To boost the profits, keep the workers

Although the goal is employee loyalty, the calculation should not leave out employers needs, others say.

"What is this person bringing to the party? Let's compensate people based on the value that we're exchanging here," says Mr. Herman. "This is relatively new thinking, and a lot of organizations haven't reached this yet."

When and if they do, the new workplaces could begin to look a little like those of the 1990s. But what sets some companies apart is that they stick to the policies in economic downturns. "The companies that continue to embrace it as a philosophy do it because that's who they are," Putzier says.

Several experts cite Southwest Airlines as a company with open internal communications and a top-down awareness of the value of employee buy-in to the corporate mission. Food giant Wegman's is often cited for its comprehensive approach to training.

Capital One has been hailed for such programs as generous community-volunteer options and staff counseling. UPS works to promote from within, and offers a generous tuition-assistance program; 62 percent of its drivers have at least 15 years of service, a spokesman says.

In terms of employee recognition - another low-cost way of fostering goodwill - Prudential, CDW, and Mary Kay stand among the leaders, says Donna Oldenburg, former publisher of Incentive magazine.

Once an employee feels adequately compensated, a tangible reward - a watch, a radio, even a pin - can go far in building loyalty. Ms. Oldenburg cites a study done for the Society of Incentive & Travel Executives in which 92 of employees polled said they would be more likely to go for their goal if some small incentive were offered.

Putzier's suggested perks are a bit more exotic, ranging from referral bonuses to take-home gourmet dinners to altering the aroma of the workplace.

However it is achieved, he and others say, retention can enhance productivity and save money otherwise spent training a parade of new hires.

Employee contentment delivers a bump of as much as 40 percent to shareholder profits, according to a report last year from the Aberdeen Group.

If a big organization can improve its employee retention by just 1 percent, it can save $100,000 a year, according to Newmeasures, a Boulder, Colo., firm that develops and administers employee surveys. Another finding confirms the 'boss' factor: People join companies, but leave managers. "Front-line managers are key to retaining employees," says Diane Fassel, Newmeasures president, in an e-mail.

That means the best firms need to make sure their managers aren't allowed to become mercenary. An age of high turnover at the highest executive levels has often led to inconsistent command chains.

"The [problem] is that there are people in the middle who don't get it, who are more concerned with protecting their turf, or who are hired guns who figure 'Hey, if it doesn't work, then I'm out of here. I don't have to worry about it,' " says Herman.

That's why a good corporate culture is so vital, consultants say.

"Better companies are around a long time not only because they have good products, but also because they recognize people," says Oldenburg, also director of next week's Incentive Show in New York, an expo for suppliers of company gifts.

"External marketing really begins internally," says Susan Drake, a Memphis, Tenn., consultant, and author of "Light Their Fire," a book about retention tactics. "Good marketing is very targeted. The same is true of employee relationships. You have to be very aware of what your employees' needs are and be prepared to be flexible to meet those needs."

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