With NH’s 2.7 percent unemployment—the third lowest in the country—it’s hard enough to fill positions with good employees. It’s even worse when you believe you’ve found someone who is a great fit, only to receive a letter of resignation. Turnover is costly in time, money, energy and company cohesion.
Here are some key points to mull about turnover and its cost:
• More than 50 percent of voluntary turnover happens within a year of the new hire’s start date, according to ClearCompany, a talent management platform.
• The average cost to replace an employee earning $8 per hour is about $5,500, due primarily to HR-related costs, but not including benefits or training costs, according to ClearCompany.
• The industry with the highest turnover rate in 2016 was hospitality at 28.6 percent, according to Compensation Force. That’s tough news for NH where hospitality is among the key drivers of the state’s economy.
• The Bureau of Labor Statistics reports a steady uptick in the employee quit rate in the Northeast over the last five years, from 14.6 percent in 2012 to 18.8 percent in 2016.
How many employees did you lose in 2017? Add up the costs of training, recruiting, administration, overtime and productivity loss for each employee you had to replace, and you’ll quickly see how expensive turnover can be.
Reducing Turnover
Here are a few ways to help lower your turnover rate and raise your bottom line:
• Hire the right people. When recruiting candidates, look beyond their resumes and experience and really talk to them. Will they be a fit for your culture? Will they understand and live out your vision and mission? Open-ended questions about their favorite previous work environments or ideal managers are great ways to understand the environment in which the candidates would thrive. The last thing you want is to hire someone who is used to calm, reserved cultures if yours is one of elevated stress, competing priorities and a high-energy staff.
• Train. Provide training to both new hires and current employees. According to a study by BambooHR, 33 percent of the 1,000 respondents had quit a job within the first six months of employment due to lack of clear responsibilities and a lack of training. Training promotes job satisfaction for both new and seasoned employees. By investing more in your employees, they in turn become more engaged and involved and start working toward the success of both themselves and your company.
• Recognize and praise your employees. People enjoy and thrive on being recognized for accomplishments. When your employees accomplish something significant, write a personal note, mention their achievements on your intranet, or send a company-wide email. Written commendations not only show your team you recognize their work, but they also communicate your expectations to the entire company. Recognition and praise are cost-effective ways to maintain a productive workforce.
• As much as possible, offer flexibility. A Boston College Center for Work & Family study found 76 percent of managers and 80 percent of employees indicated that flexible work arrangements had positive effects on retention. Offer rotating weekend schedules or staggered shifts. Get creative and see what areas of your business can be flexible.
• Live your culture. Don’t just tell your employees what your mission and vision are—live them. After all, if you don’t, why would they? A 2012 study found that lack of respect in the workplace was a key factor in turnover. Creating the culture you want in your company starts at the top, works its way through managers and soon spreads to the entire team.
• Enlist managers and supervisors. Use your management team to discover what motivates your employees. You’d be surprised by how willing your employees will be to talk about what they like, don’t like, and would like to see, not only in their positions but also in the company as a whole.
Taking Action
So how can a company put these suggestions into action? After having an HR audit performed, one NH firm realized it needed to reduce its turnover rate. It put in place a quarterly plan to demonstrate to employees how committed the company was to their success and how much they were valued. For Q1, the company implemented monthly birthday lunches: every employee whose birthday fell in that month was treated to an offsite lunch with the senior management team. Q2’s initiative was an “employee of the month” program.
The third quarter was a bit tougher as the goal was to increase praise and recognition. Everyone responsible for a direct report created a calender reminder each week to talk one-on-one with one of their team members. It took discipline, but once they saw the effect it had on their team, it became a habit quite easily. And finally, Q4 was dedicated to documenting employee goals, including professional development. The new programs made a difference: when the company reviewed its turnover the following year, it saw a dramatic decrease.
Happy employees are far less likely to leave. Creating an open and positive working environment will enhance your employees’ engagement, which means they will work harder, be more efficient and take pride in what they do. Investing in your new hires and existing employees now will pay big dividends in the future.
Christina Davis is HR director for The LMC Group in Manchester, a management services firm. For more information, call 603-217-5045 or visit lmc.group.
Current Issue - April 2024