Making Employee Turnover Obsolete
Turnover can be costly. Really costly. Take a look at just a few of these statistics:
- Employers spend 6-9 months of an employee’s salary in order to find and train their replacement (SHRM)
- Losing an employee can cost a company as much as 16% for an untrained employee to a whopping 213% for a highly-trained employee. For example, an executive making $120,000 a year could end up costing the company $255,600 if the employee leaves. (Center for American Progress)
- Per Josh Bersin, a new employee can take up to two years to reach the same level of productivity as existing staff.
- Bad hiring decisions account for as much as 80% of turnover according to Harvard Business Review.
Not too long ago, those numbers weren’t as startling, but these days, that’s simply not the case. The hard truth of it is HR professionals weren’t really seen then as the business partners they are now. In other words, HR professionals know more about the money-side of their work than ever before. In almost every imaginable situation, HR must account for every dollar spent. That is especially true when it comes to turnover.
Employee Turnover Can be a Problem of the Past
So, how does HR make employee turnover obsolete?
There’s always money. For example, Costco pays its employees just under $21 per hour compared to Walmart. That company pays employees in similar positions just under $12. Paying employees well translates to attracting workers that do a better job performing their duties. Furthermore, there is a direct correlation with the fact those workers are happier and create happier customers.
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Companies wanting to hold onto their employees must enact this strategy from the top down; from the C-level officers to the janitors.
According to research, however, money is only a piece of the overall strategy.
The Perfect Employee Model
Go back to the fourth statistic previously mentioned above: 80% of turnover can be connected to bad hiring decisions. Addressing the issue is much easier than one might think, at least in the long run. The hard work is up front. It starts with defining what perfect employee looks like from the company’s perspective and that starts with data. Two processes come to mind.
- Artificial intelligence, when fed the appropriate data and using the appropriate algorithm(s), can create an outline of the model employee complete with the necessary characteristics to pinpoint when looking at potential candidates.
- Another way to define the desired employee is through human analysis of employee data. In this process, focus solely on the data gathered from the company’s best performing employees. Look for characteristic themes that exist across the group.
Once this employee model is created, it must be incorporated into the hiring process. Judging potential candidates against this model well help solve the issue of bad hiring and will aid in making employee turnover obsolete.
It is important to note, however, one cannot simply eradicate bad hires. This model establishes a baseline for the interview. It does not prevent the candidate from misrepresenting him or herself. Nor does it prevent errors in judgement. Those are wholly different challenges addressed in our articles entitled 5 questions for getting the truth out of references and Courage: the Skill Hiring Managers Ignore to their Peril.
In most instances, finding a candidate that perfectly fits a job description is unrealistic. It’s not impossible, just improbable. That means it’s often the case the job must be tailored to the employee. Every job has its regular responsibilities, but, where possible, find ways to accentuate their talents; keeping an employee doing what he or she excels at.
Here’s a basic example. A candidate is hired to produce a television news program, but that candidate also enjoys editing video. Perhaps that employee can spend some time editing content in addition to writing the content.
This, as with the previous two “tips”, should be used at all employee levels.
The harsh reality is turnover will never be truly obsolete. Employees will continue to have the ability to change jobs as they see fit and that means there will always be the need to fill vacant spots. There is also the reality that not every employee will be happy with their respective job and that means a real desire to move on from their current employer.
In any case, turnover does not have to be a crisis for the company. If it has reached that level, it’s highly likely that a piece of the hiring or retention strategy is off and needs to be remedied. Consider the “tips” above as a first step to combating the overall problem.
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