Construction activity has been strong for a while in most areas and the impact of skill and resource shortages on companies is becoming evident, with many finding it harder to finish projects on time.

The additional pressure on staff can have the undesirable effect of increasing any feelings of dissatisfaction and a desire to work elsewhere. This sequence of events requires active management. Don’t wait for warning signs to develop or get worse, start considering now how you can improve employee engagement, motivation and manage stress levels.

Indeed, the cost of employee turnover is one of the biggest drains on the bottom line with the average cost for recruitment, training and lost time and productivity at between 100-150 per cent of the employee’s salary, depending on the role.

You need to understand that these costs are just as real as any other expenditure in your business – and be constantly alert to mitigating them. Further, loss of important staff at a busy time puts more pressure on the remaining staff and the situation can get worse before it improves.

Retaining top people isn’t about simply increasing their wages. For starters, you need to recognise individuality among your staff, which will open many doors to increasing levels of engagement and retention.

Different things motivate different people and, inequitable remuneration (perceived or real) is not the only reason they will seek new work – though if you are not paying a market wage you are unlikely to retain anyone long term who is competent at their job.

Common drivers to seek new work include:

• lack of recognition or lack of purpose or vision in the business
• a desire for more development opportunities and responsibility
• frustration over poor management, unmet expectations
• stress and/or fatigue
• boredom/highly repetitive, mundane work.

When someone is looking elsewhere or is not engaged, try to understand what motivates them and consider what would make their position more appealing. Indeed, you should be having this discussion with all your employees on a regular basis.

Motivators to stay:

• communication – this is one of the keys to retaining good staff and may reveal what your employees need to keep them satisfied and productive
• enriched duties – if someone is leaving due to lack of responsibility or a desire for more status, discuss developing a career advancement programme with a performance plan and training opportunities
• flexible workplace – if you’re not already offering excellent flexible work arrangements and investing in remote access technologies – it’s well worth considering or you’ll be left behind in a market where it’s increasingly expected
• financial – if the motivation is financial, then you may want to weigh the cost of any proposed salary or wage increase against the costs of replacing the employee – i.e. all the costs associated with recruiting someone new, training costs, productivity losses (including your time) and performance losses. However, be wary of the staff member constantly requesting further salary advances – you can’t buy loyalty and you may be being backed into a corner. You end up buying another six months’ of their ‘loyalty’ until the next request comes in.
• planning – good planning reduces stress and creates clear expectations. When tied to strong leadership, many of the possible triggers for dissatisfaction can be removed.
• non-cash benefits – you can also suggest non-cash benefits as part of a remuneration package such as providing a company vehicle, subsidised health benefits, access to or funding educational or training courses, discounted products or services your business offers - even shares in your business for carefully selected critical staff (perhaps as part of a succession plan?) Be aware of any Fringe Benefit Tax these expense benefits may attract.

If money is the key driver, perhaps consider a small pay increase coupled with an increased employer Kiwisaver contribution or implementing a performance-based bonus system. Ultimately, employee turnover is a cost that all business owners face, and one that needs to be managed and indeed, budgeted for.

Other things you should be doing to keep all staff motivated and achieving at their best potential:

• have a performance-based culture – your best staff will embrace the goals and strive to achieve them. Employee engagement is critical to retaining your best people.
• show respect and appreciation – this is the least expensive and often most effective method. Respect contributions, listen to staff, ask for their thoughts and contributions. Above all, show your appreciation.
• provide consistent feedback – this needs to be regular and both structured and informal. Structured feedback and taking a personal interest in their development are critical.
• give praise generously – rather than feel the staff are just lucky to have a job, say: “Thanks, I know it’s just part of your job but I appreciate the pride you took in doing that job”.
• avoid a dysfunctional culture – does everybody define the culture the same way and behave consistently within it? If not, start working on it now. The increase in productivity by having motivated employees and a loyal stable workforce will go a long way to your future business success and surviving in busy times.

James MacQueen is a partner with BDO East Tamaki, specialising in the construction industry.