Is employee turnover (TO) a concern for your organization? According to LinkedIn, 36 percent of employees are actively looking for a new job.
Imagine the cost to your organization if 36 percent of your employees left for another job! The 2016 SHRM Human Capital Benchmarking Report found the average cost per hire is $4,100, for all hiring, not just TO. Consider this an acceptable cost of doing business. The true cost of TO, however, goes way beyond this baseline figure and varies by organization and by position within an organization. Consider the domino effect of hidden TO costs:
- Lost productivity due to a vacant position, leads to…
- Reduced productivity by overworked, understaffed work teams, leads to…
- Poor morale, damaging an organization’s ability to innovate and grow new leaders, leads to…
- Deadlines missed, sales lost, initiatives slowed, poor customer service, lost opportunities, etc.
The bottom line: TO is disruptive, costly, and should be taken seriously as a business initiative to maintain organizational effectiveness and competitiveness. HR professionals, it is up to you to lead efforts to address this challenge! So let’s get started with a little more background information.
The MSEC 2016 Personnel Pulse survey contains useful TO data and prompts further questions to inform all workforce planning initiatives. Consider these results and questions they prompt about TO:
- Between 2011 and 2015, TO among MSEC members significantly lags the national average, is relatively stable and bucks the national upward trend. What accounts for this difference? Is it a statistical anomaly, or are MSEC members better at hiring and retaining than employers elsewhere in the country?
- MSEC employers consider 25 percent of overall TO “regrettable”; i.e. they regret losing high-performing employees (the ones who get things done and move the organization forward). “Regrettable” TO damages an organization’s ability to succeed, so how can it be reduced?
- Seventy-five percent of TO is considered neutral (employees who do the minimum level of work required) or desirable (under-performing employees). “Desirable” TO means losing poor-performing employees and appears to be positive, but it may represent poor hiring and management practices that are an ineffective use of resources. How can this be improved?
- Employers with the youngest average employee age (25 to 35) have much higher levels of TO than those with higher average employee age (36 to 50+): 32 percent versus 18.5 percent.
- Demographically, the largest group of available labor today and for years to come is the younger Millennial generation; thus, higher TO rates are likely on the horizon for most employers. Can anything be done to minimize unnecessary TO among younger employees?
Now let’s dive deeper into strategies to tackle this challenge. A review of surveys and research suggests this multi-factor approach is most likely to succeed at both boosting retention and minimizing TO:
- Brand yourself. What value do you offer potential employees? What makes your workplace special? Does your brand connect to your mission, and how do your HR hiring processes support this and bring it to life for potential employees? What is your “Total Package” (compensation/ benefits/rewards/culture) and how does it support your brand? HR, ensure alignment internally before subsequent steps. Take the lead in getting stakeholders on board to breathe life into your brand! This is not just an “HR Thing”! It takes the whole leadership team to make this successful and sustainable. If not, there will be a disconnect that sets you and applicants up for failure.
- Hire carefully. Employers using targeted sourcing techniques, followed by skilled interviewing and valid assessment steps, are more likely to find candidates that are a good match. A good match from the start is more likely to lead to a successful, long-term employment relationship!
- Onboard and orient. Surveys show new employees decide within one month of hire if their new employer is right for them, or if they need to find a new job. Employers must carefully plan a new employee’s first days/weeks/months to include meaningful opportunities to engage and connect with coworkers and the organization’s culture. They must feel supported, set up for success, and not “left in the weeds.” A “sink or swim” approach to new hires results in higher TO.
- Culture. Employers with fun, celebratory, and engaging cultures with transparency and open communication nurture meaningful relationships among employees. These are more likely to successfully engage new employees and foster loyalty. LinkedIn’s survey found 43 percent of job changers cite lack of advancement potential as their primary reason for leaving. Employers with a culture of professional development/career growth, supported by mentoring and coaching, are highly valued by Millennial new hires who crave individualized timely feedback to support their personal growth. Happy employees are more likely to be productive and less likely to leave.
- Competitive compensation. You don’t need to offer the top compensation in the marketplace to be competitive, but your compensation structure must be aligned with marketplace realities. Offset lower pay with other attractive qualities like great culture, learning and career growth opportunities, quality workplace relationships, superior benefits, etc.
- Meaningful benefits. Employers that provide choice in benefits are more valued today by applicants and new employees to meet their unique needs. Be creative and offer low- or no-cost benefits, like flexible work schedules. Today’s new hires expect this to achieve work/life balance. Personalized benefit options help offset lower wages and make it harder for employees to leave your organization.
- Communicate. Celebrate and communicate your Total Package (compensation/benefits/rewards/culture) consistently to all employees year-round. Messaging should come not just from HR, but from all levels of leadership! Help employees access and learn more about their total package; unused benefits have no value, real or perceived. If you’re not “in the face” of employees about their benefits, they lose awareness and are easily lured away by an otherwise less desirable competitor offering the “shiny object” of higher pay.
Realistically, TO will always exist, so take these steps to continually improve your processes:
- Conduct Exit Interviews for all neutral and “regrettable” exits to identify problems and possible ways to improve. This may also encourage “boomerang” employees—those who find the grass is not so green, or who grow elsewhere and acquire new skills and wish to return.
- Follow up with applicants who decline your job offer. If you’ve spent time and effort luring a prized candidate, only to lose them to the competition, ask them why they turned you down. Understanding what your competitors are offering gives you a heads up to take action and ward off other top performers from being lost! Additionally, reaching out to these talented individuals sends the message, “We value you!” and opens the door for them to reconsider future employment opportunities with you.
- Listen to current employees. Survey employees formally and informally to measure satisfaction and identify gaps areas to improve. Openly communicate and acknowledge any problems and limitations, and take quick action when possible to send the message, “We listen and value your feedback!” This message matters to your employees, encouraging them to engage and remain committed.
MSEC offers many resources and services to help members to tackle turnover challenges.