While the old adage attests to the certainty in life of only two things (death and taxes), hiring managers have at least one more thing to add to the list: employee turnover. But while turnover is a fact of business life, that doesn’t mean you should just throw your hands up and accept it. Instead, these tips and techniques can help you manage and prevail over this common HR challenge.
Plan for the Inevitable
No matter how carefully you’ve assembled the perfect team, turnover is always lurking around the bend. In order to properly prepare for the twists and turns of turnover, it’s important to thoroughly understand two things: turnover is both inevitable and costly.
One HR rule of thumb says that employee turnover can be calculated by adding 30 percent to the departing employee’s salary and multiplying it by 25 percent. The resulting number represents the comprehensive cost of turnover, including everything from training to benefits administration.
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Your turnover rate is the percentage of employees lost in a single year compared to your total number of employees. This number is a valuable benchmark for managers, and helps you understand your turnover as well as budget for its expenses.
Adjust Accordingly
Just because you should plan for turnover doesn’t mean you have to resignedly accept your turnover rate. In order to counter poor turnover, however, you first must understand it.
Many of the factors that lead to employee turnover aren’t exactly surprising: these include poor compensation and benefits, lack of job security, and few advancement opportunities. Other factors may surprise you, such as lack of appreciation, insufficient training and poor leadership.
If your turnover rate is high or growing, more likely than not you are failing in one or more of these critical areas.
The obvious answer to reversing high turnover is to offer better compensation and benefits. In some cases, this may mean disregarding market pricing and instead determining what keeping your best employees is worth. If your bottom line can sustain this number, isn’t it worth it?
In other cases, potential solutions are more subjective. By offering your employees plenty of opportunities for training across a broad range of responsibilities, you can help employees feel appreciated and valued for their growing skill set.
And don’t neglect leadership and management training opportunities. After all, the more you’re willing to invest in your employees, the more they’ll be willing to invest in you.
It’s Not Them, It’s You
While employees leave jobs for a variety of reasons unrelated to poor management, others depart for precisely this reason. If your company is experiencing a turnover problem, you’d be remiss not to consider one critical thing: yourself.
For better or for worse, your leadership contributes to your company’s turnover rate. Take time to evaluate your manage style, communication skills, and vision. If your employees aren’t inspired, lack a common goal and/or sense of teamwork, or feel insecure about their role in the company, your turnover rates may be suffering. This trend is reversible, but not without some effort from you.
Hire Smarter
While hiring managers may feel pressure to fill positions quickly when multiple or high profile vacancies exist, this is a short term solution. Instead, determine the common traits exemplified by your most successful employees and consider only those job applicants with this skill set.
And don’t forget that the hiring process doesn’t end when a job candidate accepts your offer. Foster employee connectivity by providing support opportunities every step of the way — from onboarding to ongoing engagement programs.
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Companies with low turnover rates also utilize smart workforce planning in order to predict vacancies and reduce turnover. Proactivity can lead to a promising pipeline.
Intrinsic in this formula is the inherent importance of finding the right employees for your vacant positions — no matter how long it takes. Instead of perpetuating an expensive cycle of bad hires, commit to choosing the best candidates the first time around and paying them an unbeatable compensation package.
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