employee turnover and maximizing staff retention

Employee Turnover and Maximizing Staff Retention Prepared By : Karim Ragab

I Quit !

o Definition and types of staff turnover.

o How to Calculate it.

o Reasons for staff turnover.

o Costs to the business of this turnover.

o Maximizing staff retention in order to enhance business profitability.

Contents

Definition and types of staff turnover

What is Staff turnover ?

Turnover is the act of replacing an employee

with a new employee.

Partings between organizations and

employees consist of retirements, deaths,

interagency transfers, and resignations.

An organization’s turnover is measured as a percentage rate which is called,

Turnover Rate.

Turnover rate is the percentage of employees in a workforce that leave during

a certain period of time (fiscal year or calendar year).


There are 2 types of turnovers:

I. Voluntary:

when an employee self- willingly makes the

decision to leave the organization.

Voluntary turnover could be a result of a

• Better job offering.

• Staff conflict.

• Lack of opportunities in career advancement.


I. Involuntary:

When the employer makes the decision to

discharge an employee and the employee

willingly leaves his or her position.

Involuntary turnover could be a result of

• Poor performance

• Staff conflict.

Where:

o NELDY = Number of Employees who Left During the Year.

o NEBY = Number of Employees at the Beginning of the Year.

o NEEY = Number of Employees at the End of the Year

How to Calculate it.

Analyzing the Reasons for Staff Turnover

Staff turnover – disruptive, expensive and affects team morale

A study of 12,000 employees found that people will leave one company and

go to another for the following reasons:

1. Exciting work and challenges.

2. Career growth, learning and development.

3. Working with great people

4. Fair pay

5. Supportive management / good boss

6. Being recognized, valued and respected

7. Benefits

8. Meaningful work and making a difference

9. Pride in the organization, its mission and its products

10. Great work environment and culture

1. Love ‘Em or Lose ‘Em, Getting Good People to Stay, Kaye B, and Jordan-Evans S, Berrett-Koehler Publishers 2002, p.10

11. Autonomy, creativity and sense of control.

12. Flexibility: work hours

13. Location

14. Job security and stability

15. Diverse, changing work assignments

16. Fun on the job

17. Being part of a team

18. Responsibility

19. Loyalty, commitment to the organization or coworkers

20. Inspiring leadership

Even if employees are paid well above the market rate they will still

leave if they are not enhancing their skill set or if they don’t have the

social bonds to keep them in the workplace.



- The Exit Interview

The Exit interview is the best way of

ascertaining the reasons why

employees are leaving the company

A structured series of probing questions

that are specific to both the job and the

individual.

Rather than a quick ‘thanks for working

with us and all the best in the new job’

chat.

A properly managed exit interview will elicit useful information that can then

be used to assess the workplace and make improvements to prevent

additional resignations.

Exit interview questions include the following:

1. Is the job that you were doing what you expected following the information we

gave you during the interview?

2. What additional information should we be giving new employees regarding the

scope of the job that they are being interviewed for?

3. What were the best aspects of the job?

4. What aspects would you like to see improved?

5. Were you supported with a good induction and initial training?

6. What advice would you be giving to the next person in your role?

7. What types of candidates do you think are best suited to our culture?

8. If we were to rethink this role what other suggestions could you make?


- The Exit Interview

Costs of Employee Turnover

A study found that the turnover cost for every employee who leaves

ranges from 90% to 200% of their annual salary. Highly skilled

professionals can cost up to 5 times their salary.

In assessing the cost of replacing an employee consideration needs to be given to:

The business lost when the role is vacant

o The disruption to an existing smooth-functioning team when existing employees are

required to take up the departed employees workload

o Work put on hold until a replacement is found

o Lost customers and business opportunities because relationships have been severed

o Loss of shared knowledge

2. Abbot, De Cieri and Iverson, Costing Turnover: Implications for Work/Family Conflict at Management Level, University of Melbourne 1998 (cited in The Profitable

Practice, CCH Australia, 2002, p.258)

Lost supplier relationships

The gains made by competitors by employing your employees

Lowered morale and productivity of existing employees

The costs involved in hiring – advertising, agency fees, management time

involved in interviewing and selection testing

The direct employment costs of the new hire – salaries, sign-on bonuses,

moving allowances, superannuation, workers compensation, payroll tax, office

furniture, IT equipment.

The time it takes to train a new person

The socialization of the new person into the group


• It is a useful exercise to calculate these costs for your particular business. You will

be aware of the significance of the role that is vacant, the business that you are

losing and the disruption that the vacancy is causing.

