The Skinny on Employee Retention
How employers can increase employee retention without necessarily increasing pay
According to the Society for Human Resource Management, it costs $3,500 to replace one $8 per hour employee. While this figure may seem high, it is actually the lowest one out of the estimates made by 17 nationally respected companies who calculate this cost.
STARBASE often consults with clients about the hidden costs of high employee turnover. We recently caught up with Senior Account Executive Theresa McKinney to learn more about this issue and what strategies can be deployed to increase employee retention without necessarily increasing spending.
Q: These are surprisingly high figures. What are all the costs involved?
A: There's a lot more than people usually realize. When an employee leaves and has to be replaced, costs incur from the exit process: temporary workers, recruiting, interviewing, hiring, orientation, training, compensation and benefits while training, lost productivity, customer dissatisfaction, reduced or lost business, administrative costs and lost expertise. To name just a few!
Q: What do you advise to companies suffering from high turnover rates?
A: There are several things you can do. Find out who is leaving and why they're leaving. Exit interviews will help you with this. The other thing you can do is to survey your top performers and find out what keeps them there. Also, find out what would make them consider leaving, what type of other offers would they find attractive, and what they need to be more satisfied, engaged and productive in their jobs.
Q: How are companies increasing employee retention without spending more?
A: Employee morale is critical to employee retention. While there are many factors that contribute to this, I think the one most often overlooked is job fit. Basically, you want to make sure that an employee is right for their position based on skills and talent, behavioral style, and what motivates them. There is a range of excellent tests and even programs that can help you determine each of these things. There are even job match testing systems you can use in your hiring process.
Q: We've heard a lot about the importance of recognition in the workplace. How much stock do you place in this as a retention tactic?
A: You can't underestimate recognition. This speaks to a basic human need we all have to feel appreciated and know that we matter. Consider developing a mentoring relationship or incorporating a culture of praise and reward that publicly recognizes employees. While it is especially important to recognize achievement, it is also key that employees feel appreciated on a daily basis. Taking a moment out every once in a while to let an employee know they are doing a great job carries a lot of weight.
Q: What do you feel are the building blocks of company loyalty regardless of the employee, industry or position?
A: Like I said before, good job fit and a sense of being recognized and appreciated are paramount. I would also add clear expectations, personal accountability and keeping workplace politics to a minimum. Employee engagement is a big one; you want your employees to be passionate about their jobs, which in some ways I think gets back to job fit. Interpersonal awareness also goes a long way in creating an environment that employees thrive in and deepen their company loyalty. And as simple as this may sound, that really boils down to clear and open communication.