Hiring and Retention of Valuable Employees

The Trouble With This Vibrant Economy ----Getting and Keeping Good Staff.

The full employment economy elevates company staffing to new levels of importance, right up there with strategic planning, and customer service. Working people today have options as never before. Frankly, if any of your staff are unhappy with their employment, they can get on the Internet and find opportunity virtually everywhere.

As a consequence of polling results, USM's Institute for Family-Owned Business put on a seminar for its members in March that brought together some of Maine's leading thinkers on Human Resources. They included Katherine Greenleaf, now with Wright Express, and most recently from the CEO's Circle at Ben and Jerry's, Bob Peixotto, SVP of Human Resources and also a member of LL Bean's Office of the CEO, Mike Hilton a 25 year non-family employee of the Bridge Corporation, and Kevin Hancock, sixth generation and CEO of Hancock Lumber. This experienced and exuberant panel stitched together a set of practical ideas to help family firms compete for personnel in this seller's market.

1. Hire the right person to begin with, at the right time, with the right skills, and set very clear non-job description criteria so that they know what key factors and relationships they'll need to succeed. In the hiring process, it is essential for the employer to know clearly what are the non-negotiables, i.e., what skill set can you select for, and what can you develop over time.

2. Know what your firm stands for in the labor market-as if you are managing a brand. Firms with outstanding reputations as employers, such as ,say, Hannaford Brothers, have the rare luxury of a profusion of applications for every opening.

3. To ensure your employees believe in what you are doing, treat them like the all important market segment they are. Develop a constant stream of communications devoting resources and energy articulating your dreams and values, conveying what the firm is all about, relating that each person is vital to the overall success of the firm. Understand and develop your bench (your most promising individuals) to ready them for advanced responsibilities. And promote from within. If you have a strong education policy and support systems, almost anyone knighted with increased responsibilities lives up to them (often to a greater degree than their bosses had expected). Hold regular informal meetings in which their ideas are sought and appreciated. Speak to them individually by name on the factory floor, and at your firm's version of the water cooler. Invest in developing a "we and us" attitude. Speaker Bob Peixotto proudly described LL Bean not as a place were he works, but as a place that he is part of.

4. Most importantly, family business managers can evolve their own attitudes from paternalism to participation. It is the attitudes of the family members toward each other and their associates--that unbridled enthusiasm toward achieving the company's mission and goals that becomes an important key to acquiring and retaining quality personnel.

5. In family businesses, openness has its own rewards. Communicate the rules of the game so there is minimal guesswork as to what the owners are thinking. Ensure that associates have reasonable understanding of their career paths plus those of the family members. Share financial data and shamelessly award performance for meeting objectives.

6. A feeling of involvement is one of the most powerful motivators, so include non-family management pervasively in goal setting and planning sessions, including those at the upper levels.

7. Motivational research of employees in the top quartile of outstanding performance has demonstrated that the single most important attribute in job satisfaction is the quality of the person's boss. Fact is, most people don't leave jobs, they leave bosses. That makes it imperative for firms to invest in leadership development programs to ensure a consistent standard of exceptional, people-skilled management.

Family business employee retention has a glaring hurdle in that non-family member staff realize that the choice positions may go to the family members. On the other hand family businesses have some strengths in the labor market. The following table summarizes a typical job searcher's view of the relative strengths of family versus non-family employers:

Non-Family Business Family Business

Possessing Objectivity Possessing Tradition and Values
Professional High service orientationCommunity Focused
Performance Based Customer Based
Corporate Entrepreneurial
Short-range view Long-range View
Distant Personal

Astute family businesses will address both of these worlds, providing job candidates with an objective, professional, and performance based career, along with the traditional strengths perceived in family firms. To do this effectively, family firms first need an objective review (usually meaning by an outside party) as to how fair and professional they actually are. And they ought operate the family business in a win/win mode for both the working family members and the key personnel not in the family.

Kevin Hancock is a 1988 Bowdoin grad, the CEO of Hancock Lumber, who believes in a full court press when it comes to motivating and retaining key personnel. His unique experience and enthusiastic leadership of his firm create speaking opportunities across the country on these issues. He offers insights for the top executives of family firms:

· The smaller and narrower the family tree, the better the opportunity to hire outside. In other words, think carefully about where family members are placed, and what their qualifications must be.

· Run the company in a decentralized manner, providing top execs the responsibility for decision making, plus the freedom and space to lead.

· Maintain an open policy on financial information so that all top execs have access to all strategic and financial information.

· Educate the top execs on how to run a family firm-what the nuances are, the special concerns about estate taxes, the key Teutonic plates.

· Ensure the top echelon realize their mission is one of stewardship of the firm-to leave it in better shape to the next generation than when the present management took the reins.

· Ensure management is heavily bonused on profit, and the top managers have director level input.

· Ensure that the operation of the business and its management staff are enjoyable, fun, interesting-so key personnel delight in their work and gain real satisfaction from their contribution to the overall scheme. Thus they will look forward to the strategic unfolding of their career.

· As Tom Peters (In Search of Excellence) has said, "don't just love talent: revel in the talent of others."

What about compensation? First, everyone wants to be treated fairly both within and without the company. Owners of family firms must strive for fairness in the face of occasional accusations that they are not. That goes with the territory. A professional pay system values jobs according to standard criteria like responsibility, size of budget, and decision making impact. Fairness dictates that family members be scrutinized with the same standards. (Stockholders, including those family members working in the firm, may also receive dividends).

The major rub for firms of all types in today's freewheeling labor market is the great lure of stock options offered by the dot.com companies. The recent downturn in the NASDAC will alleviate this problem only temporarily, as the major share of projected economic growth will largely derive from the technology sector. Family firms with shareholders can combat this with so called "phantom stock," which acts in every legal way like stock, but does not convey actual ownership. It does swing in value in correlation with the company's common stock, and is legally redeemable by the firm, usually with some proviso, regarding timing. The firm must buy the "stock" back at when the employee wants to sell.

During these good times, which Stanford economist Paul Romer believes may last indefinitely, family businesses face one of their strongest challenges ever--a dwindling labor pool with lots of options. Family firms will survive with the same characteristics that have enabled them to withstand other historical challenges--with leadership, creativity, and tenacity.

(Paraphrased from an article written by Tom Juenemann in the New England Business Journal).

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