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the challenge

Elemental Inc. CEO Brent WardropTIM FRASER/The Globe and Mail

Each week, we seek out expert advice to help a small or medium-sized company overcome a key issue.

About once a year, Brent Wardrop must bid farewell to one of his rising star employees.

The founder and chief executive officer of Elemental Inc., a Toronto-based advertising agency, says that not long after his 18-employee company has trained and nurtured fresh-faced, just-out-of-school grads, bigger firms are too often coming along and snapping them up.

"We've become the college-level team for the big leagues," he laments.

Typically, the firm has been losing an employee a year to a larger company. In October alone, three empoyees were headhunted by the same business, and all of them left.

Mr. Wardrop is tired of losing his brightest employees to other companies. It costs a significant amount to replace them, he says. It's also disruptive when someone leaves and, of course, he'd like to keep the talent he's trained.

"It's hard to hang on to employees," says Mr. Wardrop, whose company generated $2-million in revenue last year.

"They're allured by the opportunities the big agencies have."

He's tried to offer perks that make it fun to work at a small business – from beer flowing on Fridays to staff bonding outings he says you won't find at larger companies.

He offers benefits and salaries that, he says, are in line with other bigger firms. However, "some larger businesses will pay more because they can," he says.

Right now, Mr. Wardrop doesn't have a bonus plan in place, though that's something he'd like to offer. He's also starting to pay for additional training, such as sending staff to classes and conferences, as another retention incentive.

But he fears that may not be enough to keep his best and brightest from jumping to bigger ships.

"Because we're small, our staff get the opportunity to shine," he says. "Then they get notoriety in the industry and headhunters come calling."

The Challenge: How can the small ad agency keep its staff from jumping to larger firms?


John Cardella, Toronto-based executive vice-president of human resources at Ceridian Canada Ltd.

There often comes a point where a small business's employees feel like they're maxed out. Maybe they're not progressing or don't feel recognized for their efforts. He should implement a bonus plan first, but make it more about the organization than the individual. Consider setting targets that say, 'if we as an organization achieve a certain amount of sales, then I'll take a component of the bottom line and disperse that among employees.' That will help with engagement, and employees will really feel like their contributing to the future of the company.

He also needs to create some kind of progression in the organizational structure. If there's no established career path, then people will leave. Talk to the employee. Get a sense of where they want to go and then help them get there.

Michael Thompson, Toronto-based national partner at Mercer LLC

The earlier you can recognize someone who could be a long-term contributor, the better. That demonstrates your commitment and it gets the employee to commit, too. You do need to recognize contributions financially, but you also need to offers other things. Titles matter. People want to be acknowledged for their contribution. It gives them the job scope and ability to take more on. It also satisfies their personal career expectations.

Also consider a retention incentive. These are typically cash-based plans that have a three-year time horizon. It could be tied into the performance of the organization – after three years, if the organization does well and the person stays, they get a special bonus. Selectively ask individuals to participate in the plan; that recognizes their contribution in a tangible way.

Grail Noble, founder and chief executive officer of Toronto-based events marketing company Yellow House Events Inc.

I've only had one person leave in eight years for a bigger firm. One reason is because I make it very difficult to get a job. I make potential employees do a full standup Powerpoint presentation to the whole team. It makes them work that much harder for the job, and then they're more likely to stay.

When it comes to salaries, I've never had an employee ask for more money. That's because I preempt that. Before the review, I'll say, 'you've been doing great work, I'm giving you a raise.' Working for a small business is not a benefit; you can't get away with paying less. So I watch carefully what the industry is paying. I'm aware that an employee will be benchmarking against their peers. I think he actually has too many people for his revenue. He should have few staff who can churn out more work and pay them what they're worth.


Create retention bonuses

Base bonuses on corporate targets. That could get employees feeling more invested in the long-term health of the company.

Create a career path

Ambitious employees want to move up an in organization. Plot a career path, and offer titles and that means getting more senior titles. Create a structure that allows for advancement.

Be proactive in raises

Keep pay in line with industry standards. Pre-empt employees looking for greener pastures by giving star staff a raise before they start looking around for a better-paying job.

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