Turnover or attrition is not just about an employee leaving the office with his box and replaced by a new person in a revolving door. Its impact goes beyond that. The direct costs of finding a new hire, recruitment process (8-12 weeks), visa costs, relocation, transition, retraining and loss of knowledge. Its no guarantee the new hire would be a better or worse.
According to LinkedIn, the worldwide turnover rate of 10.9% i.e. defined as the per cent of its members who indicated they left a company in the year. Another study by Mercer showed that 45% of employers reported turnover costs of $10,000 per lost employee.
Many employers and HR professionals underestimate the high impact of hidden costs.
In fact, hiring and training within the finance industry is one of the most expensive.
The top reason people leave: a lack of opportunities or hitting a glass ceiling (45%); unhappy with leadership (41%), unhealthy work environment (36%) and lack of challenging work (36%). Other reasons include lack of personal growth, inability to have added responsibilities (upward growth).
While these sweeping trends can guide your approach to turnover, every organization is different. It’s essential to look at your own data – whether that’s attrition metrics such as (average tenure, promotion time) or employee surveys to address the causes.
To compound to this, with millennials and soon Gen Z getting more active in the workforce, in larger numbers than ever, their reason to join, stay or leave is different from that of an experienced 40-year-old employee with a mortgage, wife and kids.
To retain this talent diversity, you need to be proactive, think ahead. As an HR Manager, here are 7 pointers to maintain retention.
1. Stitch in time
Don’t wait until the awkward exit interview or firing notice. Recognise and act on tell-tale signs when someone is about to jump ship. Clues such as increase in sick days, more phone calls taken outside of the office, consistently coming late, missed deadlines, complaints from colleagues or customers. When key players leave, they take lot of know-how with them, which could take months or even years to replenish. A chat over a coffee, walk around the block to speak candidly or anonymous survey could reduce retention rates.
Sometimes talking may be insufficient, if they are deep rooted issues. Schedule psychometric assessments; invite a life coach, or motivational speaker. Creating a day retreat; counselling for batches of employees to understand dissatisfied employee(s) should be done much before the decision is made according to Mettl – an assessment and skill measurement company.
2. Don’t pass the buck:
Most companies see attrition as failure of the employee attributing it to bad performance or craving for higher salary. It’s more than that. Attrition can happen because HR didn’t have proper onboarding, or poor training. Senior management didn’t nurture new talent. Incentives were not right. The company over-promised and under-delivered, targets were impractical. The employee didn’t get the support from peers or seniors. It could be a misfit of company culture or office politics. Nepotism, discrimination or bias possibly. Inadequate pay, poor work-life balance are other reasons. All this is squarely the role of HR/management. It’s best to look inwards first and take corrective measures.
Gauge an employee by their potential, broader skills than only by their job title or last quarter’s performance. Maybe its the right person in a wrong role. In fact, when Nielsen analyzed their retention data, they saw that employees who made lateral career moves (a job within the company) tended to stay much longer and nearly as effective as giving them a promotion. If you have to get senior talent, first nurture the rising in-house stars, hone them to leadership roles them with the right skills.
4.Let let them learn while they earn:
94% of employees say they would stay longer if a company invested in their career. Professional development resources, sponsoring training courses, counselling, certification programs, offering paid leave for exams, can encourage employees to gain new skills, upgrade, reskill and advance their careers without leaving. It’s more cost effective than hiring someone trained outside.
Millennials believe professional development opportunities are important in a job – and 87% do – it’s up to the company to provide that. Making room to let them learn and earn, creates a motivated team eager millennials willing to engage and drive growth. Conduct off-site workshops, encourage online courses, invite experts, create training days. It’s not just the new comer, but even senior managers, experienced staff can do with regular skills upgrade, retraining before they turn ‘rusty’. This helps both, the young and old, in growing professionally within their role.
5.Keep it smart casual
No one wants to work in a stiff upper lip, clinical environment. At the same time, they don’t want ‘too casual’ where everyone slacks and there’s no drive. Make it relaxed, but with clear targets, KPIs that are results-based. Evaluate based on performance, not hours clocked in. Give employees the flexibility to work remotely few times a month. This increases loyalty and balance work-life better.
6.Defend Against Burnout
Employees are getting burnt out faster than ever. Pressure, competition, health factors, higher expectations are to blame. 40 hour weeks are no longer the norm. We are taking work to our homes, vacations thanks to technology – this causes overload and fatigue. When the stress becomes overwhelming – turnover increases. Implement an open-door policy, health programs, free medical check-ups to keep the burnout at bay.
7. It’s not all bad
If all employees stay in the same organization for a long time, most of them will be complacent, saturated at the top of their pay scale which will result in excessive manpower costs. New employees bring new ideas, approaches, abilities & attitudes which can keep the organization from becoming stagnant.
There are also some people in the organization who have a negative influence on the work culture. Some bad apples need to go.
‘Desirable attrition’ makes way for new talent, that’s possibly more cost effective, better skilled with the new market demands and creates high performance teams. When undesirable employees leave the company, the good employees can be given the share that they deserve.