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All things Sage 300…

On Retaining Employees

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In a few previous blog posts I’ve been talking about attracting new employees whether through office design, advice for someone starting their career or corporate mobility. In this article I’ll be looking at some ideas on how to keep existing employees. Generally the value of a high tech company largely depends on the IP contained in the heads of the employees and growth prospects depend on their ability to execute.

High Costs of Hiring and Training New People

Hiring new employees is quite time consuming and a slow process. Especially in todays job market which is very hot with all the venture capital that is freely flowing right now. Is this a bubble that will shortly burst? Either way hiring is fairly slow right now. Then any new employee has to take quite a bit of time to learn your ways of doing things and to become familiar with your existing programs and systems.

On the converse new employees do being new ideas, new experiences and new perspectives that greatly help an organization. Having a stream of new employees is very beneficial, but when it becomes a torrent then things get tricky.


To retain employees, it isn’t just a matter of higher salaries (though that works well for me), but understanding people’s motivations which may not be intuitive. A good video on people’s motivations is this one. Motivations are really quite complex and much more is involved than just money. This video’s thesis is that you need to pay enough money to take money off the table as an issue, then the priorities become:

Autonomy: people want to be self-directed, they want control over what they do. This is one of the reasons that unstructured time is so successful at so many organizations.

Mastery: people want to have mastery at what they are doing. They need time to learn and practice what they are doing in order to raise their work to a higher level. Often in technical organizations, this is why frequently moving people between projects causes so much dissonance. People aren’t just cogs that do repetitive work that are all interchangeable. This is often confused with resistance to change which is something quite different.

Purpose: People want to make a contribution. They want to see their work being used by happy customers. They want to see their work making other people’s lives better. Putting out poor quality products that annoy people will cause employees to want to leave an organization. Having corporate policies that violate customer’s privacy or do other semi-legal immoral corporate activities will disengage the workforce.

If a company pays a competitive salary then these items will be very important in engaging and retaining employees. But there are still other factors.

Golden Handcuffs

One of my favorite ways to be retained by an employer are golden handcuffs. These are benefits like stock options or future bonuses that you have to remain an employee to collect. Often these can become quite valuable making it a very difficult decision to leave. For instance stock options vest over five years and you can retain them for ten. If your company is growing and its stock is going up then these can become very valuable and walking away from them is as difficult as getting out of handcuffs. Even if you company isn’t public, having these in the hope of going public is a great retention tactic.


Challenging Work

Technical employees like programmers value challenging work where they get to use newer technologies. This keeps people interested via continuous learning and people feel secure in their profession since they know their skills are up to date.


A lot of times technical people leave an organization because they feel their skills are getting dated and that it’s hard to learn and practice newer practices.


When performing employee surveys, often the key answers given to the question of why people stay is that they like their co-workers and/or they like their boss. To some degree this comes down to having a very positive work environment. Ensuring everyone treats everyone else with respect and that bad behavior to other people isn’t tolerated.

Another key aspect is when hiring to consider how people will fit in to the current teams and often to give team members a chance to participate in the job interview process to give their input on this.

Probably the most important relationship is between an employee and his boss and this means that ensuring managers are properly trained and that you have good managers is extremely important.


Having good vertical communications in an organization is critical. A lot of times when people are having problems or not fitting in, they are saying so, just no one is listening. Many times people leave due to misunderstandings or frustrations that they aren’t being heard. Having good clear communications channels is crucial.

Also an organization needs to ensure that all the employees know what the corporate priorities are and also what is the reasoning behind these. People won’t be engaged if they don’t understand why a company is doing something and in fact will often act against it.

Another good practice is to have good coaching and mentoring programs within the organization. These can really help with communications and employee development.

Don’t Reward the Bad

On the converse, you don’t want to retain people at any cost. If people aren’t performing, aren’t engaged or exhibit bad behavior, don’t reward them. Often company’s give out bonus’s anyway because they are worried about losing the employee. But I think in some cases it’s better for everyone if the employee finds a different opportunity. You especially don’t want to do this year after year or people just won’t have confidence in your rewards system.


Retaining employees doesn’t have to be hard. Generally employees are motivated by things that are also good for the company like pursuing innovation, pursuing learning and staying up to date. Generally a healthy happy workforce is also a productive workforce, so many of these items are in everyone’s interest. When companies lose sight of this, they get themselves into trouble.


Written by smist08

March 22, 2014 at 4:15 pm

3 Responses

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  1. […] Introduction In a few previous blog posts I’ve been talking about attracting new employees whether through office design, advice for someone starting their career or corporate mobility. In this art…  […]

  2. A recent survey showed that 53% of Sage employees would NOT recommend to their friends that they work for Sage.

    Free Polazzo

    March 22, 2014 at 7:00 pm

    • Certainly one reason to make changes to remedy this.


      March 23, 2014 at 4:09 pm

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