Workforce Retention

The richest source of knowledge on attracting and retaining your workforce is your employees.  Just ask them!

Employee turnover is a problem for almost all employers.  A normal amount of turnover is to be expected, but inflated turnover rates are costly, impair the effectiveness of operations, and drain time and resources critical from your organization.  So how does a company identify turnover if it is a problem and design strategies to minimize turnover?  This article recommends three measurement tools that can critical to quantifying and minimizing turnover.

 Measure and benchmark your turnover

Some turnover is expected in any company.  Assessing the magnitude of your turnover requires, at the very least, that you keep records of employee turnover.  Identify employees who leave voluntarily versus those who are asked to leave.  Turnover is usually measured as the percentage of all employees who leave a company during a given time period.  Once you have established a good measurement system, you will be able to analyze your turnover over time.  Look for trends in your data that identify any seasonality or cyclical tendencies for your turnover.  Identifying patterns can help you to predict turnover peaks so that you can proactively implement retention strategies or at least budget time and resources to hire new recruits.

The next step is to benchmark your turnover rate.  Turnover norms vary between industries and geographies.  Participate in (or initiate!) your trade association’s turnover benchmarking survey.  This will arm you with important information on how critical your turnover problem is in relation to your peers.

 Identify and quantify costs

Managers intuitively know that turnover is an inconvenience and disruption of ideal workflows.  But to allocate the appropriate resources for fixing your turnover problem, you should have a handle on how much turnover is costing your organization.  Use the following short-list as a guide for quantifying the costs involved with terminating and replacing employees.  These costs will change depending on the unique administration and operation of your business.

 Vacancy Costs

§         Lost productivity

§         Loss of customer service

§         Overtime costs for employees who take on extra work

 Recruitment costs

 §         Advertising

§         Background checks

§         Recruiting time

§         Interviewing time

§         Testing

§         Sign-on bonuses (including referral bonuses and relocation expenses)

§         Orientation

§         Training

 A detailed quantification of turnover costs often exceeds management’s estimates and may win more recognition and resources to your turnover reduction strategy.

 Exit Surveys:  Measure why employees leave

Many employers miss a critical opportunity to mitigate retention by not collecting information from terminated employees.  These employees are the best source of information on why you may have a turnover problem.  Their insight and opinions on their position, the company, and their motivation for leaving are critical to your efforts to create a workplace that retains valued employees. 

Design a standardized, confidential exit survey and distribute it to employees before they leave your company.  Often employees are more than willing to unload their opinions on an exit survey.   Designing and maintaining a standard survey will allow you to measure trends between different departments, different position types, and different time periods.  Confidentiality is critical.  By using a third-party consultant to collect and analyze the information for you, you can expect more openness and hones opinions from these employees.

Collecting and measuring data on why employees leave will vastly improve your retention efforts.  Managers are often surprised at the real reasons why employees leave.  (It’s not always about more money!!)

New Hire Surveys:  Measure why employees want to work for you

Regardless of how well your retention strategy works, your company will likely still need to hire or replace employees at some point.  When it does, make sure to ask new employees for their opinions in a new hire survey.  Find out why they were attracted to your company.  Ask about how effective new employee orientation and training is.  Find out if the job is what they expected it would be.  Determine why candidates were driven to your company and what they like best about your company now that they are employees.  Use this information in your recruitment materials and on your web site to attract new candidates more effectively.  This information will go a long way toward improving your recruitment efforts.

The information you collect in a new hire survey will also help with turnover.  In most companies the highest turnover rate is found with employees who have been with the company for less than a year.  There are a lot of potential reasons for this.  Maybe new employees feel that their work is not what was communicated in their job announcement.  Maybe they didn’t understand salary and benefits offerings, or perhaps they didn’t like the training and orientation period.  You will never know unless you ask them and measure the results.  Your recruitment and retention efforts will be better off for it.

All of these tools help management understand what is going on with their employees.  By measuring their likes, dislikes, and expectations, you will be armed with the information necessary to mitigate turnover and ensure that you are attracting the right employees for your organization’s culture.

Insight and Innovation Home

These materials have been prepared for educational and information purposes only. They are not consulting advice or opinions on any specific matters. Transmission of the information is not intended to create, and receipt does not constitute, a consultant-client relationship between The Hill Group, Inc. and any recipient of this material. Readers should not act upon this information without seeking professional advice.