Employee Retention and Employee Turnover

Transform Your Organization from High Turnover to High Retention

Each year U.S. businesses spend billions of dollars recruiting and
replacing their employees. Individually, it costs between $2-11K to
replace an hourly employee, and upwards to $40,000 to replace a manager.
One Silicon Valley company estimates the cost of replacing an employee is
over $125,000.

As you know, it is getting difficult to attract and keep skilled
employees. Many businesses and industries are desperate for help and can’t
find good people with the right skills and attitudes.

While many leading companies place more effort in employee retention, most
are clueless. They accept employee turnover as a normal part of doing
business. High turnover organizations spend disproportionate amounts of
resources on recruiting and replacing their workforce, while smart
organizations invest in employee retention. Yes, there is going to be
turnover no matter what you do, but blindly ignoring the reasons for
turnover is foolish and expensive.

Employees quit for many reasons but, in general, there are five important
areas that motivate people to leave their jobs.

Poor match between the person and the job
Poor fit with the organizational climate and culture
Poor alignment between pay and performance
Poor connections between the individual, their coworkers, and the supervisor
Poor opportunities for growth and advancement

These five P’s can be addressed successfully. Employee retention begins by
paying attention to what causes low job satisfaction as well as what
attracts, retains, and motivates your workforce. Here are a few items to
consider:

Identify and weed out poor managers. The relationship with the employee’s
front-line manager is the most common reason people leave. La Rosa’s is a
large restaurant business with over 3000 employees. As part of their
employee retention strategy, all employees evaluate their bosses twice a
year using a special report card. It asks the employees to give their
managers a letter grade from A to D in four categories. Any score less than
a “B” requires a specific comment from the employee. After it’s completed,
they tabulate the comments and design action plans for improvement.

Hold managers accountable for turnover. Set specific responsibilities for
Human Resources, supervisors, and executives on what their specific role is
in employee retention. Train managers so they understand what leads to
higher retention and greater job satisfaction. Hold managers responsible
for retention in their departments, set turnover goals for each manager,
and track accordingly. Promote managers whose behavior is consistent with
the organization’s values and philosophies.

Create a positive work environment. Money and benefits may bring employees
through the front door, but poor work conditions drive them out the back.
In its National Study of the Changing Workforce, the Families and Work
Institute showed earnings and benefits have only a 3 percent impact on job
satisfaction. “Job quality” and “workplace support” have a combined 70
percent.

Develop an “Onboarding” program for the first 90 days on the job. Don’t
hire and abandon your new employees. Insure they get the support, training,
and assistance they need. Quint Studer, CEO of the Studer Group, a
consulting firm in Gulf Breeze, Florida, finds companies that take steps to
“re-recruit” new employees can improve performance and reduce turnover in
their first three months by as much as 66 percent.

Enhance connections between co-workers, managers, and the organization. To
build stronger bonds between the top management and employees, one
corporate office practices something called Employee Scavenger Hunt. Once
or twice a year, they give every executive or manager five names of
employees. They find each person, meet them, and learn about them as
individuals. The process builds a better bond, improves communication, and
builds trust within the organization.

Hire the best and avoid the rest. Research shows those organizations that
spend more time recruiting high-caliber people earn 22% higher return to
shareholders than their industry peers. Cisco CEO John Chambers said, “A
world-class engineer with five peers can out produce 200 regular
engineers.” Instead of waiting for people to apply for jobs, good
organizations are always on the lookout for high-caliber people.

Provide learning opportunities. For many people, learning new skills is as
important as the money they make. Identify career paths and provide
developmental opportunities for employees early in their jobs with the
organization. Promote on-going, two-way communication between employees and
their immediate managers regarding career progress. In a study by Linkage,
Inc. people said they would consider leaving their present employer for
another job with the same benefits if that job provided better career
development and greater challenges.

Make people feel appreciated. People want to be paid well, but also would
like to be treated with respect and appreciation. Find creative ways to
make people feel good about their job. We have helped organizations set up
something called, “peer recognition.” Peer recognition allows people to
reward each other for doing a good job. It works because employees are in
the best position to catch people doing the right things. TD Industries in
Dallas, Texas, helps their employees feel valued by using one wall within
the company to place photographs of all employees who have been with the
them more than five years. They also try to make everyone feel equal and
have no reserved parking spaces for executives. That is one reason why TD
Industries was listed by Fortune magazine as one of the Top 100 Best Places
to Work.

Measure attitudes of your workforce. High-retention workplaces are using
employee climate assessments to measure the attitudes and feeling of their
workforce. Every organization should conduct some form of climate
assessment periodically during the year.

Focus on individuals. You must manage retention one employee at a time.
Focus on the key jobs that have the most impact on profitability and
productivity. Everyone has a different set of needs and expectations about
their jobs. By conducting an individual retention profile, managers can
quickly identify the employee’s unique motivations, goals, level of job
satisfaction, as well as other expectations.

Focus on the family. One small company gives their employees’ children a
$50 Savings Bond twice a year when they get straight A’s on their report
cards. Another survey of 1,000 companies showed half of them let workers
stay home with mildly ill children without using vacation or sick days.
Two-thirds permit flextime defined as allowing employees to adjust work
hours on a daily basis.

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