By Curt Hensley
Building a merchant services business in today's economy is a tall task. When you add the burden of losing top talent as you expand, it can stunt your growth plans and possibly your company's entire future.
Turnover is more frequent than it was, say, 25 years ago. And the reasons why employees depart are changing. To keep on top of the situation - and ultimately retain employees - wise organizations, whether large or small, are investigating why workers give notice in the hopes of learning new ways to respond and decrease the number of resignation letters.
Many in the industry struggle to keep good sales staff, risk managers, underwriters, POS technical support staff and senior executives. And with the electronic payments business growing at an exponential rate, it becomes even more difficult to keep a firm hold.
I have spoken with a mid-sized organization in the payments industry that has a turnover rate reaching close to 75% for its key engineering talent. The high percentage is not because the company is having financial difficulty or because it doesn't pay well. In fact, it is doing very well and offers high salaries.
The reason the company is losing people is because its staff members have deep bank accounts and have built up their 401(k) plans. Many employees are leaving because they are successful and able to pursue other interests without fear of making ends meet.
I often hear directors, chief executive officers and supervisors promising this and that to potential employees to lure them in. They make speeches about how committed they are to their workers but hardly put those words into action. When it comes time to allow employees to have some input in their work, the chance to transfer to another department or the opportunity to try something new, management often hesitates.
In the good old days, turnover levels were extremely low in most organizations, often approaching less than 2% in firms such as Hewlett-Packard Co. and IBM. Most employees stayed at their companies until retirement and received a living retirement income after 25 or 30 years of service.
There was loyalty and commitment to the firm. In the best of these companies, strong cultures matured that supplied an unwritten behavioral guide, and a sense of pride and friendship. Employees were proud to be known as IBMers, for example, because it was like being admitted to an exclusive club. Their friends who were not IBMers were envious.
Things began to change in the early 1980s. The first crack in company walls came with the advent of the 401(k) and (b) plans that liberated employees from corporate retirement programs. The 401 plans are, in effect, portable pensions; you simply take your accumulated savings and add to them somewhere else.
Later, downsizing and re-engineering movements began reducing the workforce, thus fracturing the idea that a company would take care of you until you were ready to retire. Thousands found themselves on the street with no employment or retirement benefits. Loyalty crumbled, and the idea of remaining with an employer for decades became less attractive.
For many young people working today, the idea of staying with a single employer for a long period is frightening and career limiting, even if the pay is great. And from an employee's viewpoint, there is almost no negative stigma to having frequently changed jobs. In fact, changes that make sense are considered a plus as they signify the employee has added experience and competitive knowledge.
Now, as we enter a time in which it will be very difficult to find good people and even harder to keep them, we have corporations interested in preventing both its baby boomer experts and newly recruited Generation Y superstars from leaving. It is exhausting trying to persuade them to stay.
Most established organizations find themselves with perks that are increasingly the same: good salaries, portable pension plans, on-site cafeterias, free coffee and many other benefits. Nothing really differentiates them in material aspects from the competition, and smaller firms struggle to compete.
As the old adage goes, money isn't everything. And for the younger generation, happiness and freedom in a work environment reign supreme. So if more money isn't the answer, what can be done to retain prime talent? Here are a few ideas:
Employees want the opportunity to learn more and experience different roles within an organization. Do not restrict transfers between departments. Let people try out areas where they have limited experience. Encourage cross fertilization, and give your employees the support and development they need to be successful in a new position.
Never tell employees they are not ready, too junior, lack education or haven't worked at the firm long enough to do whatever it is they want to do. To tell them any of those things is almost a guarantee that they will leave you quickly.
Encourage your employees to get more education by offering to pay for 100% of a certification program or college courses. This can be a great loyalty builder and retention agent. If there are field workshops available, give them the opportunity to attend.
Select key employees, and offer them the chance to participate in longer-term development programs. Stress the importance of development, and then pay employees more money when they successfully complete the program. Generation Y, in particular, is attracted to any organization that helps them gain more skills.
Some employees would like to be more hands-on in the community but fear they don't have support from their employer. Let your workers know that volunteering is encouraged. Google, for example, allows its employees to donate time to charities while still getting paid. Letting employees contribute to community, social and charitable activities not only improves your organization's reputation, but acts as a retention tool.
Don't think extended benefits or loyalty will keep employees content. Lean toward the side of generosity when offering raises, and never let pay be an excuse for an employee leaving. Compensation is hardly ever the entire reason people leave a firm, but employees tend to blame their departure solely on that.
Most companies can't defend themselves against this issue because they, in truth, don't pay that well. If you offer competitive salaries, your organization will become known as the elite place to work. This will pay off handsomely over time.
Turnover can start and end with management. Most research shows one of the biggest reasons people leave a firm is because of mistrust, dislike or incompatibility with an immediate supervisor. Poor managers are the worst enemy of employee retention. Reputations of poor management spread quickly and tend to infect many people, starting a negative buzz about working for an organization.
It is important to monitor how your management team works with employees. Managers who have a significant amount of turnover need to be educated and mentored on more effective ways to handle their workers. And if things don't improve, they should be removed from supervising employees.
Remember, we have entered a time when employees are in command. They can take you to great heights or cripple your success. They own the tools of production, and management needs to understand that the best organizations - those that are financially successful - have employees who enjoy just enough supervision and a lot of freedom.
Today's workforce is better educated, more independent and secure, and far more entrepreneurial than the workers of even a decade ago. The result is that human resources policies, benefits and management styles have to radically change to keep pace.
So you want to build a merchant services business where your workforce is energized and productive without the constant halt to hire new employees? Follow these ideas to reduce turnover, and develop an environment that produces long-term results. It requires a committed management team and a great deal of innovative thinking, but these methods can really work.
Curt Hensley is the founder, Chief Executive Officer and President of CSH Consulting (www.cshconsulting.com), a recruiting firm exclusively focused on the payments industry. He and his leadership team have over 50 years of combined experience in recruiting and merchant acquiring. This niche focus and deeply-rooted expertise have made it possible for CSH to have placed more than 1,000 professionals over the past seven years. Contact Curt at 480-315-8800 or email@example.com.
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