Managing Employee Turnover

From experience I feel that this is one of the most neglected aspects of HRM. We currently have a flooding market of very viable candidates that we forget the real effect that high turnover rate has to our organizations. Below are a few points to consider in managing turnover because if left uncontrolled it is extremely detrimental to the organization

Organizations typically
underestimate the impact of turnover

In most cases HRM practitioners do not think that they have a turnover problem in their organization up until they sit down and do an analysis of implications of turnover to the organization can be.

It is shocking to see how much it can cost a firm and that is why even the slightest reduction on turnover can significantly improve the firm’s productivity and profitability. If as a HRM practitioner you bench mark the issues below you too could discover that your firm needs to put a little more effort in employee retention:

• Cost of the employees low productivity during the  notice period and generally the period prior to departure;
• Implication of the disruption of the work groups after an employee departs;
• Time and cost of attracting, acquiring and training a replacement employee;
• Cost of the mistakes new employees make ;
• The down time experienced when the new employees ask questions;
• and the loss of competitive edge as the company's work methods and technology were now shared with their competitors who hired their fomer employees;

Below are some points that can help curb turnover

Realize that all turnover is not equal

Distinguish voluntary turnover (separation) from involuntary turnover (termination or being fired). Termination may be profitable as poor performing employees are culled from the company. What hurts is when good employees quit.

You should also differentiate short-term from long-term employees.

Turnover of short-term employees is often due to an unrealistic job interview during the hiring process. Prospective employees are given promises that are not kept; they can be given a "rosy picture" of job conditions that are simply not true. Giving prospective employees a realistic preview - even to the point of exaggerating the negative aspects of the job - does not significantly reduce the number of people who accept the job, but can reduce turnover by more than half during the first year.

When long-term employees quit, their loss is the most expensive and the most painful to the organization. They take with them training, skills, experience, productivity and the social bonds that contribute to other employees wanting to come to work.

So, focusing on managing the turnover of longer-term employees is critical.

Avoid excuses: "If only we could hire better people" or "They all leave for better money". These make someone outside the organization responsible for your problems and prevent you from making effective changes. The first step in reducing turnover is to analyze your organization to identify the underlying causes of it.

What causes employees to quit or stay?

Commitment

Commitment had the strongest influence on desire to stay. When employees were proud of the company and shared its ideals and values, they wanted to stay.

Action: Have a clear vision and values statement. "Walk the talk." Remind your employees how their work makes your customers' lives better. Appreciate employees efforts and have defined policies that are applicable to all employees for the benefit of the organization and the employees wellness  

Long-term Prospects

How do employees see their future with your company?

Action: Is your recognition program meaningful to employees? Establish clear career paths. Identify development projects that would be interesting to experienced employees and beneficial to the company. Identify other benefits and "perks" that don't have to cost much but can be used to reward good performance.

Job Satisfaction

Are employees enthusiastic to come to work each day? Is their work satisfying?

Action: Identify the factors that satisfy employees. (What do you like best about your job and the company?) Identify factors that are a source of dissatisfaction. A climate survey, interview, or focus group is a great way to measure job satisfaction among workers.

Stress

A high stress work environment clearly contributes to employee turnover. Even seemingly low levels of stress can cause people to quit their jobs.

Action: Look for sources of stress: Red tape; Clumsy procedures; Hard-to-get information; Unrealistic deadlines; Work Interruptions; Heavy workload.

Fairness

When managers are unfair or play favorites, employees quit.

Action: Find out from your employees what is fair and unfair about the workplace. Fairness needs to be defined from their perspective - not yours. Are people promoted for the right reasons? Are jobs posted and made available to internal employees first? Is the criteria for raises and promotions clear? How do you assign offices? Equipment?  Projects? Are employees recognized for clear and fair reasons?

Focus your energy on
specific issues

One thing that makes humans unique is our ability to focus energy. Whether to heat a home or to cut steel with a laser, focusing energy where it's needed produces significant results. Focusing time and resources on a specific problem is likely to produce measurable benefits to the organization.

What about money?

The most common reason given for quitting is the prospect of more money. If your company pays below industry average, people may be leaving for more lucrative jobs. But why won't some employees reveal that pay is their motivation for quitting?

Perhaps money is a politically delicate issue - workers who raise the issue feel they could be in for retaliation. Ultimately, careful and frequent analysis of your compensation package - and taking action to improve it when needed - is key in keeping employees happy.

Improving turnover significantly increases productivity and profits, because addressing turnover issues uncovers root problems that impact other parts of your organization.