Practical Advice For Reducing EmployeeTurnover

Employee turnover is a fact of life in the business world, and not necessarily a bad thing—particularly if new entrants are exceptionally skilled and qualified, and the rate of turnover is manageable. But if you’ve experienced higher-than-normal employee turnover, you know how

disruptive it can be to the day-to-day operations of your business.

Regardless of their experience, credentials, and expertise, new hires require training and time to both become familiar with the workplace and integrate themselves successfully into its social milieu. Whereas employees who’ve been with the company for a while have had ample opportunity to learn by doing and develop automaticity with mundane tasks, newcomers initially tend to perform these duties more slowly and less sure-handedly. At least temporarily, this can cause friction, encumber productivity, and detract from the bottom line.

Much of the advice that follows can be encapsulated in a simple axiom: If you want your employees to stick around, give them good reasons to do so.

During the hiring process, favour candidates who seem compatible with your company culture.

Begin with a list of “must-have” qualities for candidates, and narrow the search down to individuals who meet those criteria. Include not only professional qualifications, but social skills and personality traits as well. Is this person equipped to handle the unique challenges of your business? Does s/he seem like s/he would get along well with the other staff, and customers/clients?

Do some research into the job market. What kind of compensation are employees in comparable positions receiving elsewhere?

Search online job boards for positions requiring a comparable skill set, and pay attention to the compensation and benefits that other companies offer—especially your competitors. If you can’t match other businesses in terms of salary, you’ll probably need to offer non-financial incentives—such as a flexible work schedule, greater convenience, shorter hours, or legitimate prospects for upward mobility—to convince employees to stay.

Praise good work, and offer specific constructive criticism of not-so-good work.

Everyone likes to hear that s/he has done a great job. By taking the time to provide positive feedback and congratulate employees on their successes, you will both enhance their positive feelings about the company and encourage desirable work habits.

Delivering criticism of less-than-stellar work in a diplomatic manner, without provoking defensiveness or resistance, is one of the most delicate tasks that managers face. Begin by mentioning at least one thing you appreciate about the recent efforts of the employee in question. When you arrive at the substance of the critique, be very specific about what you would like that person to do differently. Avoid accusatory statements; instead, favour phrases like “In future, it would be great if you could (specific instruction).”

Offer opportunities for growth and development.

Ideally, a relationship between employee and employer is mutually beneficial: the employer garners an opportunity to elevate h/er business to new heights with the help of a talented professional, while the employee enjoys the chance to grow, cultivate new skills, and experience success in a business environment. But an employee is in no way beholden to your organization; at some point, s/he will consider moving on in search of greener pastures, especially if s/he detects a risk of career stagnation. By offering reasonable opportunities for learning, growth, and career advancement, you increase the likelihood that employees will remain with your company over the long term.

A raise or bonus can be a powerful motivating tool.

Even a modest salary increase sends a psychological message to employees that the company’s managers value their hard work, and would like it to continue. 

How to Pay Yourself as a Business Owner

You've worked hard to start your business and are certainly entitled to a paycheck. The question then becomes how best to pay yourself as a business owner. You essentially have two options: salary or dividends.

There are pros and cons with each method.

The best course of action will depend on your personal and business finances. Here are the factors to consider:

Paying Yourself a Salary

When your business pays you a salary it is considered personal income which means you'll have the opportunity to contribute to the Register Retirement Savings Plan (RRSP) and the Canada Pension Plan (CPP). How much you put into the RRSP is up to you.

However, there are maximum contribution limits. The CPP is an automatic deduction which can set up for a nice retirement fund.

In other words, the longer your work and pay into the CPP the more of a "nest egg" you'll have upon retirement.

With regard to taxes, when you pay yourself a salary, the corporation can deduct it as a business expense. On the other hand, as personal income, it is subject to taxes.

How big do you want your tax burden to be? That could determine whether or not you pay yourself a salary. 

Taking payment as a salary means you have to set up a payroll account through the Canada Revenue Agency. This means filling out T4 slips and the rest of the required paperwork. Another tax issue with a salary is that you won't be able to mitigate a business loss if your profits go up and down over the course of several years.

Paying Yourself Dividends

You'll have more cash on hand with dividend payments because they are taxed at a lower rate and don't have any automatic deductions taken out for the CPP. It's also very easy to pay yourself in dividends. Just write a check and square it up with the accounting.

By taking dividend payments you are essentially saying you'll be handling your own retirement. Not only would your CPP be less but you are prohibited from making contributions into an RRSP. If you take dividend payments you could also be precluded from taking additional tax deductions such as childcare expenses.

Overall you need to consider your company's cash flow needs, not only for current business, but also down the road. A qualified financial planner should be able to look at your business and help you make a decision that will provide you and your business with a decent level of financial security.

Can You Hire Unpaid Interns to Help Your Startup?

