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Barry Goss is really turning on the charm around the office these days. He'll surprise top performers at Professional Project Services, his engineering firm based in Oak Ridge, Tenn., with a complementary fancy dinner at a local restaurant. When the company lands a big contract, all 225 employees are treated to an impromptu barbecue-and-beer bash. At least once a week, Goss sends laudatory e-mails to people who do a particularly conscientious job.

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All this isn't just because Goss is a nice guy. More than that, he's trying to head off a potentially ominous workplace trend: An expected tidal wave of employee turnover. It's not hard to see why.

Ever since the bubble burst about three years ago, anyone with a job probably felt lucky to have work at all. Fewer overall positions, meanwhile, have translated into demands for increased productivity, leaving many employees feeling overworked and stretched to the limit. And employers, faced with falling demand and dwindling margins, cut back on salaries, raises, benefits, and other perks. It all added up to a kind of human resources perfect storm. "Every survey says people aren't happy, but the talent has stayed put because there weren't many choices," says Beverly Kaye, author of the book,

Love 'Em or Lose 'Em: Getting Good People to Stay

. "That's not going to be true for long."

To be sure, the labor market, though improving, is hardly on fire. But a number of recent surveys suggest that hiring is poised to pick up. According to the Bureau of Labor Statistics, some 112,000 new jobs were created in January, the best performance since the economy began pulling out of the recession in late 2001. Anecdotal evidence from headhunters suggests that the technology and pharmaceutical industries are headed for a hot streak. And in the January survey of the National Federation of Independent Business, 50% of respondents said they were attempting to hire new workers, and 17% said they planned to increase their total payrolls over the next three months. "Job creation is anticipated in every industry," says William Dunkelberg, the group's chief economist.

A December 2003 survey by

, for example, found that 38% of the directors, managers, supervisors, and team leaders surveyed said that they were likely to change jobs in 2004.

No CEO will argue with a job boom. But such an event, however welcome, could lead to unforeseen problems if companies aren't careful. Staff turnover is both costly and distracting, especially if a company loses its most valuable employees -- something experts warn is likely to happen once the anticipated wave of job-hopping begins.

That would include people like a 50-year-old technology whiz in the San Francisco Bay Area who recently spoke with


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on the condition of anonymity. We'll call her Betsy. Before the tech-market imploded, Betsy was pulling down a six-figure salary at a major semiconductor company. Downsized in late 2002 and increasingly desperate, she wound up taking a job as a systems analyst for a large bank, even though it meant a $40,000-a-year pay cut.

In many ways Betsy is an exemplary employee. She gets to the office on time, works hard, and doesn't complain much. In fact, she generally gets positive evaluations from her managers. What those managers don't know is that Betsy has been plotting her escape for months -- networking, shopping around her resume, even working with a headhunter. "I'm frustrated because I'm not challenged," she says. "And I'm not getting paid well."

There are countless employees out there who feel the same way, HR experts warn. That's why Barry Goss isn't taking any chances. Tough economic times have forced him to cut back on raises. But he's compensated with a comprehensive suite of benefits, including an improved 401(k) plan for senior management and a policy that lets married couples convert extra insurance benefits into cash if both partners are covered by their employers. Even part-timers are eligible for some benefits. "We're a nuts-and-bolts engineering firm," says Goss, "but we've used the techniques of high-tech software firms to keep our people happy."

What's more, rather than hiring outsiders, Goss makes a practice of promoting current employees when higher-level positions become available. HR experts call it "internal mobility," and say it's a smart way to keep staffers challenged and productive. "In this climate, companies need to start making a distinction between people who want to leave their jobs and those who want to leave the company," says Louis Tetu, CEO of the San Francisco-based staffing giant



Promoting a current employee rather than hiring an outsider, he says, can cut the amount of time it takes the new employee to become fully productive by more than half. And encouraging internal mobility sends an important message: That you're flexible, willing to let them explore new areas of the company, and encouraging them to pursue new personal and professional goals.

Lawrence Prager, CEO of


, a Bedminster, N.J., tech-consulting firm, says there's nothing fancy about his retention policy. Almost without exception, his best workers want interesting, challenging work, and they want to be surrounded by other high achievers -- people who share their attitudes and work ethic. "We go back to fundamentals and ask them 'What keeps you happy?' " Prager says. "We do a formal survey about once a year, and then we check in with them constantly."

What's more, Prager has learned that employees are far more productive at work if their home life is harmonious. So if he sees staffers putting in lengthy hours at the office, he doesn't hesitate to take steps to make sure their home lives remain in balance. "We've done everything from sending a cleaning person to their house, to sending flowers, to giving the person time off," he says. "We want to let the family know that we understand the impact and do care about them."

HR experts concur: If you don't know what your employees need, ask them, often. Kaye, the retention expert, says a 10-minute session once a week is not too frequent. After all, adds Recruitsoft's Tetu: "If you don't let your employees tell you what they want to do next, they'll figure out what they want to do elsewhere."

Jess McCuan is a staff writer at Inc. Magazine. This article was originally published in Inc.