Think giving your employee a generous raise will keep her loyal, motivated and less likely to jump ship? Don't count on it.

"It's rarely ever about the money," says Andrée Mercier, a principal with global human resources company, Hewitt Associates. "No matter what the generation, babyboomer or Generation X or Y, it comes down to three motivators: stimulating work, supportive management and work-life balance."

These factors will not only help retain employees, but also recruit high-quality new ones. Canada's low unemployment rate, coupled with a large wave of retiring workers and a migration of skilled labour to western Canada, has made finding and keeping talented people a number one priority for many companies. This is even more important for small businesses where high employee turnover can wreak havoc with productivity and bottom lines.

A Hewitt Associates' Best Employers in Canada study shows the country's top 50 organizations scoring top marks in dealing with HR challenges – they have lower turnover among both their full-time (27% lower) and part-time (48% lower) employees, receive more applications for job openings and experience better business results.

How do they do it? "By focusing on engagement," says Mary Karamanos, senior vice-president, human resources, with the Business Development Bank of Canada.

"Engaged employees are generally more motivated, more productive, give better service to clients and are generally happier"," she says. "A large part of engagement comes down to the way you manage and communicate with your employees. Be open and honest, share information, be inclusive and ask your employees for their input."

Engagement begins before an employee has even been hired. How you word a recruitment ad influences the type of applicants who come forward. While you want to make the position and the company sound as enticing as possible, be careful what you promise.

Mercier says branding your company is good idea and helps you to attract the right kind of people, but ensure the employee's experience lives up to the hype: "Our surveys show there's a big drop off in engagement after about 12 months, when the honeymoon is over. So, if you're branding yourself as a sexy place to work, be sure you can deliver on what you're selling."

The Challenges of Generation Y
Generation Y (ages 18-25) employees represent a potentially huge talent pool – more than 70 million in North America alone. And unlike many Gen Xers and babyboomers, these highly tech-savvy Gen Yers are adept multi-taskers and extremely achievement- and goal-oriented. They are also likely to change jobs every couple of years.

For small companies, this represents both a challenge and an opportunity. A company with only a dozen or so employees will have limited opportunities for promotions, but they are often more flexible in their ability to structure the job around a person's skill sets.

For example, if you have a receptionist with a background in communications, get him or her involved in developing a communications strategy for the company, writing press releases or even a company newsletter.

Plan ahead – be preemptive
All companies, regardless of size, should have a performance management system as a key component of any human resources strategy. This can be developed with the help of a consultant, or at a minimum, pick up any of the many books available on the subject.

"This is fairly easy to put in place. What's more difficult is having the discipline and the rigour to evaluate your employees' performance at least once a year – to discuss how they are progressing, their areas for development and where they want to go longer term in their career," says Karamanos.

A sound HR plan should be integrated in your business plan and strategy. It should also include some forward thinking on what type of talent your company is going to need two-to-three years from now. Consider where your company is going, such as expanding into different market segments, products or services. Also consider your normal turnover and pending retirements. This will help you focus on what type of skills and capabilities your organization will have to develop and/or acquire to achieve its goals.

"This type of planning allows you to be very proactive in tapping into your internal workforce to develop the skills you will need, and more importantly, taking steps to hook up with your future workforce externally before you even need to hire them," says Mercier.