Employee Turnover and Maximizing Staff Retention

Presentation Outline

Reasons for staff turnover

Costs to the business of this turnover

Maximizing staff retention in order to enhance business profitability.

Analysing the Reasons for Staff Turnover

Staff turnover – disruptive, expensive and affects team morale. A study of 12,0001 employees found that people will leave one company and

go to another for the following reasons:

1. exciting work and challenges2. career growth, learning and development3. working with great people4. fair pay5. supportive management/good boss6. being recognized, valued and respected7. benefits8. meaningful work and making a difference9. pride in the organization, its mission and its products10. great work environment and culture

1. Love ‘Em or Lose ‘Em, Getting Good People to Stay, Kaye B, and Jordan-Evans S, Berrett-Koehler Publishers 2002, p.10

Analysing the Reasons for Staff Turnover

11. autonomy, creativity and sense of control12. flexibility: work hours13. location14. job security and stability15. diverse, changing work assignments16. fun on the job17. being part of a team18. responsibility19. loyalty, commitment to the organization or coworkers20. inspiring leadership

Even if employees are paid well above the market rate they will still leave if they are not enhancing their skill set or if they don’t have the social bonds to keep them in the workplace.

Analysing the Reasons for Staff Turnover – The Exit Interview

The Exit interview is the best way of ascertaining the reasons why employees are leaving the company

A structured series of probing questions that are specific to both the job and the individual.

Rather than a quick ‘thanks for working with us and all the best in the new job’ chat.

A properly managed exit interview will elicit useful information that can then be used to assess the workplace and make improvements to prevent additional resignations.

Analysing the Reasons for Staff Turnover – The Exit Interview

Exit interview questions include the following: • Is the job that you were doing what you expected following the information we

gave you during the interview?• What additional information should we be giving new employees regarding the

scope of the job that they are being interviewed for?• What were the best aspects of the job?• What aspects would you like to see improved?• Were you supported with a good induction and initial training?• What advice would you be giving to the next person in your role?• What types of candidates do you think are best suited to our culture?• If we were to rethink this role what other suggestions could you make?

Costs of Employee TurnoverA study found that the turnover cost for every employee who leaves ranges from 90% to 200%2 of their annual salary. Highly skilled professionals can cost up to 5 times their salary.

In assessing the cost of replacing an employee consideration needs to be given to:

The business lost when the role is vacant

The disruption to an existing smooth-functioning team when existing employees are required to take up the departed employees workload

Work put on hold until a replacement is found

Lost customers and business opportunities because relationships have been severed

Loss of shared knowledge

2. Abbot, De Cieri and Iverson, Costing Turnover: Implications for Work/Family Conflict at Management Level, University of Melbourne 1998 (cited in The Profitable Practice, CCH Australia, 2002, p.258)

Costs of Employee Turnover

Lost supplier relationships

The gains made by competitors by employing your employees

Lowered morale and productivity of existing employees

The costs involved in hiring – advertising, agency fees, management time involved in interviewing and selection testing

The direct employment costs of the new hire – salaries, sign-on bonuses, moving allowances, superannuation, workers compensation, payroll tax, office furniture, IT equipment.

The time it takes to train a new person

The socialization of the new person into the group

Costs of Employee Turnover

It is a useful exercise to calculate these costs for your particular business. You will be aware of the significance of the role that is vacant, the business that you are losing and the disruption that the vacancy is causing. These costs can be considerable and can be many millions of dollars when significant accounts go to competitors.

Consider how much money your organization would save by reducing turnover and how more effectively your organization could use the dollars associated with recruiting and training new employees eg employee development and enrichment programmes.

Costs of Employee Turnover

There are many implications when someone leaves an organization, but consider the following scenarios:

When a Sales Representative leaves territories are vacant and the doctors are receiving the competitor’s messages, therefore losing marketshare.

When a Product Manager leaves supplier relationships are lost, the new Product Manager doesn’t have the personal chemistry to work effectively with the advertising people; is unfamiliar with the marketing mix and overall brand strategy so therefore competitive opportunities are lost.

