With the news of the Volkswagen plant coming to Chattanooga, there will be a large number of jobs opening, which is an incredible opportunity for the city and the surrounding region.  As exciting as this news is, and as much potential for development as the advent of so many jobs presents, a number of challenges are likely to go hand in hand with this potential. 

One significant concern for existing employers will be employee retention.  A report that the US Bureau of Labor Statistics released in May 2008 analyzes the national numbers for jobs in 2007, taking job openings, hires and separations as its primary focus.  What they determined was that while job openings stayed relatively stable for the year, both hires and separations decreased, which stood out as statistically significant.  After examining a number of possible explanations, the conclusion the report found most reasonable, and one that is borne out by our experience as well, is that in uncertain economic conditions, employees are less likely to leave jobs, and employers are less likely to hire, despite possible needs.  All in all, this is a pretty common-sense conclusion to draw from the data.

          So the next question is how does this relate to the arrival of the Volkswagen plant?  In an economy in which consumer and employee confidence are resurgent, there will be an increase in willingness to leave a job, if not for Volkswagen, then for another opportunity.  The region’s unemployment numbers for the beginning of 2008 are the highest they have been in ten years, rendering the labor force uncertain about the job market, and the pressure of rising costs for gasoline in an auto-commuter labor force enhances this nervousness.  Employee retention in these conditions is a different ball game from what is coming with Volkswagen.  The better the economic conditions, the easier it is to make a job change, or even a career change, even if this is a matter of psychology more than economics.

          So the logical way to approach the situation is to accept that the economics are going to trend such that employees are going to be more likely to leave.  The other leg of the dynamic is the psychological one, and this can be broken down into two aspects.  First, people are less likely to leave jobs where they feel appreciated, and they feel they make a noticeable contribution.  Second, not everyone who leaves a job is someone that an employer needs to keep, and learning to differentiate between someone who can make a contribution to the continued well-being of a company, and someone who, if not a drag on development, is not contributing is a vital aspect of ensuring that a company grows.

          The obvious way to handle yoking these two aspects of the psychology of employee retention is performance evaluations, and an incentive program that rewards the employees who are most likely to be able to continue to contribute to the development of a company.  This approach is time-consuming, but the costs, in both time and money, of continually filling the same jobs are considerable, and the inability to fill jobs for any length of time will in fact contribute to the deterioration of the psychological component of employee retention, insofar as greater turnover will cause employees of longer tenure to question whether the company has problems they should be concerned about.

We have all heard of Fortune Magazine’s yearly list “100 Best Companies to Work For”.  Granted companies like Google have excess reserves that allow them to implement every employee-oriented program that could be imagined, but a company can have highly satisfied employees without all the fluff.  In fact, a larger company has to be more innovative to make allowances for the size of the company’s employee base.   What can smaller companies do to create a great work environment? 

Fortune’s list is generated by The Great Places To Work Institute.  The institute’s study focuses on five areas of importance: Credibility, Respect, Fairness, Pride, and Camaraderie.  I highly recommend dropping by the institute’s site.  It can be a great help in making your company more stable during Chattanooga’s soon to be surging job market.  http://www.greatplacetowork.com/great/index.php