It certainly takes a lot of staff to get a business up and running. Along with the full salaried employees, many business owners have turned towards the idea of bringing on unpaid interns as a way of supplementing the staff needs. The Ministry of Labour has very specific guidelines when it comes to bringing these types of workers into your business. The first thing you have to determine is if your intern fits the official definition of an intern.

As classified by the ESA (Employment Standards Act) an intern is “an individual who performs work under a program approved by a college of applied arts and technology or a university.”

A person who falls under that classification is excluded from being designated as an employee and therefore doesn’t have to conform to the ESA requirements for that type of worker. However, there are some possible complications. The ESA defines an employee as one or more of the following:

a)      a person…who performs work for an employer for wages,

b)      a person who supplies services to an employer for wages,

c)      a person who receives training from a person who is an employer, as set out in subsection (2) For the purposes of clause (c) of the definition of “employee” in subsection (1), an individual receiving training from a person who is an employer is an employee of that person if the skill in which the individual is being trained is a skill used by the person’s employees, unless all of the following conditions are met:

a.       The training is similar to that which is given in a vocational school.

b.      The training is for the benefit of the individual.

c.       The person providing the training derives little, if any, benefit from the activity of the individual while he or she is being trained.

d.      The individual does not displace employees of the person providing the training.

e.       The individual is not accorded a right to become an employee of the person providing the training.

f.       The individual is advised that he or she will receive no remuneration for the time that he or she spends in training.”

Obviously, that is a lot to sort through. The best course of action is to contact the Ministry of Labour before hiring an intern to make sure you’ll be in compliance. You might also look into programs where the government will provide funds to your business if you hire a post-secondary student for a 12 week internship.

Strictly speaking, you’ll need to pay for 25% of this person’s salary but the government will step in and fund the rest. This applies only to companies with fewer than 500 employees who have been in business for a year or longer and it is only for improving a company’s e-commerce website.

It could be the perfect way to get a fresh approach for your business!

Career Path for an MBA in Canada

It's best to begin with the good news. Overall, on the global level, the Canadian economy is in much stronger shape than the American economy. That having been stated, life is still rather difficult at a grass roots' level, especially if you are a recent graduate of a fine university, clutching the license to a successful career – your MBA.

This is not to say that an MBA degree is unimportant. Just the contrary! It is a degree well worth pursuing, especially if your career vision is targeted in the business or financial sectors. Unfortunately, though, the current employment market is not the most promising for new MBA's. In the finance sector, traditionally the major MBA employment sector, career centres for MBA graduates report a decline in finance jobs ranging from 6% - 16%. In addition, graduate schools have reported a drop of on-campus recruitment of at least 10%. Furthermore, graduates seeking internships have encountered a serious reduction in available placements. Back to the good news, the dip in salaries in Canada was slight, compared to the major drop in 2002. Estimates are that salaries will return to the pre-recession level by late 2010 or 2011. However, if you can't secure a position, the salary is irrelevant.

Recruitment has been on the rise in some sectors, though. More positions requiring MBA's have become available in government, health care, non-profit, and energy. While these sectors comprise a relatively small percentage of all available jobs, it may cause new graduates to begin thinking in different career directions, away from the traditional employment sectors. Also, a growing number of recent grads have turned to entrepreneurial endeavours, as have many Canadians who have been unable to find employment.

Some graduates have begun looking for foreign employment, although the prospects abroad are also not very encouraging. For most, though, they will weather the storm in Canada, hoping for better times down the road because, when all is said and done, there's no place like home.

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Survey: National Salary Increases Less Than 3%

Ever the employee's question, the issue has achieved far more relevance in the current economic climate. No longer is the annual salary increase a matter of form. In fact, many employees were relieved at year's end to learn that they would still be employed for the coming year, let alone expect a raise from the boss.

The truth is that, owing to a negligible inflation rate, even the slightest salary increase will, in reality, contribute to a gain in living standards. Nonetheless, this is not to say that salaries in Canada will not rise this year. The question on many lips is how much?

According to surveys conducted recently across Canada, encompassing a broad spectrum of more than 700,000 employers, Canadians should not expect large increases this year. Estimates average between 2.3 to 2.8 per cent nationally. Although the national average was 2.2 per cent in 2009, caution in the business community is keeping the numbers down, at least for the foreseeable future.

Employees in Saskatchewan are projected to earn 4.1 per cent more this year, due to the province's energy boom. Ontario and British Columbia bring down the national average, as estimates are increases of 2.6 and 2.7 per cent respectively, due to low performance in manufacturing and forestry.

In actuality, many companies across the country have projected zero salary growth for 2010. While this is not set in stone, many employers are waiting to see how the economy reacts over the next few months before making new financial commitments.

Another factor to be considered is the number of employees pulling double workloads to compensate for reduced workforces. Easing these conditions could also be considered to be a benefit.

In this recession, every little bit will help.

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