What is employee turnover? Conventional thought would tell you that the employee turnover ratio is hires compared to terminations over a period of time. Certainly there are complex methods that tell you how to calculate turnover. Companies spend a lot of money to find and understand staff retention rates. A high attrition rate is expensive. Staff retention has to be a priority for every organization.
I would suggest that the traditional methods that teach you how to calculate turnover are wrong! Yes, they can tell you a mathematical ratio and, yes, that number is true. But corporate leaders could be asking the wrong questions about their true retention rate. Instead of asking “what are our employee turnover rates?” a better question is “What is employee retention?” An employee doesn’t have to leave your company to stop working. Recent surveys state that more than 50% of employees today have mentally or emotionally left their jobs. To really understand your attrition rate you must factor this into how you calculate turnover. A disengaged employee could cost a company more than a vacant seat. To truly understand staff retention, employee engagement must be part of the equation. Otherwise companies are fooling themselves into believing their employee turnover rates are simply a mathematical ratio.
The most overlooked fact about employee turnover is this; employee disengagement has to be part of employee turnover rates. Find out who is in the wrong job (see my other posts about job analysis). Add that number to your actual terminations. Then you’ll truly understand your employee turnover ratio.
P.S. Don’t forget to subscribe! Use the box in the upper right-had corner of this page.
A funny thing happened on the way to school last week. My son, a high school senior, was getting ready for an awards event. Before leaving he asked me to tie his tie for him. Putting a tie on is something I’ve done almost every morning for more than twenty years. You think I could do it in my sleep by now. But I couldn’t! First I tried to do tie it standing in front of him while it was around his neck. That was strange; I’d never done it before from that perspective. Then I tried to tie one around my neck, over my own tie, while standing in front of his mirror. For some reason that was even stranger. It took me almost fifteen minutes before I could get it tied. For years I put on my tie in the same room, at the same time, in the same mirror, the same way for so long. Now I was out of my element, in a new environment, and I couldn’t do it. The entire process was on auto-pilot and when something new came along the process broke down.
The same thing can happen if your job analysis process is on auto-pilot. When a job evaluation has been done the same way for so long it becomes ineffective. Companies that want to attract top talent must transcend the tradition of writing job descriptions. Today’s talent will not come to your company when the human resources process for job evaluation is a cut and paste operation. The HR job description from four years ago is not the same as a true performance based job analysis.
The process of job analysis consists of several steps (see my related post The Pros & Cons of Job Analysis). If you think your job analysis process is on auto-pilot, take a fresh approach. Start with your HR job description. This will have all of elements of what a person needs to have to do the job. But the job analysis process goes well beyond writing job descriptions. The next step is to understand what a person must do to be successful. This can be different from the HR job description. Would you rather have a person who has done the job successfully in the past or someone who has all the job description requirements? Most Strategic Employers would take the former, even if person didn’t have all the requirements in the HR job description.
Take your job analysis process off of auto-pilot. Begin the process of job analysis with what someone does to be successful, not what they need to have.
Be sure to subscribe to the Strategic Employer. Just enter your email address in the box in the upper right-hand corner.
Be extremely selective with who you hire.
Have you ever interviewed someone for a job who said they weren’t a hard worker, had tremendous integrity, or wasn’t honest? Of course not. Did you validate their resume during the interview? Did you ask your favorite interview questions? You know, the questions you like to ask because your gut instincts can pick a winner every time? Amazingly this is the kind of “selection process” many organizations use to make $100,000+ decisions!
To become a high performance company or to build a high performance team, ‘selection’ is where you invest your time and money. Hiring the wrong person today is too costly in dollars, time, profitability, and competitive edge. Identifying the right person is the key — and that might not be evident from their resume or their interviewing skills. High performance organizations, Strategic Employers, know that selecting the right personis a structured and rigorous process. Using a structured selection process takes a bit longer, but it pays for itself in the long-term.
A simple, structured selection process might look like this:
- Create a Performance Profile of the job
- Develop a interview guide for everyone on the interview team
- Determine if outside selection tools are appropriate
- Structure an interview process
- Partner with a niche search firm
- Interview candidates using the interview guides
- Interview team meets to discuss candidates
- Top 3 candidates are ranked in order of priority
- Offer is made to highest ranked candidate
There is more detail involved with each step, but you get the picture. The key is to know what you are selecting for in advance — and it is not the job description “requirements”!
Implement a simple, but disciplined, selection process today and you’ll see a ROI through retention and increase productivity.
In this short (2 min) video I talk about a recent search project we became involved with. There is an easy way you can avoid circumstances like this.
[ustream vid=16259041 hid=0 w=480 h=296]