When a Senior Manager leaves there is a loss of high level networks with key decision makers therefore business takes longer and can be more costly (the best deals cannot be negotiated because the personal relationships are not there)

Costs of Employee Turnover

When a Clinical Research Associate leaves, clinical trial project management milestones are not met, local investigators lose confidence, regulatory timelines are lengthened, local health economics data is not being collected and the entire pre-marketing strategy is affected.

When Regulatory or Health Economics staff leave relationships with both the government and head office are lost, resulting in delayed submissions.

When the Receptionist leaves the phone doesn’t get answered resulting in lost business; or an inexperienced receptionist cannot identify key callers or visitors resulting in a decrease in customer service and lost business.

Maximizing Staff Retention

Maximizing staff retention saves the company money.

There are a range of initiatives to minimize turnover and it starts with the interview process.

Candidates become attracted to the vacancy because they have seen the advertising and have heard positive reports about the company in the marketplace.

 

Creating and nurturing these positive thoughts within the candidate marketplace, and thus increasing the pool of candidates available for interview, are central to a company’s Recruitment Brand Management strategy.

Maximizing Staff Retention – the Recruitment Brand Campaign

When devising a Recruitment Brand campaign the following questions should be asked:

What impressions do the candidates have of our company?

What types of people suit our organizational culture?

What is the personality of our department?

What are the key benefits of working for the company?

How will these benefits be communicated?

 

Answers to these questions then drive the advertising strategy from the text of the ad through to the entire feel of the campaign in order to communicate the right messages to the right audiences.

 

Very few companies invest in recruitment brand campaigns to differentiate their offerings to

the candidate marketplace. Those that do have a larger candidate pool from which to

choose.

Maximizing Staff Retention – the Interview Process

The initial interview is an important aspect of the candidate’s introduction to the company, however many managers treat this interview too casually.

 

Behaviourally based interviewing is the strongest technique to assess a candidate’s suitability for a particular role.

 

The premise here is that past behaviour and performance is the best predictor of future performance.

 

This can be achieved by asking candidates:

Prepared questions

Probing for fuller answers

Understanding what the candidate is capable of doing

Understanding what the candidate wants to do.

Maximizing Staff Retention – the Interview Process

During the structured interview interviewers want to find out:

 

How the candidates have handled various situations

  What they did

  The results of those actions

 

in order to uncover the true nature of the candidate’s knowledge, motivation and values

 

  With this insight an assessment can be made in terms of the candidate’s organizational fit. If the candidate is the wrong person to add to your existing group they won’t form the necessary informal networks to share knowledge and enhance group productivity and turnover will be an issue.

Maximizing Staff Retention – the Interview Process

To augment the interview process a number of employment tests can be used including:• IT and Office skills• Role plays• Writing tests• Presentations• Analysis of clinical papers• Psychological tests• Sales aptitude tests• Management and leadership assessments.

 

These tests can be invaluable in reducing turnover because the employer can gain an accurate understanding of the candidate’s skill set so there is no misunderstanding once they have joined the company.

 

Maximizing Staff Retention – the Interview Process

To decrease turnover it is necessary to ensure that the candidates have a good experience throughout the entire interview process. How they see the company in the future will depend on how they remember their first experiences.

With successful candidates it is advised to:

Move them quickly through the interview process (good candidates have high expectations of quality and service and don’t favourably view delays)

 

To take time to clarify expectations so there is no misunderstanding of what the role involves

 

To excite the candidates but not to oversell the job

To stay close to the candidates throughout the process continuing to probe for attitude, motivation and organizational fit.

Maximizing Staff Retention – Induction and Socialisation

Once employed, new recruits should have a good induction and socialization experience.

This involves:

  Meeting with other employees

Understanding the structure of the company, what the different employees are responsible for, and how they are expected to interact with employees in other departments

Who to go to for help

 

How to use the office IT and telephone systems

 

Training in procedures and processes.

