Costs associated with turnover include the following:
- Separation costs: unemployment compensation, Consolidated Omnibus
Budget Reconciliation Act, exit interviews
- Replacement costs (cost per hire): advertising, pre-employment tests,
interviewer time
- Training costs: sales training, customer service training,
on-boarding
- Productivity costs: morale, lower production, increased errors,
customer service
Given the high percentage of employees who plan to seek new employment
opportunities as the job market rebounds, human resources professionals and
business leaders need to understand turnover's costly impact and focus on
ways to keep their best employees on board.
As a way to establish an effective retention strategy, we must first
uncover the main reasons driving employee satisfaction. A recent Society of
Human Resources Management Workplace Survey found the following as it relates
to job satisfaction.
Top five factors contributing to job satisfaction include:
- Opportunities to use skills and abilities—63 percent
- Job security—6 percent
- Compensation/pay—60 percent
- Communication between employees and senior management—57 percent
- Relationship with immediate supervisor—54 percent
It should also be noted that overall employee job satisfaction has
decreased from 86 percent to 81 percent since 2009.
Developing a Strategy
When I consult with companies, the subject of identifying and retaining
top talent is always one of the critical items executives tell me they'd
like to improve upon. However, when I ask what their strategy is in that
regard, they either mention that they've found this great recruiting firm
that is going to do nothing but send them top-level talent, or they look at
me and tell me the people who have left were no good to begin with—basically
rationalizing the cause of the turnover.
There are a couple of flaws with this line of reasoning. First, just
because a recruiter has sent you top-level talent doesn't mean that
employee is going to stay and prosper with your organization. I can't
tell you how many talented employees I've seen leave organizations
because they were miscast for the job, management style, or corporate
culture. Second, never assume a turnover problem is just because the employee
was no good to begin with. Job fit and performance go well beyond just having
a talented employee. As with any business goal, you have to implement a
proven process and strategy to attain that goal. The following will outline a
seven-step strategy to increase employee retention, one that helped one
Fortune 500 company realize a 67 percent increase in retention in the first
year of implementing all seven steps.
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Conduct job analysis audits to provide realistic job
previews. Conduct job analysis audits with behavioral
assessments, cognitive reasoning assessments, job simulations, and hard
skills assessments (i.e., computer skills, etc.) to objectively define
the core competencies required for success in each role (competency
modeling). This helps in providing a realistic job preview for candidates
and managers. Often, what managers think they need for a certain role is
different from what they actually need.
-
Implement a well-designed assessment and selection
process. Include behavioral assessments and structured
behavioral interviewing techniques to increase the likelihood of hiring
people who can, and will, do the job at a high level in your environment
and for your managers (job fit assessment).
-
Provide good employee orientation. The people you
hire today are, potentially, your greatest resource for corporate success
in the years ahead. As a senior leader, your participation in new
employee orientation sends a vital cultural and leadership message:
"We're all involved here in the drive toward what we want to be
in the future." Everyone—even the newest employee—has value.
-
Implement programs for employee training and
development. Provide ongoing professional development to show
your willingness as an organization to develop your greatest asset—your
people.
-
Improve manager and employee relationships.
Concentrate on the people who stay with you to learn what makes them
happy … then give them more of it! "People leave managers, not
companies. If you have a turnover problem, look first at your
managers," Marcus Buckingham and Curt Coffman wrote in First,
Break All the Rules.
-
Provide an equitable or fair pay system. Be
competitive!
-
Encourage succession planning. Identify roles for
which employees may be suited in the future and work with them on
designing their succession plan within the organization. Invest in
cross-training, job shadowing, coaching, mentoring, and
cross-experience.
Conclusion
In summary, many organizations are already using several of the
aforementioned steps but may be lacking or may be deficient in the other
steps. Each step is critical to the overall success of an overall employee
retention plan.
Mike
Poskey is president of ZERORISK HR, Inc., a Dallas-based human
resources risk management firm and exclusive provider of ZERORISK Hiring
System. For more information, visit www.ZERORISKHR.com or email Mike at
.