Turning the Turnover Tide
Hanging on to the employees you have
By Joe Escobar
Keeping the employees you have — many companies are realizing that is the key to increased profitability and positive work environments. In searching for ways to improve the bottom line, holding on to employees is a central part of any successful operation
What does turnover cost?
Employee turnover has many costs. One of these is the direct monetary impact on the business. Leigh Branham of Kansas City-based Right Management Consultants notes in an article titled "Six Truths about Employee Turnover," that most managers know turnover is expensive, but two-thirds are unable to quantify the actual cost. He states that turnover can cost a company from 25 to 200 percent of annual compensation. Using the low end figure, if the average pay for a mechanic is $40,000 per year, then it would incur costs of approximately $10,000 to replace him should he leave. These costs are related to decreased productivity, administrative costs, resources spent on searching for applicants, relocation expenses, and increased training time.
Other hidden costs
Other costs of high turnover rates that adversely affect companies include disruption in the smoothness and continuity of the operation, lowered morale, burnout/absenteeism among remaining employees, and loss of experience and knowledge. Although it is not easy to place a specific dollar amount on these issues, they definitely affect the profitability of the company. Lowered morale of remaining employees can be the most harmful effect of high turnover rates; once the seeds of low morale are planted, it can be hard to uproot the negative attitudes even with the best intentions.
Lowering the turnover rate
So what are the keys to keeping the employees you have? It may only require a few changes within the organization. But, in cases of very high turnover rates, there may be many factors influencing the defections that will require significant introspection on management’s part.
Open up the lines of communication
Talk with the employees to find out what issues are important to them and where they see room for improvement. Showing a sincere desire to have open lines of communication can start the ball rolling towards higher morale. A questionnaire might be used to obtain information that otherwise might not be shared openly in person due to fear of retaliation.
Another good tool is an exit survey. It should be thorough enough to obtain important information like reasons for leaving, opinions on pay, benefits, supervision, and opportunity for advancement. Although some disgruntled employees may give exceedingly low remarks, many will be truthful in this type of survey. Consistent low marks in a particular area should send up a red flag. The feedback obtained from these exit surveys and communication with the employees can help focus on areas that need improvement.
In his book, Keeping the People Who Keep You in Business — 24 Ways to Hang on to Your Most Valuable Talent, Leigh Branham states that companies fostering a culture of commitment versus a culture of abuse will more easily hold on to their employees. Companies that have cultures of commitment become "employers of choice" because they create environments where three key retention management practices are established:
1. Adopting a "give-and-get-back" philosophy
2. Measuring what counts and paying for it
3. Inspiring commitment to a clear vision and definite objectives
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