Four Top Strategies to Retain and Motivate Key Employees

In Cash Management
July 7, 2017
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by Mark Steranka, Moss Adams, LLP

In today’s robust construction marketplace, subcontractors and construction firms face a significant challenge to their business: retaining an effective employee base. In addition, employee engagement in the United States has hovered around 33 percent since 2000, according to annual surveys conducted by the Gallup organization. This dismal level of employee engagement is complicated by the fact that as baby boomers retire, there simply aren’t enough Generation Xers to replace them. This alarming trifecta of a strong construction market, low employee engagement, and a shortage of human capital threatens the ability for construction firms to retain and motivate their most valued employees.

These challenges can impact performance and affect your company’s bottom line. As reported in the 2017 Gallup State of the American Workplace survey, behaviors of highly motivated employees resulted in 21 percent greater profitability, and business units with highly motivated workers experienced a 20 percent increase in sales. So how can you engage your employees in ways that encourage them to stay and thrive, while also enabling your company to reach its full potential?

Here are four top strategies to retain key employees, foster engagement, and ultimately enhance performance:

Create a clear strategic plan.
Define and monitor performance.
Cultivate and compensate employees based on performance.
Commit to clear communication.

Create a Clear Plan

The first strategy is to create a strategic plan that defines a roadmap for reaching its goals. All subcontractors should have a long-term vision that guides your strategic decisions, reflects a thorough understanding of how your organization reached its current state, and defines a clear path of practical actions to achieve your desired future state. Core elements of a comprehensive strategic plan include:

Mission, vision, and core values to guide decisions.
Goals and objectives to quantify your expected outcomes.
Strategies and tactics to achieve your goals and objectives.
Action plan to identify responsibilities, costs, and timelines for strategies and tactics.

It’s important to understand that the planning process is just as important as the plan itself. Involving your management and staff throughout the process is critical to success. By asking for input from your employees, you will develop a more informed plan, strengthen buy-in, increase the likelihood of implementation success, and ultimately increase employee engagement.

Define and Monitor Performance

Key performance indicators play an integral role in monitoring performance. The second strategy is to develop KPIs for each facet of your business, and to tie them back to your strategic goals and objectives. Think of performance at three different levels: company, business unit or department (team), and individual. Focusing on performance at each of these levels is important to your organization’s success. For instance, subcontractors need all employees to perform in a manner that is in the best interest of the organization in order to achieve company goals; work together as teams to achieve departmental/team objectives; and conduct themselves in accordance with core values to achieve individual expectations.

Cultivate and Compensate Employees Based on Performance

The third strategy is to determine how your organization will attract, retain, develop, and motivate your key employees to meet your goals at every level—and in every facet—of the company. For instance, subcontractors need to clearly define and articulate what core competencies their employees are expected to possess to successfully perform each role at each level of the organization, and how the company will support development of those competencies. Similarly, organizations need to craft performance-based compensation programs that are aligned with the demonstration of core competencies and achievement of multi-level performance expectations. Annual performance reviews should reinforce this alignment.

Employee cultivation and compensation programs should include the following key components in order to be as effective as possible:

Well-defined recruiting needs for entry-level and experienced personnel.
Career paths that enable managerial and technical personnel to progress.
Compensation programs that incentivize employees to accomplish goals.
Training programs designed to help employees reach their potential.

Ultimately, the goal should be to motivate employees to strive for strong company, team, and individual performance. The most effective employees are those with a clear understanding of how their performance contributes to company success, how to navigate their career, and how they benefit from performance-based compensation.

Commit to Clear Communication

Although the first three strategies form the cornerstones of performance, engagement, and retention, they can’t be fully effective without clear and consistent employee communication. Communication is the glue that aligns and binds these strategies together, helping employees understand how they individually and collectively contribute to your company’s success. As a result, subcontractors need to focus on making communication crisp, clear, structured, and regular. For example, subcontractors can engage employees through quarterly communications on their company’s progress toward implementing the strategic plan, and explaining how that progress impacts performance and, in turn, performance-based compensation payouts.

When Employees Thrive, Companies Succeed

These four strategies lay the groundwork to develop key management staff into future leaders, help reach your company’s full potential, and sustain your business over the long term. The key is to take an honest and transparent approach with your key employees by treating them like essential members of the team, and making it clear that each person plays a valuable role in achieving the company’s mission. Employees need to understand your strategic goals, the expectations for achieving those goals, the competencies required to meet those performance expectations, and how compensation is tied to performance in order to perform at their best. When they do, your organization will have incentivized key employees, strong retention, and high employee engagement.

Mark Steranka is a partner with Moss Adams, LLP. He has more than 30 years of experience helping organizations to improve performance through strategic planning, succession planning, performance assessments, and executive compensation planning. Learn more at www.mossadams.com.