What is the cost of losing a good employee? Entrepreneurs know it can be high.
At Frima Studio, a fast-growing video game maker, the challenge of attracting and keeping talent got harder five years ago, when a pair of deep-pocketed multinational competitors opened offices nearby. “We couldn’t compete on salary, so we decided to create an attractive workplace─one that was fun and inspiring,” says Nathalie McLaughlin, Frima’s Human Resources Director.
Twice a year, Frima emulates the “Dragons’ Den” TV show and invites its employees to pitch innovative projects to a panel of judges. “If we judge a project to be solid enough and to have sufficient marketing potential, we will release its creators from a few of their usual tasks so that they can devote one day a week to the development of their amazing idea. A few months later, we review the state of the project and decide if it’s worth pursuing, in which case we greenlight its production and marketing. This program is already starting to yield impressive results,” explains McLaughlin.
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The array of benefits designed to make Frima’s employees’ lives easier includes flexible work hours, as well as a week of paid vacation time between the 25th of December and the New Year. The company offers employees gaming areas and an on-site gym. Twice a month, two massage therapists and a hair stylist also drop by.
Frima isn’t alone in turning to creative ways to provide employees with non-monetary rewards.
“Companies in all industries—not just high-tech—increasingly see non-financial compensation as vital to their growth,” says Nathalie Gélinas, Senior Vice President, Consulting, at the Business Development Bank of Canada (BDC). In today’s challenging economy, it’s harder than ever for many entrepreneurs to find the resources to draw in and retain skilled employees, she adds. At the same time, boomers are quitting the labour market, leading to labour shortages in many fields. This means businesses are increasingly competing for good workers, but they have less money to do it with.
The good news: non-financial benefits can be inexpensive and can even boost a company’s productivity, Gélinas says. “The cost is a lot smaller than what the employer gets back. Losing an employee is very costly. Human capital is the most important resource a business has,” she says. “The ultimate challenge is to mobilize employees. Salary alone will never mobilize or retain talent over the long-term. Businesses should be creative about finding ways to attract and engage talent.”
At Frima, the employee-friendly workplace became a beacon for smart, enthusiastic workers who helped propel the company’s explosive growth. “The key to our success is our work culture,” McLaughlin says. “We listen to employees a lot. People always talk about the customer experience. We have developed the employee experience. It means people don’t want to leave.”
Frima also has a performance reward system that awards points that employees can exchange for services, thus reinforcing the company’s commitment to helping employees maintain work-family balance. Perks include tax preparation, lawn mowing, babysitting, movie/dinner combos and more. “Our office is completely different from anything else in the area. It’s really made a difference in attracting people,” McLaughlin says.
Frima’s success shows that while pay is important, it isn’t what makes employees happy at work, Gélinas says. Employees want flexibility, trust and the chance to develop as part of a team, she adds. “We spend a lot of time listening to customers to serve them better. We also need to listen to employees.”
How to compensate without cash
Entrepreneurs should listen to employees to learn what benefits they value and work on non-financial compensation constantly until it becomes part of the company’s way of life, BDC’s Nathalie Gélinas says. Here are three types of non-financial compensation to consider.
- Flexibility. A flexible workplace is increasingly in demand. You can offer flexibility in terms of time (variable work hours) and space (opportunities to work outside the office).
- Trust. Employees like to have responsibility, work in a harmonious environment and be trusted to make decisions. At the same time, you should hold employees accountable via solid performance appraisals.
- Self-development. Entrepreneurs should think about how to help employees develop themselves. The result will be more a productive and motivated workforce.