When the headhunter comes knocking... In today's free agent workplace, employees have few qualms about jumping ship when they get a better offer. And in a booming economy, desirable workers don't even have to seek new opportunities--headhunters come to them.As a result, employers are having to work harder to retain talented employees. Ignoring the problem can be costly--eventually the cost of hiring and training replacement workers will affect the bottom line. Read on to find out what smart companies do to keep their best workers from roaming.If you're wondering whether your company needs an employee retention plan, consider the potential costs of employee turnover. The price tag varies from position to position and firm to firm, but it's not unusual for total costs to run

as high as a full year's salary--or more. Consider the following expenses:

Loss of a seasoned employee's expertise

• Interruption of client relationships
• Fees paid to professional recruiters
• Staff time to recruit, interview, and hire new employees
• Higher wage costs to attract new employees
• Training costs
• Downtime until the new employee is up to speed

If your company has been hemorrhaging key workers, you can begin by making someone responsible for the issue (maybe that's you). And even if turnover hasn't been an issue, it's worth examining what you're doing right so you can keep up the good work.

Understand why people leave
Many employers think retention comes down to cold, hard cash, but in fact it usually starts with warm, fuzzy issues like appreciation, recognition, and communication. In general, salary isn't what motivates employees to start looking elsewhere. Rather, they look when they're unhappy with the job itself. So before blindly handing out raises and bonuses, sit down with employees one-on-one to find out how they really feel about their work. Ask them why they stay and what could convince them to leave. Learn what they like about their job, what they don’t, and where they want to be in 1, 5, and 10 years. To be helpful, such discussions must be as honest as possible. That means managers have to create an atmosphere of trust. That's not always easy, but just by sitting down to talk you can start fostering trust. Meanwhile, ask yourself how often you and other managers do the following:

• Praise employees for a job well done
• Show employees how their work is valuable and needed
• Communicate the company's core values
• Inform employees about the company's overall business strategy, as well as strategies for particular departments
• Inform employees of important business developments, whether or not they affect employees directly
• Regularly meet with employees one-on-one, ask if they like their jobs, and why

Make work fun
Companies where employees report that their work is "fun" tend to boast the best retention rates. That doesn't mean you have to turn the office into a theme park, nor should you compromise performance standards and let employees goof off on the job. But considering people are spending more and more time on the job, making your workplace friendlier can go a long way toward making employees willing to stick around. There are a number of inexpensive ways to help employees bond and relax at the same time, including:

• Providing complimentary bagels or doughnuts (great on Monday mornings)
• Catering a group lunch once a week
• Setting up a Ping-Pong or foosball table, basketball hoop, or some other activity that allows employees to blow off steam
• Hosting an annual holiday party and encouraging employees to participate in planning it
• Organizing a sports team and joining a league
• Spending a day together out of the office and away from work (see 2torial #0403: Plan a Company Picnic for ideas)

Foster good working relationships
Employees often remain at their jobs simply because they don't want to leave the people they work for and with. This is especially true as people's social lives and identities become (for better or worse) increasingly tied up in their careers. Encourage your employees' attachment to your company by trying to create a congenial and collegial atmosphere. Here are some concrete ways to do this:

• Foster open communication with employees (see Step 1)
• Be watchful for personality conflicts between employees and do your best to resolve them promptly and fairly. Make sure you and other managers make an effort to talk honestly with every employee, not just those who report directly to you.
• Make sure managers have (or develop) the interpersonal skills necessary to work with employees harmoniously. Take this talent into consideration during the hiring process by asking questions and checking references. If you discover a manager is having difficulty with employees, address the problem immediately.
• Hire people--particularly managers--who are fun to be around.
• Plan fun, non-work-related group activities (see Step 2)

Challenge employees
A bored employee is an employee with time to update a resume and peruse job listings. In fact, lack of challenge is cited as one of the principal reasons people leave their jobs. As you search for ways to challenge your staff, consider the following:

• Identify any special talents an employee may have, then try to find a way to tap into them. As much as possible, do this in consultation with the employee (see Step 5).
• Consider rotating employees through different projects, positions, and departments to provide ongoing challenges and build a stronger, more diversified staff. However, consider such a plan carefully. You don't want to rotate employees against their will or put them in positions for which they are not suited or prepared.
• Give employees as much autonomy as possible. This increases both the level of challenge and their personal investment in their performance.
• Along with autonomy, however, also provide whatever resources employees need to accomplish the goals you set. This may include additional training, supervision, relevant technology or equipment, or simply moral support.

