Employee identity theft can be thwarted when you apply various data-protection strategies.

• Storage: At this point in history, you may be one of many businesses that probably keep employee information (active and terminated) in file cabinets as well as electronic data on company computers/servers. You want to initiate specific policies that require files to be stored in locked cabinets and limits which managers/employees control the key(s) and access. Similarly, computerized employee data should be password-protected, so only authorized personnel can log into that system.
• Information Distribution: Your employee-data system should also include a stringent policy that employee information is never released to anyone other than the employee. The only other reason you would ever release such information is in response to a subpoena signed by a judge and presented by an officer of the court.
• Clear the Desks: Even when payroll or other authorized personnel have accessed employee data, that information should be returned to file cabinets immediately and not left on anyone’s desk. Computer-based data should not remain on screen and authorized personnel shouldn’t remain logged into the employee information sub-system on your server while they’re at lunch, on break or not at their desks for an extended period of time.
• Social Security Number Masking: Follow the lead of many companies, especially those doing business on the Internet, and don’t identify your employees by their complete Social Security numbers. Instead, mask the first five numbers, and only use the last four.
• Shred and Its Dead: Add to your procedures, a policy that requires any authorized personnel who use or make copies of employee information to shred it immediately, during the day or before the end of the day. Too many identity thieves are just waiting to look through your company’s trash in the refuse bin in the alley behind your facility.
• Government Support: Visit the Social Security Administration Web site at ssa.gov for more information.

Employment background checks have also been added to the hiring process at many companies because of potential terrorists. These don’t have to be persons from other countries that violently disagree with western politics, culture or capitalism. For most companies, “terrorists” are more likely to be someone that has a grudge against the company and surreptitiously tries to become an employee to retaliate; or someone could be angry with a spouse and stalks him or her to the workplace and perpetrates domestic violence. Employment background checks can also be a useful tool to reduce the number of supposedly qualified candidates that are hired, and then quickly fired because their résumés or statements inflate their true skills.

Employment background checks, as regulated by the government, also have additional implications for employers and employees. These checks are not required of all employees by law, except when potential employees will be interacting with children, the sick and elderly. Employers should ask their attorneys for details about federal and state laws that may affect their background check policies. Some employers have the staff and prefer to conduct employment background checks internally, while others will use third-party vendors that are skilled and equipped to provide those services.

Many small-business employers will find it easier and less costly to pay a fee to an outside agency, rather than spend the time and money to plan, implement and manage an internal process. Those outside agencies are bound by the Fair Credit Reporting Act (FCRA) (and state-specific regulations), which states that not all information discovered during background checks can be shared with employers. For examples, bankruptcies more than 10 years old can’t be reported, nor civil suits and arrest records more than seven years old. A third-party employment background check company is also required by law to obtain permission from the candidate to conduct the check and provide him or her with a copy.

Employee time systems have been swipe-card-based for a number of years, similar to using a credit card at a store. Even that technology is showing its age, as the magnetic strips become worn and start to record inaccurate data. The newer technology is biometric, where employees’ fingerprints, faces or eyes are scanned as nearly foolproof identification. Biometric systems are more likely to be found today where the security of the facility and industrial secrets are the prime concerns. Recording employee time is a secondary function.

With such a great variety of choices, employers must do a bit of research to determine what employee time system serves their needs. Companies with mostly salaried staff may not need more than computer software that requires employees to “clock in” in the morning and “clock out” at the end of the workday at their PC. Employers with a preponderance of hourly workers, however, are more likely to need a robust employee time system that records work, breaks, and even vacations, sick days and personal leave, in more detail.

Employee time systems have also been an “opportunity” for some employees to try to bypass the system to their advantage. Many of these ruses are as old as time clocks, such as one employee clocking in or out another employee to hide his or her absence or late arrival. That is why it is important for employee handbooks to include a complete description of the employee time system used. Not only must employees know the mechanics of using the system correctly, but also must be thoroughly aware of the policies and regulations of its use, so there are no ambiguities about what is a violation of the system and the penalties they could suffer.

An employee stock option program also enhances a company’s benefits package, without substantially increasing the employer’s benefits costs. For many employees, this can also be an excellent introduction to stock ownership. It may motivate some employees to take more interest in their retirement programs and become more confident to invest in additional securities. Employers that are contemplating an employee stock option program should meet with their financial advisor or attorney to create a balanced and legal program. Some of the details that must be determined include how much stock will be offered, how do employees qualify for the program, future stock option levels and whether the program is a permanent part of the benefits package.