Maximizing Staff Retention – Induction and Socialisation

During this period employees will also learn how to socially adapt to their new workplace. They will need to understand the social norms of acceptable behaviour and the unwritten rules for interaction.

 

Without this knowledge they may make social mistakes that will affect their smooth introduction.

 

Following an effective induction employees then form a psychological contract with the company to deliver what is required.

 

The new employees then identify with the new company and build productive relationships with their management, peer group and subordinates.

Maximizing Staff Retention – throughout the employment relationship

After the new employee has joined there are a range of initiatives that a manager can do to retain their staff including:

 

Ensuring that their jobs are interesting

 

Their career goals are supported

 

Information is shared with them

 

They are connected with others in the organization

 

That they are respected and valued

Make their jobs interesting

 Employees need opportunities for personal challenge and growth. If good workers find out that they are no longer receiving these necessities then they may decide that they have outgrown the company and consider leaving. The simplest way to enrich jobs for individuals is to ask them questions such as:

 

What skills do you have that you are currently not using?

     In what areas would you like increased responsibility?

In what ways would you like your job changed?

Managers therefore need to focus on job enrichment for their employees if they wish to retain their services.

A major cause of turnover is workplace boredom. Job enrichment is not difficult, but it does require staying alert to opportunities for all your employees and working with them to enrich their jobs.

Maximizing Staff Retention – throughout the employment relationship

Support their career goals

Discuss your employee’s futures, openly and frequently. Involve them as you discuss their abilities, choices and ideas.

 

Employee’s don’t expect all the answers, but they do want you to listen to them and to offer your perspective.

 

They will also benefit from specific feedback with examples of their performance and how it relates to their future goals.

 

Take time out to have in-depth discussions with them about how the industry is changing over the next 2-5 years and what skills they will need to compete for roles in the new environment.

 

For instance, should they be completing further business studies, a qualification in health economics, gaining exposure to new therapeutic areas or undertaking overseas assignments.

Maximizing Staff Retention – throughout the employment relationship

Share information with them

 

Make your employees feel part of the organization by telling them what is happening.

 

Information sharing is important at all times but critical during periods of change (downsizing, mergers and acquisitions).

 

If employees are worried about events and don’t have sufficient information they are likely to worry about their job security and update their resumes.

Maximizing Staff Retention – throughout the employment relationship

Share information with them

 Managers must give information as early and as honestly as possible and this will make employees feel important and valued. These employees are likely to have insight into the specific problems and may be able to offer solutions.

 

The role of the manager is also to help employees look into the future, by providing information that helps the employee’s development and career advancement.

 

Employees want to know about the company’s direction and goals, the industry’s future and the emerging trends that may affect career possibilities. Employees with this information will feel more confident in their future within the company.

Maximizing Staff Retention – throughout the employment relationship

Get them connected

 

Employees need groups of colleagues who can support them, offer information or help, or just listen to them.

 

Connections are a major reason why people stay with a company. Managers need to give attention to strengthening the bonds between people in their team and others within the organization.

 

Employees need to link with others to get their jobs done effectively. Managers need to be asking their staff “who else in the company do you need to be liaising with to optimize your role?”

 

Relationships with others will help employees get their work done and will give them insights to enhance their productivity. As employees are linked to other functions within the company their knowledge and skills will grow and they are more likely to stay.

Maximizing Staff Retention – throughout the employment relationship

Respect them

Even if employees are well paid and have opportunities to learn and grow, if they don’t like their bosses or co-workers they will leave. It is unacceptable for anyone to exhibit the following behaviours:

acting in an arrogant or condescending manner

intimidating staff

slamming doors and pounding tables

swearing and behaving rudely

showing disrespect

being sexist, bigoted and using inappropriate humour

humiliating and embarrassing others

deliberately ignoring or isolating some people……. and the list goes on.

 

These behaviours do occur and they do cause staff to leave.

Maximizing Staff Retention – throughout the employment relationship

Summary

Examined the reasons for staff turnover

 

Identified the costs to the business of this turnover

 

Suggestions regarding maximizing staff retention in order to enhance business profitability.

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