When you invest in your employees, they'll give you a more profitable business back.
What’s a business without its employees? As the owner, you might be the driver, steering the car where it needs to go. But the people you employ are the engine—they do the work to get your business from A to B and beyond. To drive fast and true, you need to invest in your employees.
The team you have directly impacts:
- The relationship you have with your clients,
- The quality of work you’re delivering and
- Your ability to produce work at the pace you need to.
It takes an investment of both hard and soft costs to reap the rewards in your bottom line.
What it Means to Invest in Your Employees—and Why You Should
Investing in employees means spending both time and money to ensure that your staff feels valued and informed. It can be as simple as a thank you card for a job well done or as complex as establishing a corporate training and education program.
Your goal when investing in your employees is to increase their engagement. Engaged employees routinely exceed expectations because they feel like they’re contributing value to something greater than themselves.
Here’s what making that investment in employee engagement can lead to:
A 2017 Gallup Poll report suggests that only 15% of employees consider themselves “engaged” at their job, and that companies with a higher share of engaged employees experienced higher earnings per share than those with low engagement rates.
Do engaged employees work harder? Research suggests that engaged employees outperform their less-engaged counterparts by as much as 200%. Meanwhile, almost two-thirds of employees experience “burnout” at work, which can lead to compromised health and reduced productivity.
Reduced Turnover Costs
Engaged employees typically stay at their jobs longer. According to some estimates, replacing a single employee (factoring in recruiting, on-boarding and training costs) can cost as much as 50% of that employee’s salary. When you factor in additional considerations such as their role, seniority and your company’s industry, that cost can balloon to 200%.
Improved Customer Experience
Companies with high customer experience scores typically have 1.5 times as many engaged employees as their competition.
The Risk of Failing to Invest in Your Employees
Failing to invest in your employees doesn’t mean your business will fall apart. However, it can add additional stress and cost.
Here’s what you’re in for if you don’t make that employee investment:
Decreased Client Confidence
When employees leave, they take the relationships they’ve built with your clients with them. Rebuilding those relationships takes time, can lead to mistakes and can erode client confidence.
A Talent Exodus
You want to hire and retain the best people for your company. Disengaged employees are more likely to leave, taking institutional knowledge with them. And you’ll incur costs replacing them. Engaged employees? Not only are they more likely to stay, but they’ll help recruit other top talent as well.
Increased Hiring and Onboarding Costs
In addition to recruiting and training efforts, there are “soft costs” associated with turnover. For example, team-mates pick up the slack when an employee leaves. This can lead to greater stress, longer work days and eventual unhappiness if their efforts aren’t rewarded.
Invest in Your Employees: Where and When to Spend Money
There are any number of ways to spend money on employee engagement, and each of your employees will respond differently. You’ll experience some trial and error as you figure out what works best for your team.
Here are the crucial starting points when you’re building out your processes:
Dissatisfaction and voluntary turnover is often driven by employees feeling under-compensated for their contributions. While you might not be able to pay the highest rates in your area, strive to keep salaries competitive. Make sure your company does due diligence into researching salary ranges for the jobs and roles you’re hiring for.
Recognizing Employee Contributions
Employees want to be recognized for the work they do. A gift card or an afternoon off can show them you value their wins (like completing a client project under budget). For long-term ongoing contributions and successes, raises and bonuses go a long way towards retaining your top performers.
Competitive Health and Benefits Packages
Providing a health and benefits package gives your employees confidence that they’ll be taken care of, and can reduce illness-related absences. A competitive benefits package will also help you recruit and retain top talent.
Employees value empathetic leaders who pay attention not just to the big stuff, but to the little things as well. Milestones like birthdays, work anniversaries and project successes should be recognized and celebrated. There are many ways to do so:
- Team gatherings on a lunch or coffee break
- Birthday/anniversary cards
- Company-wide e-mails recognizing employee contributions
Team-Building and Events
Team-building events like group lunches, parties and outings can help your team get to know one another and build morale.
Invest in Your Employees: Where and When to Spend Time
Employee engagement doesn’t always mean spending money. The time you and your organization spend on your team is equally important.
Here’s how to contribute to a healthy culture without a large cash investment:
The Opportunity to Do Great Work
You might not always pay the highest salary or give the biggest bonuses. But if you’re a small to medium sized company, your employees will have the opportunity to do more. Make sure your best employees have the opportunity to work on projects that will let them develop their technical and/or project management skills.
Develop a Company Buddy System
A welcoming onboarding program is critical for your company. New employees often feel overwhelmed. They want to show their worth right away, but are learning everything from scratch. Assigning every new staff member an experienced buddy can help them settle in confidently.
Establish In-House Training Programs
Great employees want to learn new skills and invest in their professional development. Beyond paying for them to take courses or get certified, you can offer in-house training sessions. For example, a leadership program that prepares mid-career employees to take the next step.
Emphasize Work/Life Balance
Even when employees love their jobs, they need some time away to prevent burn out. Alongside better benefits, you can offer flexible work hours, work-from-home options and increased vacation time.
Establish Believable Company Values
Clearly defined company values, backed by a company mission statement, can help employees find purpose in their work. Even better? Engage your employees in creating and iterating on your values.
Offer Productive Feedback
While recognition bonuses and the occasional “great job” are important, regular constructive and developmental feedback can help employees grow. Feedback can be delivered both informally, coming as situations arise, and/or in a more structured manner, such as in regular one-on-ones and annual reviews. Receiving great feedback, both positive and constructive, will help your staff engage their work.
Conduct Exit Interviews
Exit interviews are an opportunity to learn about an employee’s experience with your company and why they’re leaving. That knowledge can help you mitigate future employee departures and the associated costs.
Leadership’s Role when Investing in Employees
Every employee is different. A great business owner won’t take a cookie-cutter approach to investing in their employees. They’ll show their appreciation and support in many different ways, and observe how their employees respond both individually and as a team. For example, not every employee is comfortable being recognized in front of others, and some won’t feel comfortable participating in team-building activities.
Be sure to take note what works for your employees, and offer an individualized approach wherever necessary.
Finally, remember that investing in your employees isn’t a one-time task you cross off a checklist. It’s an ongoing process that involves regular check-ins to ensure morale remains high and your teams are feeling supported—especially as your business changes and grows.
Engaged Employees Deliver Success
Clients and staff are equally important to the success of your organization. By investing in your employees, you can be confident that they’re engaged and productive, contributing to great customer experiences, and improving your bottom line.