In today’s society, it seems we are exposed to new terms every day. Those that are repeated a lot, we eventually get an inclination of what they describe or at least know to what they are related. Anything to do with technology probably jumps to the forefront, since it is evolving so rapidly, and new terms are required to talk about what is under discussion. Human resources, on the other hand, is just the old stayed practice of dealing with people who evolve slowly. That may be so in some respects, but due to frequently changing regulations and social norms, it requires the people, systems and practices to change to be effective in today’s business climate. They are likely to be modified even more as the next wave of employees comes on. Consequently, HR practitioners also use a lot of jargon to talk about what is going on, and perhaps without thinking, generally expect everyone to know what they are talking about or at least be somewhat familiar with the terms.
One practice, “employee retention,” is a pretty simple concept. It is the act of keeping your employees from leaving your organization. It is really the essential aspect of having the talent necessary to accomplish the goals of your organization. The why and how of making it happen, however, is not so simple. People in the business environment think about this a lot, but it really applies to any organization, whether it is a not-for-profit agency, church, school, hospital or government. If you make something or provide a service, you need people and the things they can do or know.
The end result
Employee retention is the end product of a series of processes. The results reflect how well or how poorly you manage the processes. Sometimes you may want to get rid of an employee, but even that action follows when something didn’t go well in an earlier process. So, for the most part, we must assume that it is always better to keep employees than have them leave. We sort of know this intuitively, but few of us stop and dig into the process and comes to terms with what it means to have employees leave the organization from a dollars-and-cents perspective.
This starts by looking at employee turnover statistics to determine what percent of your employees leave in a set period. For most organizations, that is a calendar or fiscal year. People have calculated and looked at those numbers for a long time and watched the trends. They knew that it was better to have a lower number than a higher number. A somewhat newer aspect of this practice is the financial calculation.
Recent studies have shown that turnover costs anywhere from 30-120 percent of the first year’s annual earnings to replace a full-time person. Higher-paid jobs are the most expensive. These numbers encompass search efforts, background checks, onboarding, training, start-up processes, lost company and client information, etc. When this is compounded by turnover of 25-50 percent of the workforce, the numbers are rather astounding. Even with a low-paid staff and only 15 employees per year, the number can amount to over $150,000 per year.
What do you do about it?
It starts with knowing what you need in the way of talent, both immediately and to some extent down the road. Making the right initial selection to fill a position should help you avoid issues down the road, assuming you don’t undermine matters after the hire, or the employee doesn’t encounter a personal issue you can’t control. If you do a good job of defining what will be included in the work and the job environment, you and the candidate can make a better match on job requirements.
Many people do overlook the job environment, organization cultural and management style of the immediate supervisor. Leaving the boss often is cited as why employees leave a job. We’ve also found that in a situation of high turnover, the selection process turns into just getting a warm body in place, which then just adds to the problem. Another key practice when you have found what you think is the right candidate should be to do a background and drug check. It may be the best investment of $50 or $75 you can make. It may tell you more than an hour or two of interview time.
Historically, when an employee is hired, they spend the first few hours filling out forms and a very basic orientation. Depending on who does this work, it may be somewhat slipshod. We’ve heard of a number of cases where the new hire was not aware of an income tax because of where they decided to live and got a bit of a rude awakening at tax time because the proper taxes were not withheld from their pay. Getting the proper forms completed and documented in an organized fashion is really just the first step in getting an employee started in a job.
Onboarding is one of those newer HR terms. It is intended to define all the steps the organization takes to prepare the new employee to be successful in their work. It starts with forms that HR manages. However, it then extends into discussions of policy, procedures, culture, organization history and strategic plans, and review of key documents of the working relationship — more than just handing out the employee handbook so they can sign a statement that says they read it in the 15 minutes since it was placed in their hand.
The onboarding process should extend into a departmental orientation conducted by the supervisor and any other key departmental staff. The depth of this process should take on the role of training, not just orientation. It should extend over a period of weeks, with follow up on essential processes or special relationships to clients or customers so established patterns are not disrupted. Again, this should be well thought out and organized. This process should include extensive listening to the new employee, not just one-way fact-giving. You also need to pay attention to employee objectives to work desires and career objectives.
Once the employee is settled into the job and the organization, the issue of retention is not completed. It needs to be an ongoing process called engagement. Employees want to feel they are making a difference and will do so when given a chance. The critical strategy is to establish good two-way communication. This consists of listening to the employee and getting real-time feedback and giving regular organization updates and insights. With regards to the latter, you can’t rely on the grapevine or even the management line of command. It needs to be conscious, regular and controlled messages for all employees. They need to know what to expect.
In reverse, there has to be a mechanism that allows employees to give thoughts and insights to management without fear of retribution. It needs to be ongoing, not an all-out attitude survey. That just creates other issues. The use of an independent service that offers regular requests to employees to share their thoughts, or to ask for a special commentary when things are of concern, will provide management with valuable feedback and the ability to make adjustments as issues surface.
These are just a few of the steps connected with employee retention. In general, it requires a mentality of management that employees are an asset that is worth protecting and wooing, not a commodity to be utilized when it is convenient.
Ardon Schambers is president and principal at P3HR Consulting & Services.