The best employee practices today aren't expensive, exotic or even time consuming, but if you ignore them, the price can be enormous
NICK ROCKEL

O'Hara Technologies builds giant stainless-steel blenders that look straight out of Fritz Lang's Metropolis. In early 2006, the 31-year-old company took steps to ensure its 70 staff don't get lost in the machinery. Richmond Hill, Ontario-based O'Hara-which specializes in processing equipment for the pharmaceutical industry-was retooling to meet future demand, and management zeroed in on employee relations. "One of the big areas we wanted to get into was the people," recalls project/operations manager Paul Bovis.

Like many small businesses, O'Hara has never had a full-time human-resources position. So it did the next best thing and retained consultant Richard Thomson a few days a week as acting HR manager. According to Bovis, Thomson is a sounding board for both staffers and department heads, who used to juggle HR duties themselves. He's also made structural changes to keep employees engaged, among them a formal evaluation process-with detailed documentation-and announcements recognizing outstanding work.

O'Hara was wise to act. A recent survey of 2,000 U.K. workers, commissioned by the Chartered Institute of Personnel and Development, highlights the perils of neglecting employee relations in this tight labour market. The study's authors found that a poor employer-employee dynamic leads to low productivity and high turnover. A disappointing 42% of respondents said they weren't kept informed about company goings-on, and just 34% said they trusted senior managers. One result: 47% were either job hunting or packing up their desks.

Avoiding such a fate can be simple, if a new poll by California-based staffing firm Accountemps is any indication. This survey of 1,400 CFOs and 536 office workers found that after money, the two top employee motivators are frequent recognition of accomplishments and regular communication with staff. But Thomson says many small businesses consistently overlook employee relations until there's a problem. His best customers are those with legal woes-especially firings gone wrong. Employees must know where they stand from the beginning, explains the owner of Toronto-based HRonCall. "If you have basic policies and procedures, job descriptions and clear communication in the organization, you wouldn't have had to end up with a legal battle, whether it's harassment or a bad termination," explains Thomson, author of the 2006 book Successful Employee Relations for Small Business.

Besides explicit policies and a surfeit of job descriptions-which eliminate duplication and turf wars-Thomson says the key ingredients of strong employee relations are succession planning and cross-training. "If you're a lean organization and you have key people doing very specific things, if they're not there and you haven't trained anybody else, then you're caught," he notes of the former. Cross-training between departments and positions helps workers support each other.

Dave Hagel is principal of Burlington, Ontario-based consultancy High Performance Human Resources. Unless companies politely but firmly lay out expectations, Hagel says, they risk creating a monster: a culture where employees grow attached to unacceptable behaviour. "When you have to go in and change it, then you're trying to take away entitlements or change behaviours, and people resist."

When an employer does make changes, it's important to see things from the rank and file's perspective. Hagel encourages his clients to share information with staff and get them involved by seeking their input. For example, a company that sells medical-imaging equipment was having trouble with its customer demos. On Hagel's advice, the firm struck an internal committee that included a sales rep, technical specialists and others close to the problem. After soliciting employee recommendations, this group revised the demo process.

If everyone understands where the business is going and how it might benefit them, Hagel says, they're more likely to trust management and embrace the new order. "It's really just having a clear vision, getting everybody to buy in and getting everybody to work toward that vision."

Still, Thomson reminds entrepreneurs that having a vision will only take them so far. Since the dot-com meltdown, employees want proof of a company's staying power, and robust corporate protocols are one reassuring sign. "They know that if you're not going to treat them well, somebody else will," Thomson warns. In other words, today's workers know their value-and when it's time to make a move.