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Employee retention is a problem that plagues many managers. Have you noticed how it's always the most productive and talented employees who seek employment elsewhere? Then, human resources professionals, such as me, have to spend countless hours searching for their replacement. And, here's the dilemma: If we're not selective enough, we end up hiring someone who's under-qualified, which only leads to more headaches.
The Financial Factor
Consider how expensive it is to replace someone. To calculate the cost of turnover, a quick rule of thumb is to take 40 percent of a fully loaded salary (i.e., salary paid, Social Security payments, taxes, matching funds, full cost of benefits and bonuses). But, you can't overlook the less-tangible expenses, or "soft dollars." These include lost hours of productivity related to setting up and conducting interviews, reviewing candidates, and training new employees.
Reasons Why Employees Leave
A few years ago, the Midwestern CPA and consulting firm, RSM McGladrey, conducted a study on employee retention. They discovered that the main reasons employees leave their jobs are:
- 1. Their managers' poor supervision skills
- 2. Lack of growth potential
- 3. The inability to freely express concerns
- 4. Lack of recognition
- 5. General job dissatisfaction
- 6. Inadequate pay
- 7. Lack of work-life balance
In addition, RSM McGladrey found that the following five issues were the main retention concerns:
- 1. Fairness at work
- 2. Concern for the individual as an employee
- 3. General job satisfaction
- 4. Reputation of the individual's employer
- 5. Trust in the individual employee
Notice how these two lists are completely contradictory. The take-home message is that employees are an organization's most important assets. Therefore, as managers, it's our responsibility to groom employees and make them feel like valued members of the department and company. After all, it's better to lose an employee to a promotion than to another organization. Obviously, not all job turnovers are preventable. But, there is a big difference between losing 9 to 12 percent of your workforce versus more than 25 percent. Remember: The higher the employee turnover, the greater the loss of productivity and money.
How to Retain New Employees
When considering ways to boost retention, a good place to start is with new hires. (However, don't forget your other employees, as well!). For both you and your new employees, first impressions are everything. Studies show that people who develop negative perceptions of their company within their first 60 to 90 days of employment often look for new jobs within a year.
Here's how to put - and keep - your best foot forward:
- Prepare for the new employee's arrival. Set up their work area; get rid of excess clutter; and alert your existing employees of the new arrival.
- Give new employees a tour of the facility and properly introduce them to their coworkers.
- Designate mentors to show around and train the new employees.
- Begin with the basics. Don't assume that the new employees already know your methods and procedures. Also, listen to them - you never know, they may actually tip you off to better ways of conducting business.
- Meet with new employees on a weekly basis to see how they're acclimating to the office. Do they have adequate space, tools and training? Have they encountered any obstacles yet? To ensure that new employees feel like valued team members, keep the conversation casual and friendly.
In closing, RSM McGladrey determined the key traits managers should exhibit:
- Participative leadership style
- Concern for employees
- Honest, direct communication
- The willingness to confront poor performers
- The prudence to praise in public and chastise in private
- The capacity to deal with problems quickly and judiciously
Let's Talk About It
Has your company encountered problems with employee retention? If so, what are you doing to remedy the situation? Please share your stories!
Diane Miller, Chuck Muzzy and Rick Sullivan are with Human Capital Strategies. Together, they have more than 80 years of industry experience. For more information, please check out www.human-capital-strategies.net. Their procedure on any assignment is to first get to know the business, then the issue, and finally apply practical solutions. You can reach Chuck at 678-910-8714 or e-mail him at: mailto:email@example.com.
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