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Employee retention, if not good, shocks pocket book

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Written Tuesday, July 15, 2008  

There are aspects of farming that producers can't control, such as grain markets, input costs and the weather, but employee management is one aspect that can be controlled and significantly affects an operation's bottom line.

Sarah Smith, an organizational leadership and supervision specialist at Purdue University's North Central campus, said according to Purdue's Crop Costs and Return Guide, the 2008 budget for row crops shows that production agriculture costs relating to labor is $30 to $60 per acre.

"If your farm has eight key employees, fulltime and primarily year-round, and you lose two of them this year to competitors or other work opportunities, that's nearly a loss of $4,000 just in employee replacement costs," Smith said. "This is an area that farmers can control and minimize employee turnover by offering good benefits, both tangible and intangible."

It's not unusual for a farming operation to experience a 25 percent turnover rate, but by providing benefits, they can substantially reduce their turnover rate, Smith said. And if you don't have those employees in place during those crucial farming times like planting and harvest, the costs can become astronomical if you can't get your crop harvested, she said.

Smith will discuss how employees can offer these benefits at reasonable costs during Purdue's 41st annual Top Farmer Crop Workshop, which will be held July 20-23 in Pfendler Hall on Purdue's West Lafayette campus.

Some of these benefits include offering a health care plan, accommodating requested time off, retirement options, disability benefits, as well as providing a good work environment where all employees are treated with respect.

"Farmers often think they can't afford to offer these benefits to their employees," Smith said. "But now employers have some feasible options to choose from that they can offer to help retain key employees.

"Many employers want to offer health benefits to a couple of key employees, but are unsure if it's worth it because the monthly premiums are so high. One option available to them is to purchase a Health Savings Account (HSA). Then, instead of giving that employee a $1,000 bonus at the year's end, that money can be put into an account for the employee to use for medical purposes. This allows the employee to have access to a good health care plan and makes it affordable for the employer to offer."

Smith also said that there is often a misconception that disability insurance isn't relevant because of Social Security.

"This is not the case," she said. "There is lag time between the time of disability and when Social Security actually kicks in.

"Disability insurance is extremely reasonable and acts as a bridge to fill that gap. Because farming is such a hazardous occupation this is often very important for employees working in the field."

Smith said another myth that farmers have is they can't afford to offer a retirement plan. She said this shouldn't matter.

Employers can offer simple plans such as an IRA account and provide automatic payroll deduction, which adds to the paperwork, but is often very important to attracting and retaining good employees, she explained.

"Even if you can't match the amount the employee puts in or provide a percent, if you will just set up payroll so they can make an automatic deduction, it's a huge benefit," she said.

During Smith's presentation she will also talk about legislative and legal changes and potential changes that affect employers. These include changes to the Family and Medical Leave Act, minimum wage and seasonal labor laws. Smith will provide resources to make sure employers are legally compliant and will answer any questions in regards to these issues.

More information about the workshop is available at http://www.agecon.purdue.edu/topfarmer/conference.asp . Pre-registration is encouraged due to space limitations, but not necessary. Individuals can register by visiting http://www.conf.purdue.edu/TOPCROP or calling (765) 494-7220. Registration costs $300 for the first individual representing a farm and $100 for each individual after that. The cost includes two meals, refreshments, the opportunity to test farm plans using the B-21 linear programming analysis and a workshop proceedings binder. A registration discount of $100 is being offered for first-year attendees (only applicable to full registrations).

For questions and more information regarding the workshop, contact Bruce Erickson at (765) 494-9557 or berickso@purdue.edu . For questions regarding registration, please contact Tom Robertson at (765) 494-7220 or tlrobertso@purdue.edu .

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