If you haven’t heard, there’s a labor shortage and employees are in the driver’s seat. Under the best circumstances, it can be difficult to recruit qualified employees. But when a company is experiencing a distressed financial or operational situation, the process becomes even more challenging.
Employees are a company’s most valuable resource that must be carefully managed and preserved. Based on my personal observations as a business turnaround advisor, coupled with insights from conversations with industry experts and related data, the following blog highlights some important items for businesses to consider when recruiting and retaining employees.
First, avoid the common mistakes when hiring.
According to Stephanie Shine, VP of Permanent Placement Services for Central & Northwest Arkansas for Robert Half International, some of the most common mistakes she has observed in the hiring process include:
- Lack of clarity on the details of the position – The job description should be well defined, so everyone is aligned on what the position entails.
- Too much focus on a candidate’s perceived match with “everyone else” – While company fit is important, keeping an open-mind about candidate diversity is important and can be very beneficial to the inclusivity of a team.
- Overemphasizing technical skills at the expense of soft skills – Even if a candidate’s technical background isn’t a perfect fit, don’t count out individuals that may bring other skills and positive energy and attitude to the team.
- Taking too long to make an offer – If the hiring process it too long, employers will lose good candidates. Many job seekers are receiving multiple offers, so companies should move fast.
Shine shared an example of an interview process that she facilitated where the candidate had more than ten interviews scheduled. “Candidates can get very frustrated with a cumbersome interview process and drop out of the running – or they may take accept another offer,” said Shine. “Be respectful of the candidate’s time and consider streamlining the hiring process and bringing your best offer right away.”
Hiring considerations for a company in a distressed situation
Selling the benefits of working for a struggling company adds a layer of complexity to recruiting quality talent. Many times, companies in distress resort to hiring unqualified “B” or “C” candidates just to get some help with the workload.
How can you convince an “A” candidate to leave a position at a secure company to come to a company that has gone through some challenges? It’s important to always be straightforward and honest with candidates. Develop clear messaging and focus on the positives that the company has to offer now into the future (e.g., proprietary technology, work-life balance, collaborative environment, etc.), which may also include longer-term career advancement.
I once had a client ask me to hide the financial condition of the company from a candidate, but I advised against this. Whether communicating with candidates or existing employees, honesty and transparency about the situation are paramount. You don’t have to share every single negative data point, but don’t misrepresent the business situation. I’ve learned that employees can make their own decision to leave or stay and work through the problems. In fact, employees are often empowered to remain in their position, and comradery is built between employees as they work together during tough times.
Prevent and address issues before they become a problem.
In addition to common mistakes that employers make when hiring, there are several factors that companies should consider when trying to retain employees, including:
- Compensation should be competitive to the local job market. When filling a position or retaining employees for critical roles, it’s important to understand the employee compensation market. Have other companies increased pay and compensation packages recently that has made your company’s pay less attractive? It is important to perform a compensation survey at least annually, especially in times like these, when employee pay is rapidly evolving. Sometimes companies need to take a fresh look at their wage scales, it may be time to make changes and increase product prices to incorporate those increase costs. In addition, some companies may want to consider non-cash compensation as a mechanism to award employees. These could be an Employee Incentive Program to allocate a defined dollar amount to designated employees based on a corporate accomplishment (i.e., company sale, equity raise, office opening, etc.).
- Be flexible with remote work policies. If remote work isn’t an option at your company, consider implementing a hybrid model. Note, however, I’ve observed that not all positions are a good fit for work-from-home, including some lower-level positions. When possible, find a way to measure work performance or output because some employees may abuse remote work privileges. A recent survey of 459 companies by ABC News and Sequoia illustrates that there doesn’t seem to be a “one size fits all” for companies when handling “return to office”.
- Company location can hinder your talent pool. While a company’s industry may dictate a location in a rural or less desirable area, this can hinder the talent pool—especially for upper-level positions. In many cases, companies should consider an increase in compensation and benefits to attract qualified talent. Why would a candidate agree to a long commute when they can find employment closer to home for the same compensation? Also, consider if certain roles need to be full time. For example, would a full-time Controller with a contracted/fractional CFO be sufficient?
- The controversial consideration of drug screening. If applicable, companies may want to consider changing their drug testing policies if they are losing a great deal of otherwise qualified candidates. For example, Amazon has advised its delivery partners to advertise that they do not screen applicants for marijuana use because they reported that not requiring testing for marijuana can boost job applicants by as much as 400%. Regardless of testing policies, no one should work while under the influence of legal or illegal substances.
Employee Turnover Remedies
Shine told me that while compensation is not the only reason companies are losing employees, it is still at the top of the list according to Robert Half International research. The top three reasons people are for looking for new employment include the following:
- Salary increase (54%)
- Better benefits and perks (38%)
- Opportunity to permanently work remotely (38%)
Beyond the Salary – Create employee engagement opportunities
Ultimately, I believe companies should strive to make employees feel valued and part of a team. Creating a healthy and inclusive culture often trumps all other things—including money. Here are a few examples of effective employee engagement I’ve experienced with past employers and clients:
- Host employee social and team events — I have seen companies successfully accomplish this by simple team building activities such hosting virtual cocktail hours during the pandemic—or a company BBQ. It’s fun to get out of the office so employees can feel more relaxed.
- Keep employees informed – It’s important to be transparent and keep employees informed through effective communication. Whether through digital communications and/or internal newsletters—or hosting periodic town hall or “all hands” meeting—good communications shouldn’t be overlooked.
- Recognize good work — Employee recognition—whether informal or through a defined program—can be a very meaningful way to making someone feel valued.
Wrapping it up
It’s a tough market for talent. Companies must closely evaluate why they are losing good employees or not attracting qualified applicants. Ultimately, employers should strive to treat employees with respect. In my experiences as an employee, supervisor, and consultant, I have found that most employees are good people who want to do their job well and be rewarded accordingly. Reward comes in the form of compensation, fair treatment, work environment/culture, or benefits and amenities. Employees are adults and should be treated as adults who can be trusted to perform their jobs.
About the author:
John Horner has more than 25 years of specialized experience in restructuring, turnarounds, mergers and acquisitions, as well as general financial and operations management. He provides strategic advisory services to companies that are experiencing a complex transition or a distressed situation. He is committed to driving value for his clients and seeking creative opportunities to ensure the best outcomes in every engagement.