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.
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Entrepreneurs and business leaders report employee retention is still on of their top 3 challenges.
A 2011 AFLAC Workforce Report found that 18 percent of business owners see the benefits package as a direct influence on an employee’s decision to leave. The report lists voluntary benefits as a way to reduce costs and still offer quality benefits.
What is important to note, however, is that even in a recession and high unemployment, good people are willing to leave their jobs. This makes solid employee retention strategies an essential part of every business opeation. As the report states “it takes time and money to recruit, interview, train and hire a new employee.” Buisnesses who don’t drive employee retention strategies from the top down are going to lose their competitive edge.
If your business doesn’t have a written and implemented plan to minimize employee turnover, today is the best day to start!
When I finished my active duty service with the Navy I took a job as a sales representative. The company sent me to a training session with a world renowned sales trainer. During one session he asked us to list the first word that came to mind when we heard the term “salesperson”. We all listed words like “pushy”, “obnoxious”, and “slick”. He told us that if those are the words 95% of the pubic used to describe salespeople we should become the exact opposite and we’d be successful. For me that strategy worked very well.
Employers can apply this lesson after they read the article linked below. Not only does the article list the most hated jobs, it also provides great insight as to what employees hate most about a job. It’s not what you might think!
Today it is the company with the best talent that beats the competition and increases profits. Employers don’t want their top talent hating their jobs. Read the article then be sure your company is doing the opposite!
10 Most Hated Jobs
Give employees a career instead of a job
“That’s just not fair!”
Whether it is true or not, this is not something you want employees to say. Often is beyond a company’s power to control how employees feel. However, company’s can avoid creating situations that might cause an employee to think or say this. Companies DO have a great deal of control in which they hire and promote.
In my executive search business we often hear from executives who feel this way. Either they have been passed over for a promotion or they have seen others passed over multiple times. Sometimes their company never considered an insider for an open position. Whatever the reason, these people feel like a commodity instead of a valued contributor. If this kind of perception starts to permeate the workforce the company is doomed – especially now that top talent is harder to find.
There are many reasons why a company would go outside to hire top talent; they don’t have a qualified person internally, they want fresh perspectives, they want competitor intelligence, etc… Hiring outside is expensive, time intensive, and dangerous (see steps 1 & 2)! Often it can be avoided if companies have a career development culture instead of an open seat culture.
Hiring from your current employees only works if you diligently practice Step 3. It also means a huge ROI on your labor expense. When employees believe they have the opportunity to grow and advance they don’t spend time looking elsewhere. When they enjoy a company development program they have greater confidence to take on more responsibility. Employees will take their performance more seriously and pursue self-development agendas. Giving an employee a career is a long-term investment strategy, one that every company must follow.
This is the final installment of the four steps to building a high performance team. Putting these steps into practice will have tremendous impact on company profitability and competitive edge. Don’t wait until your competition has all the top talent, beat them to the best people now!