Tips to Retain New Hires — and Realize Significant Savings

Many organizations are considering ways to take advantage of the federal tax credit for hiring previously unemployed employees. What HR professionals need to pay more attention to is the retention part of this law.

The Hiring Incentives to Restore Employment (HIRE) Act, enacted in March, provides employers who hire previously unemployed workers with two new tax credits.

The first provides employers with an exemption from the employer’s 6.2 percent share of social security tax (from March 19 through the end of 2010). The second — dubbed the new hire retention credit — rewards employers who retain these new hires for 52 consecutive weeks with a business tax credit of 6.2 percent of the wages paid to the employee — up to $1,000 per worker. This new law can save companies a few thousand to several hundred thousand dollars, depending on size.

Hiring new people can be relatively easy, but retaining those new hires for a year can be surprisingly difficult for some companies. Utilizing tools such as exit interviews, employee satisfaction surveys, and mentoring programs and implementing effective new-hire strategies have proven to be effective in hiring, training and retaining top talent.

• Exit interviews: A well-constructed exit interview program takes the guesswork out of retention planning. Before a company can implement a retention plan, leaders must understand the specific reasons employees are leaving. Exit interviews are the first line of defense to get to the root causes of employee turnover. When exit interviews are conducted and tracked properly, they identify the specific irritations that cause employees to leave. Exit interviews can be used to differentiate reasons for leaving across departments and divisions. With deeper analysis, exit interviews can point to turnover catalysts affecting classes of employees, such as generations, gender and ethnic background. For larger organizations, exit interview management technology is available to automatically slice and dice the data. Information from exit interviews is then used to create a next-steps road map to keep employees on board, satisfied and productive.



• Employee satisfaction surveys: Although not as pointed as exit interviews, surveying current employees can provide additional insight on areas in need of reform. Employee surveys should be conducted anonymously and allow for both quantitative (numerical) and qualitative (open-ended) responses. The results may then be analyzed to gain specific feedback from those new hires eligible for the new hire retention tax credit.



• Mentoring programs: Corporate mentoring programs have proven to be a highly effective retention strategy. For instance, one health care organization reduced its turnover of new nurse assistants from 64 percent to 4 percent in two years after beginning a new-hire mentoring program. Today, starting and administering corporate mentoring programs is easier and more cost-effective than in the past through the use of online mentoring program technology.



• On-boarding efforts: Focused and ongoing attention to new hires can pave the way for improved employee retention for those employees eligible for the tax credit. The first 90 days are critical for moving new employees from feeling like outsiders to building ties with the organization. Surveying new hires at one or more intervals — such as 30 days, 60 days or 90 days — can provide critical information to make sure the organization is providing an appropriate new-hire experience.

Source: Talent Management