After Donna George left her corporate human resources position at a bank with 24,000 employees to work for Dunn Lumber in Daytona Beach, Fla., she ran into her former mentor, who told her that she was “underachieving.” After all, the family-owned dealer only had 117 employees and a handful of locations.

“I told him, ‘You have no idea what a great time I have had,'” says George, who serves as Dunn Lumber's human resources (HR) manager. “Working with employees and seeing the fruition of all your efforts has tremendous gratification. The last five years I was at the bank, I barely saw an employee. I've never had a dull day here since I walked through the door.”

With that kind of enthusiasm about her job, George isn't likely to jump ship the first time a competitor offers her more money. The main reason is that every day she believes her job is important and she's making a difference.

“No one ever left a job when they felt personally valued. It's about as simple as that,” believes Ed Gubman, an Illinois-based HR consultant and author of “The Engaging Leader.” “There's a great deal of information available now about people feeling emotionally connected to their work. It's more powerfully related to retention than anything else, even more than productivity. When people feel appreciated, they'll go to great lengths to do as much as they can for you and stick around.”

Finding and keeping the right people are critical to building a successful and profitable company. Nowhere is this truer than in the LBM supply channel, where owners and customers consistently report that they place a high priority on long-term relationships. On top of that, employees usually cannot be easily—or cheaply—replaced. Turnover studies estimate that it costs anywhere from 30 percent to 200 percent of an employee's annual salary to replace him or her.

A survey conducted in 2003 for Fort Lauderdale, Fla.–based international recruiting and outsourcing firm Spherion Corp. found that more than half of American workers wanted to change jobs, and most of them were looking for a change within 12 months. Here are five key steps you need to take to keep your top performers in the corporate fold.

Step1: Hire Right the First Time The process of building community begins, of course, with hiring the right people, not only those with the necessary skills but, more importantly, with a mind-set that meshes with your company's culture. It's particularly important at Dunn Lumber, for example, because the company has a policy of promoting from within to fill new positions; 90 percent of their “hires” are filled in-house, George says. Virtually all outside hiring is for entry-level positions. “That's been key to keeping employees,” George says. “It doesn't matter how much recognition or how many rewards you provide employees. If you don't give opportunity for advancement, eventually you'll lose them.”

To make sure this process works, all of Dunn's managers and supervisors have been trained in “strategic hiring” techniques, tools that were developed in-house to help them choose interview questions that identify skills and behaviors to be successful in the position. Results are tracked quarterly through turnover rates, which are translated into hard dollar costs. The result has been a drop in turnover from as much as 50 percent in some sales and installation positions five years ago to 14.5 percent.

George adds that the hiring process is critical for LBM companies because there is little formal training for a career in the industry. “A lot of times, people gravitate to the industry because they have [experience in] some aspect of it—their dad was a contractor so they know how to read blueprints—but it's all ad hoc. You don't just walk in and learn it overnight. It takes years of experience. You have to grow your own within the company. That's why we put so much emphasis on creating a culture to retain people. It makes a difference if you bring them on board, give them basic skills, and build on that.”

Giving managers training in interviewing is critical because interviews are the most heavily weighted, but least valid, tool in the hiring process, says Ben Dattner, a New York City–based HR consultant and an adjunct professor of industrial psychology at New York University. “Interviewing is highly subjective,” Dattner says. “Most people do it on an informal basis and don't do it very often.”