What keeps employees?
June 22, 2013
It would be easy to think that when an employee leaves your farm, at least you are saving a few dollars on the payroll. Actually, various studies have shown that you will probably incur costs to the business equal to 30 to 150% of that person's pay. The payroll is lower, but shuffling staff to cover the opening, the hiring process and training time all hurt productivity on the farm and may incur some actual costs for overtime, advertising, etc. This means that retaining good employees not only makes life easier, it saves money.
Employee retention is not often given a lot of thought on dairy farms, but it deserves attention. Employees are what make many dairy farms successful today. A good manager can't do it all alone; he/she needs the right people to do the work in the business plan. Retaining good employees also reflects well on the farm as a well-managed business where people want to work. You are an employer of choice.
A 1999 Cornell University study found three factors that were important to employees' job satisfaction and eventual retention:
- Good working conditions
- Good wages
- Job security
Good working conditions include reasonable employee comfort, a pleasant atmosphere in which to work, and equipment that is in good repair and ready for work. These items help the workforce be productive and show them that the employer cares about their safety and well-being.
Working conditions may also include reasonable working hours, scheduling flexibility that allows for employee participation in family events, school activities, vacation, etc. Farms need workers every day of the week, but that doesn't have to mean the same people always have the calendar weekend off. Consider schedules that might give some employees a Friday/Saturday weekend and others a Sunday/Monday weekend, or some other variations to be sure you always have enough of the right staff on hand. The size of your farm and your staff will have a major impact on how you work this part of your staff plan. Remember, overtime pay at 1½ normal pay is due employees working over 48 hours per week. Salaried staff might be exempt from overtime, depending on their normal salary amount.
Good compensation doesn't necessarily have to be the highest pay rate in the area, but it does need to include a fair and competitive pay rate and may well include some extra benefits. You need to remember your competitive market isn't just other dairy farms. If you employ relatively unskilled and entry level people, you probably need to see what is being paid at the local convenience stores and other small businesses hiring similar people. If you are hiring people capable of bearing some management responsibility, you'll probably want to look at supervisors at other industries in the area and perhaps positions in trades where people have some level of extra training.
Whatever your pay is, be sure your employees realize the full value of all segments of their compensation. If there is some insurance, housing, meat or produce offered, paid vacation, etc., outline the value of those extras and include them in a pay statement so they are recognized for the value they contribute to employee compensation.
Employee retention is not just a Minnesota or United States issue, either. A 2011 Gardiner Foundation project (Nettle, Semmelroth, Ford, and Zheng) for Dairy Australia reported that employees were influenced to stay with their employer because they were promised and experienced:
- Higher than average pay rates in industry for their role
- Flexible work hours
- Limited weekend hours and very long shifts
- Training and development opportunities
- Feedback and appreciation for a job well-done
- Individual attention to career development and mentoring
- An enjoyable work environment with good facilities
- Varied work
Some employers are probably looking at the list and saying, "I'd like those things, too. Wish I could afford it all." That feeling is understandable, but the list points out that your employees are just like you. They want to grow and improve themselves in their chosen profession. A good employee whom you can trust is a valuable asset to your dairy business; one worth some investment to keep and develop into an even better employee.
Employers should also note not all the items in the two lists are direct cash costs to the business. Several of the items are management issues of time management, personal relationships between employers and employees, and attention to good management practices on a farm.
Would you rather spend a bit more to keep the good, current employee, or spend that money and time on finding and training a new employee whose quality you will not know for perhaps a year or more? Consider the options for your business.
For more topics on employee management, visit the University of Minnesota Extension Dairy website at www.extension.umn.edu/dairy.