What a delightful experience I had Thursday as guest speaker for the Northeast CT Human Resource Association! My presentation topic was “Turnover – It’s Not About the Numbers! – and Retention”. My main theme regarding Turnover is that we, as HR professionals, can provide management with numbers and percentages, but are we tracking WHAT has value to the organization? And what is the cost of turnover to an organization? How can we increase retention?
Most companies are interested in knowing what their turnover rate is, especially if the company is large enough that gathering data is more accurate than simply observation. Quantifying the cost of turnover can be done, as one of the members shared, by tracking lost hours of billable revenue due to a shortage of professional staff to fill the appointments. However, cost of turnover runs less visibly yet more deeply when considering statistics state an average range of 1.5 to 2.0 times the cost of an employee’s salary is the financial burden of turnover to the company. The less visible cost is beyond the recruitment expense and includes the learning curve for the replacement hire, loss of engagement from coworkers who are picking up additional work, higher error rates, and lower morale.
It is up to us, as HR pros, to determine what turnover information is most useful to our organizations. WHO is leaving? Are high potential employees, newly hired managers leaving, or entry-level staff who are depended upon to keep the lines of production moving, the ones who are leaving? Are the employees leaving who we allowed as turnover in that the fit is not good so a parting of the ways is actually healthy for both employer and employee? Is there an exodus from a single department?
WHY are the employees leaving? We are employees as well so we can relate to this ourselves, when we get up in the morning and think about who we are going TO at work each day, does the thought motivate us or demotivate us? So, looking at the management in place and ensuring the right people are in manager roles and have been provided the training and tools for success is keenly important to retention and lowering turnover. According to SHRM, 36% of new hires fail within 18 months and 40% of senior managers hired externally fail within 18 months. Who at your organization is overseeing the success of the new hires?
Granted, there are industries such as retail, hospitality, sales and customer service where turnover is expected as high as 30-40%. This tolerable turnover is typically found in positions that are designed for new hires to get up to speed quickly and smoothly.
We all recognize the challenges of five generations in the workplace. Each has its own trademark qualities and challenges. Does the organization’s benefit package address such a broad group of generations? Why not conduct a focus group and take a pulse check on the benefit package? Is your pay policy transparent? When people perceive they are paid fairly, retention is higher.
As we discussed in my presentation, there is no quick or one-brush fix for every company regarding turnover and retention. However, we can each look more deeply at our organizations for where to put the focus on measuring turnover and where we can take steps to improve retention.