Employee Retention: An Employer Hero in the Recession

Although the television networks bring more devastating news about the economy every night, we also need to be aware of employers and employees who are making beneficial, even heroic, efforts to help each other and the economy.

Here’s an outstanding effort by an employer which will motivate and retain good employees while reducing costly employee turnover.

Just this past December, 300 employees in Ashland, Ohio, were devastated when Archway Cookies, owned by a private equity firm, suddenly closed the plant, eliminating their jobs and health insurance.

However, Lance, Inc., a Charlotte, North Carolina-based maker of snack foods, purchased Archway, reopened the plant, immediately hired back 60 employees, and reinstated their health insurance. More employees will be rehired as business improves.

So far, this would be a great story, but there’s more.

Lance gave all 300 of Archway’s former employees a $1,500 prepaid debit card to help with expenses. Rita Devan, an employee said, “What are these people doing? They don’t know me. They don’t know us. They don’t know any of the Archway people. And they are giving each and every one of us $1,500.”

According to CNN (the source for this article), David Singer, CEO of Lance, Inc., said the gift cards were a way of letting employees and the community know the new owners are different.

“We wouldn’t do it willy-nilly,” Singer said. “We do want to make money. But this is the pool of folks we intend to hire. We just wanted to let them know who we were.”

Many, if not most, managers and business executives would be critical of the company’s generous action.

However, just what has Lance likely received in return for its $450,000 investment?

1. An enormous reservoir of goodwill from the employees who are back at work; the employees not yet back at work; local officials; and the community at large.

2. A workforce that’s likely to do whatever it can to be certain that Lance not only recoups every penny of its investment, but makes lots of money and thrives.

Why is this? It’s human nature. How do most people respond when someone demonstrates their belief in them and makes a financial investment in them before they get anything in return?

Most of us would be determined to prove they made the right decision by doing as much as we can.

And, if there are some employees who don’t feel or act this way, the peer pressure on them will be substantial.

3. A workforce likely to be highly cooperative when the company asks for help in reducing costs or waste, learning new skills, improving quality or productivity, working overtime, or cutting management some slack if it makes an error.

4. Employees who value their employer and show it in small and large job actions on a day-to-day basis.

5. High retention of skilled employees and low employee turnover costs. This is a company that’ll be spending its time and money on improving its internal operations, products, and customer service instead of recruiting, interviewing, hiring, orienting, and training new employees.

6. Lower hiring costs; qualified employees will seek this company out as an employer; they’ll have a deep bench.

7. Far fewer grievances and complaints, sloppy or incomplete work, bad attitudes, lateness, and absenteeism.

8. Thousands of dollars worth of positive publicity in the consumer and business press, and in broadcast and print media.

In addition, I estimate Lance will get 3 to 4 times its dollar investment back!

Every organization wants talented, hardworking, cooperative employees and desires to reduce costly employee turnover.

Notice that Lance, Inc., was willing to make a financial investment in advance to forge a strong, new employer-employee relationship.

Management often has to make the first move in such matters because it’s management’s responsibility to lead, and because it has the resources.

While your organization may not need to take action similar to Lance’s, are there smaller, but similar things in principle that you could do?

Remember that at some point the economy will turn around; how well you’ll retain valuable employees then has a lot to do with how you’re treating them now.