Because owning stock may be a totally new experience for many employees, it’s important that all the details of a program are included in the employee handbook. An employee stock option program is also an excellent opportunity for employers to provide employees with personal finance training or seminars. From employees’ perspective, they want to understand the exact benefits, procedures and policies of owning stock in their companies. For example, they should learn that there are two forms of employee stock options: nonqualified, which the largest percentage of employees can choose, or qualified, or incentive stock options, known as ISOs, that have been created for executives.

Employee stock options can be a great employee benefit. Employers, however, should carefully develop a program that protects their interests and provides an opportunity for employees to take pride in their ownership and demonstrate that pride in the productivity and efficiency of their work.

You can alleviate any of that confusion by making sure a reward is given for completing a specific task, and one well beyond normal expectations, not general good work. Differentiate your rewards program from your wage structure. Employees should not think that rewards could become a regular supplement to their incomes. They earn their wages or salaries for the work they do everyday—and they’ll continue to do so, and even earn a raise, as their day-to-day work improves.

Employee rewards, according to many human resources experts, must be carefully calculated because employees are more likely to appreciate and respond positively to materials rewards than cash rewards. Even when cash is appropriate, too little can destroy motivation, just as too much may not seem logical to employees, especially when an employee’s achievement doesn’t seem to match the reward.

You may own the kind of business where cash rewards are appropriate because it’s relatively easy to match specific results with a specific monetary reward. For example, each employee has a daily, monthly goal of so many widgets manufactured. Reaching one’s goal is expected, not exceptional, but increasing output by 50% to 100% may be worthy of reward if that level of achievement is very seldom reached. A cash reward may be warranted if an employee implements an innovative idea that increases everyone’s widget productivity well beyond the norm. Regardless of the form of your employee rewards, you can maximize the value to employees and the health of your business when you make sure employees know the reward is justified.

Employee retention can become more tangible for you when you start to develop two value concepts in your employees: trust and commitment. In most situations, people return like for like: Show that you trust and are committed to your employees before you expect them respond with equal trust and commitment. As a business owner, you initiate that reciprocal process by addressing, and then fulfilling, the issues or needs that are most important to your employees. You also want to foster a workplace environment that doesn’t drown individuality with too many rules and rigid procedures. In fact, individuality is a factor that motivates employees to take the initiative, become unexpected leaders and help you improve productivity and the processes that drive it.

Employee retention can also be strengthened by mutual trust when it’s reflected in your leadership. Employees should clearly understand the decisions you make, but not as edicts or commands. Instead, your decisions should be interpreted as being made for the common good, and with empathy for all those your decisions affect. You can also take these actions to create a trusting relationship between you and your employees.

• Be visible. Don’t remain in your office all day or spend all your time with other executives and/or managers. Circulate throughout your business during every day, and don’t just observe.
• Interact with your employees, so they know you’re approachable and are willing to listen to their comments and input. Join them for lunch occasionally.
• Share the burden. Jump into the production process and help employees clear a bottleneck. If you see an employee struggling, then sit with him or her to overcome the challenge.

Your trust and commitment will return in the form of employees that are willing to work longer hours and adopt these and the other strong values of your company as their own. That strengthens your relationships with your employees and makes retention less of a problem.

Employee-turnover costs can be calculated accurately and become valuable business statistics when a system is first planned and implemented. Such a system should include a number of elements.

• A comprehensive list of which costs will be measured, so the various parts (executive, finance, labor) of the business are making assessments and decisions with common data. That list could contain: exit costs, recruiting, interviewing, hiring, orientation, training, compensation and benefits during training, lost productivity, loss of customers, reduced revenues, administrative costs, lost expertise and temporary worker wages.
• Meet with your top-producing employees regularly to determine why they continue to work for you, what might cause them to leave and how you can help them to be more productive. Ask the same questions during exit interviews.
• Employee-turnover-cost assessments can then be done periodically. Make sure to divide your statistics and assessments into three groups: low-wage, middle-wage and high-wage employees. Your analysis will reveal who is leaving and why, and what it is costing to replace them.
• A method to measure the success of whatever steps you take to control or reduce employee-turnover costs.

