High employee turnover rates are slashing your profits.
With employee turnover rates of 30-40% as the accepted norm in industries such as retail, customer service and hospitality, a major portion of your profit is leaking out of your bank bag before the deposit ever reaches your account. Not only is your profit evaporating, but your employee and customer confidence and security is seriously deteriorating as well.
According to Josh Bersin, Principal and Founder of Bersin by Deloitte, “Many studies show that the total cost of losing an employee can range from tens of thousands of dollars to 1.5-2X annual salary.”
Can you afford to throw away 1.5 to 2 times the annual salary of thirty to forty percent of your employees? Why would you choose to throw away such a significant sum when a few tweaks to your employee strategy could move those dollars to your bottom line instead?
1. Hiring criteria. What qualities are you seeking in new hires? Are you seeking both current skills and individuals who plan to advance in their career? What degree of importance is placed on the loyalty and long range potential of a new candidate? If they have a history of job hopping, this trend is likely to continue. Are they looking at your company as a stepping stone, a temporary paycheck until something better appears or a career where they can grow?
Consider some more mature employees who have an established work ethic and company loyalty as part of your employee strategy. There are a plethora of highly qualified, experienced and dedicated candidates currently seeking employment.
As a test, I interviewed with a few headhunters. Good news: They were elated with my skills, prior experience and educational qualifications.
Good and Bad news: The recruiter said my age (60+) was not a deterrent since companies only expect even a high level employee to stay three to five years. Consider what that says about the cost factor and the concern for employee retention.
• Hiring costs: advertising, interviewing, screening, administrative processing
• Training (10-20% of salary), management time to come up to speed (could be 1-2 years to reach peak production
• Good portion would be the fresh ideas and insight
2. If your job descriptions are designed in such a way that the job is easy to learn in order to quickly assimilate new people, you are promoting the idea that you will constantly have a flood of new employees. You may unintentionally be saying that employee retention is not important as part of your employee strategy. What does this policy convey to your current employees? It may be saying “You are not that important to us. You are easily replaceable.” Such a message does not inspire security and employee retention; it does encourage employee turnover.
According to DISC profile, 26% of the population is task oriented and 74% of the population is people oriented. Why is this significant? Three fourths of your employees are people oriented; relationships are more important to them than tasks. Of this 74%, 29% are influencers (outgoing personalities – sales and connectors). 45% of the population is Conscientious (also known as Amiable). “People with high "C" styles adhere to rules, regulations, and structure. They like to do quality work and do it right the first time. High "C" people are careful, cautious, exacting, neat, systematic, diplomatic, accurate, and tactful. Those with low "C" scores challenge the rules and want independence and are described as self-willed, stubborn, opinionated, unsystematic, arbitrary, and unconcerned with details.”
Since 45% of the population values rules, structure, stability and security, what message are you sending them when you plan to have 30-40% turnover every year. You are undermining the confidence and basic security needs of almost half of your workforce. Employee retention occurs more easily with high “c” individuals. Employee turnover results when these individuals feel a lack of security and concern for their welfare.
3. In order to prevent money from pouring out of your bank bag on the way to the deposit teller, consider revamping your employee strategy. Consider retention as a higher priority than replacement.
Your bottom line, your employees and your customers will thank you. If you have stockholders, they will sing your praises. The benefit to you will be less stress, less cost and more productivity and profitability. Employee retention is far most cost feasible than high employee turnover.