As the economy continues to improve it will become more challenging to attract and retain employees. This will get increasing more difficult because the amount of available workers is also shrinking. Baby Boomers (born between 1944 and 1964) are retiring and being replaced by the next generation which is about half in number. Generation X (born between 1965 and 1980) has 44 million people compared to the 76 million Baby Boomers. Therefore it is important to ask yourself what you are doing to protect your most valuable asset, your employees, from the competition.
Cost of turnover can range from 20-150% of the employee’s wage. It depends on the available workforce in your geographical area and the type of position. Lower level positions are less costly to replace than upper management positions. However all employee turnover impacts the bottom line of your company. Some are direct costs such as severance, benefits continuation, hiring recruiters, training or defending an unemployment hearing. It is harder to quantify the lost opportunity cost while a position is vacant or the contacts and customers that the person who leaves takes with them. Other less tangible costs include lower productivity, lost knowledge or intellectual property, interviewing costs and the effect on the overworked remaining staff.
The change in the market place will often affect the hiring manager at a time when they are least able to deal with it. Their department is understaffed and now interviewing and training are added to their work load. It is now taking much longer than they expected to fill the position and they don’t know why. The good news is that there is a lot that can be done to mitigate employee turnover and it does not have to be costly or time consuming.
It may be interesting to note that in surveys of the factors that are most important to create job satisfaction money is typically NOT at top of the list. Let’s explore some of the reasons good employees leave and how to attract top talent.
One of the top reasons employees quit their jobs is because of their manager. While every supervisor has a different management style it is important to balance the personality of the employee with the requirements of the position. It is demoralizing for work to be rejected because it was not done “right” when the supervisor did not state how it was to be done. Often assumptions are made which lead to disappointing results. A simple question such as “How do plan to …” can be an opportunity to clarify expectations and give direction if needed.
Not doing meaningful work or bored and unchallenged by the work itself was a significant factor for people leaving their jobs. This is especially important for workers who are a few years out of college or just starting out in their career. One way of making the work seem meaningful is to let them know how their contribution plays a part in the overall success of the project, strategic plan or company initiative. Having a one on one conversation about career objectives is important. Career development and suggesting opportunities to use skills and abilities that are in line with their career objectives goes a long way towards creating job satisfaction.
Clarifying goals, expectations and the metrics to measure progress are important for every manager to discuss early in the persons employment. Otherwise the employee does not know where they stand or if their contribution to the company is valued. Recognition of a job well done and sincere praise lets the employee know their performance is satisfactory and appreciated.
Relationship with co-workers is also a component of job satisfaction. The culture, environment, team work and ability to collaborate all play a factor which can create a positive or negative experience. It is best to encourage team work and collaboration rather than competition. When departments or salespeople compete there are winners and losers which creates animosity. When employees collaborate towards a common company objective everybody wins. It creates a healthy spirit of cooperation.
Nobody likes micro-management. This usually occurs because trust and competency have not been established or the manager feels a need for control. The way to avoid feeling out of control is to establish clear objectives, expectations of how the completed task should look and specific metrics for measuring progress. A proper reporting structure allows the employee to exercise autonomy within the established guidelines. The reporting process can be as simple as verbal or written status updates. Some companies have daily or weekly telephone conferences 20 minutes to an hour long.
Some people leave because of concern over the organization’s financial stability. When sales are down and there are budget cuts or lay offs employees are often left to wonder how this affects their job. Management finds this subject difficult to discuss and aren’t sure how much to say and usually end up saying nothing. That leaves the employees to wonder what is going on and how bad it really is. I have found transparency to be a better way of handling things. Employees will rally behind a cause if they have a reason to. In one company that I owned there was a significant reduction in sales during an economic downturn. I held a companywide meeting explaining that we were below our break even and how much our sales need to increase. Then I had the employees vote on a choice of reducing their hours by one day a week or having me decide on staffing reductions. Everyone voted for a temporary reduction in their hours. They all worked hard and in less than two months we were back in the black. Everybody said they appreciated the transparency. It increased morale and gave everyone a sense of accomplishment for being able to reach a common goal.
In conclusion, all of the employee retention suggestions listed above can be implemented with little or no cost. It is always less costly and less stressful to mitigate employee turnover. You will also gain the additional benefit of increased productivity by increasing employee job satisfaction.