full-time HR staff but with all the benefits!
How to know which HR outsourcing individual or firm to go with? Well, there are a couple of ways. Use an online freelance service like guru.com, Upwork, or Freelancer and pay special attention to the reviews posted on these sites, and possibly even call a couple of their long-term customers and ask about their experience.
Of course, you can just Google something like “freelance HR” or “part-time HR services” or you can select a freelance HR service from someone who has done the vetting for you like Concerto Marketplace (www.concertomarketplace.com). This company has researched and vetted not only outsourced HR services but more than 70 other products and services too. Learn more about Concerto Marketplace in the next section.
Lower Costs, Generate More Money and Redirect The Funds Toward Your Employees
How long has it been since you reviewed pricing with your suppliers or payment terms?
We recommend giving them a call to discuss your long relationship and history of on-time payments.
Ask for a little bit of price reduction based on your strong partnership.
Likely Positive Outcomes
They might adjust your rate card up to the next bigger customer level. They aren’t going to want to lose a good customer, so they’ll likely be willing to speak to you.
Ask for More Favorable Payment Terms
Asking for payment terms can give you a quick 1-2% discounts over 10-30 days, which is equivalent to much higher savings.
For example, if you receive a 1% discount for paying in 10 days rather than your usual 30 (1/10 net 30), essentially you are receiving an annualized 18% return on your money. Similarly, 2/10 net 30-terms gives you a 36% return.
Now, that’s hard cash with long-term benefits that you can use to keep your employees happy and wanting to stay put.
Everything we mentioned previously applies to general and administrative (G&A) expenses as well.
Negotiating lower prices like we discussed in the previous section is great, but what if you have a large number of suppliers of your G&A expenses?
You probably don’t have the resources to call all those suppliers and enter into discussions with them. Even prioritizing them by largest spend and calling the large ones first is time-consuming and may not be viable. Also, many small and medium businesses don’t have the volume necessary to ask for discounts, so what do you do?
Bulk Pricing Discounts Without Volume Purchasing Requirements
Wouldn’t it be great to combine your spend with other small and medium businesses to obtain lower prices based upon larger volumes? However, how? What if someone has done that for you? Wouldn’t you want to take advantage of the opportunity?
Great news – they have! Concerto Marketplace has done just that, not only with G&A products but also with commonly used services. Concerto Marketplace can become your one-stop shopping place for most everything and assist you in selecting a best-in-class outsourced freelance HR company.
Lowering your business costs is a good idea anytime, but what better incentive than now when you need more money to target toward keeping and retaining skilled and trained employees, so take the above steps NOW to free up some cash to redirect toward your employees.
Don’t wait until the business down the street hires them away from you with these same ideas. It might be too late to do anything about it.
Start today! Good luck and good savings!
About the Authors: JR & Liz are partners in Concerto Marketplace, a company which helps small and medium businesses save money by combining their spend to get volume discount pricing on over 70 products and services with the objective of assisting them to increase their profits. JR is a CPA and has over 35 years of business management, financial management, and entrepreneurship experience. He can be reached at [email protected] Liz is an operational and customer service professional who has helped startups through Fortune500 companies be successful in implementing their core business strategies. Liz can be reached at [email protected]