Employee-turnover costs that are accurate and recorded, calculated and assessed regularly become valuable business tools for ownership. Now, you are in a better much position to decide which solutions can specifically address, for example, a higher-than-average turnover of managers. Knowing your employee-turnover costs, which solutions you can implement and measuring their results mean you’ll prevent most of your turnover problems. That advanced knowledge is likely to result in more optional solutions and a successful effort to reduce employee-turnover costs.

The Society for Human Resource Management (SHRM) determined that a single $8.00-per-hour employee could cost $3,500 to replace, which includes recruiting, interviewing, hiring, training, loss of productivity, etc. The research of other labor industry and business groups revealed the following employee-turnover costs: 30–50% of entry-level employees’ annual salaries, 150% of middle-level employees and as much as 400% for executives and employees with specialized skills.

Employee-turnover costs can also be understood when the research is applied to real-world examples. Let’s say your small business has two managers/supervisors and they drive most of the productivity of your company on a day-to-day, hour-to-hour basis; therefore, losing one of them could have a significant impact on your productivity and bottom line. Let’s also assume that their average annual salary is $40,000. According to the research, middle-level employees cost 150% of their annual salaries in turnover costs. Let’s use 125% to be conservative, which calculates to a cost of $50,000 to replace one of your managers.

Employee-turnover calculations for entry-level, or the lowest-paid, employees reveal a similar eye-opening result. For every five of these employees you lose per year, it could cost you as little as $17,500 (5 employees X $3,500, based on SHRM study) or as much as $40,000 (5 employees X $8,000, or 50% of an annual $8.00-an-hour salary, based on the other studies).

The smart strategy is to separate your employee-turnover costs and analysis into two categories: the less-productive employees, most of whom you would want to replace, and the highly productive employees that you want to keep. Once you study the research and examples above, and then calculate employee-turnover costs for your business, you’ll discover that the cost of expanding your benefits package or providing more incentives, bonuses and other employee perks cost much less than the cost of replacing your best employees. Give them more reasons to stay and you’re likely to retain more of the employees you want, and even motivate some of those that were underperforming to become valuable employees and not turnover statistics.

Employee awards are usually organized in two broad categories: planned and unplanned awards. Planned awards recognize an employee’s remarkable record during a given period of time that has advanced both the company’s growth and the employee’s professional growth. Planned employee recognition awards could include employee service, customer service or relations, lifetime achievement, employee of the month and attendance.

The other category, or unplanned employee recognition awards, is generally more spontaneous, but it can be noted in your employee handbook in the section that explains your awards program. You could give this award to a team of workers that you’ve noticed are operating at a very high level of performance. Maybe you’ve assigned a special project to a group of employees that was very effective in increasing sales and that they were able to complete on schedule. You can also present appreciation awards to individual employees during one-on-one meetings, so you can emphasize how much you value their work. That seemingly simple gesture can do more to boost that employee’s morale and productivity than an elaborate awards ceremony, or even a raise.

Employee evaluations will be more positive for you and your employers when you are prepared for disagreements with these steps:

• Listening is your most important tool. If an employee disagrees with a fact in your evaluation, such as how many sales calls he or she made per day, then recheck your source and ask the employee how he or she arrived at a different number. If the disagreement is about your analysis of his or her specific performance, then ask for an explanation of why, for example, he or she continues to answer the phone incorrectly or isn’t more friendly with customers.

• Employee evaluation disagreements can be reduced or resolved quickly if you have in a place a continuous evaluation process throughout the year. Because you’ve developed a plan with each employee, coached and encouraged them regularly and prepared well for the annual evaluation, you are more likely to know in advance where disagreements may occur. With that knowledge, you can have responses ready.

• When you do meet with each employee for the annual evaluation conference, review what he or she has done best first, and then discuss where he or she needs improvement. This same technique applies to your stack of evaluations: Meet first with the employees that have scored high; they’re not like to disagree. You’ll be better prepared to face the challenges of those employees with less favorable evaluations, which you should conduct last.

• Employee evaluations will also be more positive experiences if you demonstrate a willingness to listen to the employees’ explanations and points-of-view about the issues in disagreement. Asking for more information or nodding your head can motivate employees to be even more open. Give any employee the opportunity to express himself or herself and you may be surprised to hear that he or she now understands your point and is at least in partial agreement.