High employee turnover is bad for business. It’s that simple. Here are the reasons why;
1. New employees are costly, there are expenses associated with hiring new employees, such as advertising fees and recruitment fees. Training employee also has corresponding costs attached. It has been estimated that the hiring and training of new members can cost as much as twice his or her salary.
2. Having a high staff turnover is a waste of time and effort; as the saying goes ‘time is money’. Equipping employees with the skills needed to do their jobs, and getting them up to speed with the way the company operates requires time away from the desk for both the trainee and the trainer. Every hour allocated to training, whether external or internal, means time away from accomplishing revenue-generating tasks such as; sales calls, networking or payment collection. When the time used up is accumulated it totals to a significant amount in dollars.
3. Having an unstable working environment also damages morale of other employees; when an employee resigns or is let go, the rest of the team tends to speculate. It can also cause employees to consider the security of their own positions, which may push them to look for other options.
4. The training and recruitment process can hamper Business Operations. When a senior employee takes time out from his or her original schedule to train a new hire, it can mean that other tasks will need to be pushed back and may lead to some missed opportunities.
If the turnover rate of employees is high and frequent, the cycle of recruiting and training will persist. This has a flow on effect for efficiency, effecting the bottom line results.
The good news is that there are ways to ensure your turnover rate is kept to a minimum. Some of these tactics are outlined below.
Efficient Hiring Process
Whether you have a Human Resources Manager or are doing the hiring yourself, it is essential to be aware of the correct hiring process and associated costs. Research the best and most affordable options for tracking down star candidates. Before the interview, it is best to know what your process will be. To define this process it is best to look at exactly what you are looking for in a candidate, your boundaries or flexibility to your requirements and offer and what recruitment methods may uncover this information.
Select the Correct Person for the Job
Gone are the days when the only thing that mattered was the credentials on a piece of paper. Nowadays, companies put a premium on the Emotional Quotient (EQ) of employees. More and more companies are hiring for attitude and training over skill. When reviewing resumes or while interviewing, be on the lookout for red flags relevant to the role. For example, if you are looking for someone who will build their skills within the business, look out for signs of job hopping which may indicate they are less of a long term option.
Consider your Company Culture
It is important that the candidate that you choose shares the same values and fits with the culture of the company. In other words, the personality and attitude of the candidate should complement the environment of the workplace or vice versa. A good indicator of this is if the candidate shows a similar attitude and outlook with your present employees.
Provide Open Lines for Communication
At the outset, it is integral for you to lay your cards on the table in terms of your expectations for the position and the terms of employment including hours, salary increases, benefits and the like. Doing this will manage the expectations of your new hire and ensure that the understanding of the employment arrangement is the same for both parties.
Offer Competitive Compensation
The expression “You get what you pay for,” doesn’t only apply to material goods and services. It can also be applied to recruitment wherein the caliber of the employee that you get will have a correlation to his or her expected salary. If current budgets are an issue, think of the cost the company will incur in hiring the wrong person for the job (i.e. repeating the recruitment and training process). Alternatively, if the budget is lower, ensure you factor the training time into the timeframes for getting that employee to full capacity.
If your remuneration budget is not alterable and you need a higher level employee, there is the option to offer other benefits in lieu. Alternatives that may be effective are options to work from home, a flexible work schedule, performance bonuses and flexible vacation packages.
Once the hire is onboard, feedback is key. Providing constant feedback, whether negative or positive, is an effective way to nip any problems in the bud and to reinforce positive behaviours/outputs. Getting your comments and being informed about the correct way to do things allows employees to learn what they need to quickly and do so in a way that meets the standards of the company.
Investing in the training for employees doesn’t only equip them with a better skill set to do their jobs, it also shows them that the company cares about and supports their professional development. This can be tailored training schedules with other members of the team, or training from external providers.
Conduct Periodic Evaluations
Employees need to know where they stand in terms of meeting your expectations and what they need to do to get there. These ‘catch up’ sessions allow both employee and employers to set goals to identify what support or training is necessary to meet these standards. Within the probation period, it is recommended to set consistent meetings (e.g. monthly) to go over any feedback you wish to highlight and any performance areas they could improve.
The cost of recruiting and training a new hire is an expense that cannot always be avoided, but with consideration in the early stages it can be minimised. To make sure that your turnover is kept to a minimum and the recruitment process is efficient, begin the recruitment process correctly knowing what you are looking for from the onset. Once you sign with the right candidate, the next step is to ensure that the employee is kept satisfied and supported to succeed by following the tips above.