Turnover is an enormous cash flow drain. Unfortunately, too many companies think of turnover as a necessary evil you must live with. Nothing could be further from the truth. You can reduce turnover with an immediate positive impact to cash flow and your bottom line. Here’s how:
- Start hiring people who will want to stay with you.
- Continually treat them right so they will stay, day after day, month after month, year after year.
Here’s what it takes to get this done:
Identify the profile of your best, most-senior employees at their time of hire. We’ll call these people star employees. What you’ll need is data from the original application of each star employee. Using a spreadsheet format, record all the data you can from each star employee’s application. Typical categories are education level, length of working career, number of prior jobs, marital status, type of prior job, average length of time on each prior job, how they learned about the opening, etc. The more data you can glean from your applications, the better.
Next, make a similar database, this time using application data from employees who quit, or were terminated. Start with the ones who exited most recently and work backwards until you reach the exact same number of people in your star database.
Next, compare the results of the two databases. Are there patterns? Are there clear differences between the two databases? Pinpoint the areas of clear-cut dichotomies. For instance, you may find your stars are predominantly retirees and your quitters were predominantly teens.
What this data is telling you is that in your existing corporate culture, you have a better chance of keeping a retiree and therefore, should be recruiting more retirees. With this new knowledge, you might try a special in-house employee referral program where eligibility requires a certain length of service. This service requirement would automatically result in referrals of friends from your stars! Or, you might advertise in your senior paper, and cancel your college campus want-ads. Your objective at this stage is to increase your applicant pool with more people that fit your star profile. If more of the right people apply, there is less pressure to hire the ones you now know statistically will have little chance of staying on the job.
Make the application process easy for your target group. Once we know exactly who we want applying, we need to make the process easy for them. For instance, if it’s retirees we are seeking, we don’t want a fine-print application — we need one with larger print that is easily read. This is just one example. With your star employee profile in hand, think through any and all ways to make it easier for star profile applicants to find your job and get hired.
Sharpen up your hiring procedures. This usually means applicant testing plus streamlining the interview and due diligence procedures. Pre-employment tests can help you weed out the turkeys and identify the potential stars much more easily.
For efficiency sake, only interview the candidates who meet your profile criteria and pass your pre-employment tests.
Offer meaningful orientation and training. No matter how great your hiring process, day one on the job is the true reality. Although there are the mandatory tax forms, safety issues, etc., try to think from the new hire’s perspective. Plan activities that make them feel good about their decision to work for your company.
Unfortunately, many companies end up sitting the new hire alone in a back room with tax forms to complete and safety videos to watch. This can be pretty depressing for the new hire and burst their excitement bubble about your company.
What works best is one-on-one, person-to-person orientation including background about your company and its employees. Then provide an overview of all the facets and working operations, reviewing the employee handbook and all required forms together. If you think you can’t afford the luxury of one-to-one orientation, consider your current turnover costs. At an industry average of $2,500 per employee, a mere 15 employees leaving per year costs your company $37,500 per year. You could hire a person whose sole job is orientation for $25,000 per year and still be dollars ahead through retention!
Once you’ve passed the first day hurdle, next comes training. Efficient organizations have standardized checklists for each position and a logical sequence for learning the tasks. Whenever possible, each new hire should have a mentor or trainer responsible for their success and available for questions.
Keep employees challenged. To keep employees happy and motivated year after year, they need mental challenges, the feeling of self-worth through valued input, and for some, a clear path of advancement where monetary rewards increase with job responsibility. In addition, to retain employees, a company’s culture must constantly show respect for the individual, including awareness and empathy of the employees non-working life — family and outside interests. This may mean accommodations for unexpected time off, or even flexible working hours or day care arrangements.
If turnover is a problem for your company and you want better results, you must change your hiring and retention system. Remember the definition of insanity is doing the same thing over and over again while expecting a different result. Use these steps now, before the year-end, to change your personnel system. It will be worth it!
Meridian Associates has been partnering with family-owned businesses for over 30 years to remove barriers, accelerate business growth, build their legacy, and reduce stress levels. With three, high-impact business events each year, The CEO Exchange, Women in Family Business, and The Family Business Intensive, we continually provide best practices & proven strategies that keep multigenerational businesses thriving. Discover how Meridian can help your business thrive through our combination of high impact business coaching, advisory, M&A, and precision company valuations by visiting www.askmeridian.com or calling us at 817-594-0546.