Challenging employees is a balancing act. You don't want to set your workers up for failure because that will make them feel stressed out, over-committed, or inadequate. That can be a potential disaster in terms of employee retention. Rather, the goal should be to help employees challenge themselves, then provide appropriate support when they need it and appropriate rewards when they're successful.

Provide career development
Employees are much more likely to make a long-term commitment to companies offering them real potential for career development (see Step 1). Begin by getting to know employees and their career aspirations. Use such discussions to design programs that both help employees meet their personal goals and contribute to your company's goals. Train. Offer special training or education assistance to motivated employees. This could include a range of options. You can send employees to professional conferences, arrange elearning for them, hire onsite trainers for short-term classes, or offer tuition assistance for outside skills development. A well-thought-out investment in training can pay off in terms of better skilled, more committed employees. One caveat: You may have to redouble your efforts to retain your newly skilled workers.

Mentor. In-house mentoring programs, in which experienced managers share their expertise with younger or newer employees, can build bonds and expertise, and are less expensive than outside trainers or courses. You may even want to pair an employee with a mentor from an entirely different department, if that's a direction the employee wants to explore. Promote. Make a point of telling high-performing employees what opportunities lie ahead if they stay with your firm. If you keep them guessing, they may test the waters elsewhere. Likewise, deliver on your promises of advancement by promoting them as quickly as possible. You may even want to pre-qualify them for promotions. That is, tell them that when a specific position becomes available, they'll be offered it first.

Offer flexibility
Workers who have a sense of control over their jobs are satisfied workers. Giving them a say in where and when they work can go a long way toward providing such control. Flextime and telecommuting can be a great solution, but also offer managerial challenges. In other words, you want to be sure that such plans don't compromise employee productivity. By setting clear goals and expectations, you can avoid such problems and still end up with a happier staff. Flextime. More and more companies are offering flextime, enabling employees to arrive earlier or later than the usual 8 or 9 a.m. start time. Not only can they avoid rush-hour commutes, but employees can tailor their schedules to the times of the day when they’re most productive. Other options include four 10-hour days per week (instead of the traditional five 8-hour days), 35-hour work weeks, and a clear policy on comp time for extra hours worked during crunch periods. Telecommuting. Wireless communications, together with the Internet, make working at home a viable option for many employees. Not every task can be completed from home, though, and you should consider the potential impact on both productivity and team building. Properly managed, telecommuting can mean happier employees--and actually boost productivity. Think of all that time they'll be working instead of congregating at the water cooler!

Consider compensation
Money alone will never buy you a devoted staff--but it sure can help. And penny-pinchers should remember the costs of high turnover. While there's no simple formula to determine salaries, there are some basic rules: Be fair. If your employees knew what their colleagues earned, would they be upset? Make sure wages are distributed fairly according to responsibility, productivity, performance, and experience. Study the competition. When was the last time you checked the going rate for an office manager, executive assistant, or sales director in your area? Ask colleagues, check job postings, or even consider hiring a Human Resources consultant (see Step 8). Consider equity sharing. Known as "golden cufflinks," stock or equity options can keep employees committed for at least several years (until they’re fully vested in whatever compensation plan you offer). Meanwhile, they have an interest in the company's success. Try productivity bonuses. If you're hesitant about raising base salaries, consider granting bonuses. They can be a great motivator, yet they give you flexibility.

Review salary levels regularly. Does your company have an established procedure for reviewing salary and performance and awarding raises accordingly? A clear, fair, dependable system helps build morale. (See 2torial #0582: Provide Effective Employee Reviews for more suggestions.)

Consider professional advice
Even if you can’t afford a full-time Human Resources staff, you might consider hiring an HR consultant for specific issues. Besides routine tasks such as recruiting and payroll, the right HR consultant could address any number of issues, including:

• Salary levels
• Creative compensation alternatives
• Conflict resolution
• Communication skills training
• Blueprints for team building
• Managing telecommuters

To find the right consultant, you must first define your specific needs. Then ask colleagues to recommend experts in that field. You can also contact a local chamber of commerce for advice and additional resources. Whatever course of action you choose, remember this: Treat your employees well, and they'll treat you well. Sure, money helps, but money alone won't buy their loyalty. You also need to support their personal and professional goals and treat them with dignity and respect.