Innovate to Motivate Veteran Employees

By L.M. SIXEL, HOUSTON CHRONICLE, May 11, 2011
6.04.2011 
Many baby boomers can’t afford to retire because they haven’t saved enough. Other aging employees don’t want to give up what they enjoy doing even if they reach the typical retirement age.

Whatever the reason, companies are finding that employees are sticking around longer. And motivating that group of valuable longtime employees, especially if there isn’t a lot of money for incentives in this economy, requires some innovation, said Jennifer Loftus, national director of Astron Solutions, a New York-based human resources consulting firm that specializes in designing compensation programs.

One way is to extend the company’s college scholarship program to include grandchildren because so many grandparents are helping with the college bills, suggested Loftus, who gave a presentation Wednesday at HR Houston’s 20th annual Gulf Coast symposium on human resource issues. Or give long-term employees the first choice in vacation and shift schedule requests.

Some companies provide special parking places for employees with seniority, she said. Others increase the amount of company-paid health insurance subsidies based on years of service. Others provide gift cards for a job well done.

But make sure they’re targeted to each specific employee, and that can require a little research, she said. If someone’s a reader, buy a gift card for a bookstore, she said. If they’re into travel, buy a gift card from a hotel chain.

Loftus, who is president of the Human Resources Association of New York, said she regularly sends handwritten birthday greetings to her board members along with a $5 coffee shop gift card. It’s a way to recognize their service and thank them for what they do, she said.

The directors, she added, are surprised. One told her: “It’s a shame you’re not my real boss.”

Making an investment

Incentive programs are an investment because companies don’t want their longtime employees to walk out the door, either, Loftus said. They don’t want those skills to disappear along with the relationships they’ve built up with vendors and clients over the years. Long-term employees are also more stable and less apt to make abrupt career changes, she added.

Some companies, however, have a practice in which they “red circle” certain employees who reach the maximum of their salary range. Instead of getting an annual raise, the employees receive a lump sum payment not added to their annual base salary.

“How demoralizing is that?” asked Loftus about a longtime employee getting the word he or she is no longer eligible for a raise.

While it may be understandable that a company puts a limited value on a specific job, it’s not much of a morale booster, she said.

She suggested that companies rethink the idea of “red circling” and consider what it would cost if the employee left. The cost of turnover varies by job, location, industry and other factors, but roughly, it runs about 50 percent of the first-year salary to hire and train a new employee, she said.

If an employee earns $120,000 a year, a 3 percent raise each year might actually work out cheaper in the long run, she said.

And that’s especially true if the employee would be hard to replace or performs a critical function.

A hospital can’t run without registered nurses, she said. And a manufacturing plant would be hard-pressed to get by without its skilled line employees.

Or its geologists and engineers if it’s an energy exploration and production company.

Kathy Rapp, vice president and managing director of hrQ, a human resources recruiting, staffing and consulting firm in Houston, said that one of her oil and gas clients offered its top performers who are eyeing retirement the ultimate flexible arrangement.

If they want to take the summer off when their grandchildren are out of school, that’s fine. Or if they want to stay home for the month of December, no problem — just as long as they stay working the rest of the year.

Stepping back

They’re senior engineers with a lot of skills and experience, said Rapp, who was also at the conference. Many of them, ranging in age from their 50s to their 70s, want to take a step back but couldn’t afford to stop working. The company asked what it would take to keep them onboard and came up with a variety of flexible schedules.

“They have all the knowledge,” Rapp said, which benefits the company immediately. Longer term, the arrangement is a way to transfer those skills to the younger generation