• These costs can be considerable and can be many millions of dollars when

significant accounts go to competitors.

• Consider how much money your organization would save by reducing turnover and

how more effectively your organization could use the dollars associated with

recruiting and training new employees e.g.. employee development and enrichment

programs.


Cost of Turnover Calculator

https://au.drakeintl.com/hr-news/cost-of-turnover-calculator.aspx

https://au.drakeintl.com/hr-news/cost-of-turnover-calculator.aspx

There are many implications when someone leaves an organization, but consider

the following scenarios:

• When a Product Manager leaves supplier relationships are lost, the new Product

Manager doesn’t have the personal chemistry to work effectively with the advertising

people; is unfamiliar with the marketing mix and overall brand strategy so therefore

competitive opportunities are lost.

• When a Senior Manager leaves there is a loss of high level networks with key

decision makers therefore business takes longer and can be more costly (the best

deals cannot be negotiated because the personal relationships are not there)

• When a Procurement Representative leaves territories are vacant and the

engineers are receiving the vendors messages, therefore losing time.

• When the Receptionist leaves the phone doesn’t get answered resulting in lost

business; or an inexperienced receptionist cannot identify key callers or visitors

resulting in a decrease in customer service and lost business.


Maximizing Staff Retention

Maximizing staff retention saves the

company money

o There are a range of initiatives to minimize

turnover and it starts with the interview

process.

o Candidates become attracted to the vacancy

because they have seen the advertising and

have heard positive reports about the company

in the marketplace.

o Creating and nurturing these positive thoughts

within the candidate marketplace, and thus

increasing the pool of candidates available for

interview, are central to a company’s

Recruitment Brand Management strategy.

Maximizing Staff Retention –

The Recruitment Brand Campaign

When devising a Recruitment Brand campaign the following

questions should be asked:

• What impressions do the candidates have of our company?

• What types of people suit our organizational culture?

• What is the personality of our department?

• What are the key benefits of working for the company?

• How will these benefits be communicated?

Answers to these questions then drive the advertising strategy from the text of the ad

through to the entire feel of the campaign in order to communicate the right messages to

the right audiences.

Very few companies invest in recruitment brand campaigns to differentiate their offerings to

the candidate marketplace. Those that do have a larger candidate pool from which to

choose.


The Interview Process

The initial interview is an important aspect of the candidate’s introduction to the

company, however many managers treat this interview too casually.

Behaviorally based interviewing is the strongest technique to assess a

candidate’s suitability for a particular role.

The premise here is that past behavior and performance is the best predictor of

future performance.

This can be achieved by asking candidates:

• Prepared questions.

• Understanding what the candidate is capable of doing.

• Understanding what the candidate wants to do.

o During the structured interview interviewers want to find out:

• How the candidates have handled various situations

• What they did

• The results of those actions

o In order to uncover the true nature of the candidate’s knowledge, motivation and

values.

o With this insight an assessment can be made in terms of the candidate’s

organizational fit.

o If the candidate is the wrong person to add to your existing group they won’t form the

necessary informal networks to share knowledge and enhance group productivity

and turnover will be an issue.



o To augment the interview process a number of employment tests can be used

including:

a. IT and Office skills.

b. Role plays.

c. Writing tests.

d. Presentations.

e. Analysis of clinical papers.

f. Psychological tests.

g. Sales aptitude tests.

h. Management and leadership assessments.

o These tests can be invaluable in reducing turnover because the employer can gain

an accurate understanding of the candidate’s skill set so there is no

misunderstanding once they have joined the company.



o To decrease turnover it is necessary to ensure that the candidates have a good

experience throughout the entire interview process. How they see the company in

the future will depend on how they remember their first experiences.

With successful candidates it is advised to:

• Move them quickly through the interview process (good candidates have high

expectations of quality and service and don’t favorably view delays.)

• To take time to clarify expectations so there is no misunderstanding of what the

role involves.

• To excite the candidates but not to oversell the job.

• To stay close to the candidates throughout the process continuing to probe for

attitude, motivation and organizational fit.




Induction and Socialization

o Once employed, new recruits should have a good induction and socialization

experience.

o This involves:

• Meeting with other employees

• Understanding the structure of the company, what the different employees are

responsible for, and how they are expected to interact with employees in other

departments.

• Who to go to for help.

• How to use the office IT and telephone systems.

• Training in procedures and processes.

o During this period employees will also learn how to socially adapt to their new

workplace. They will need to understand the social norms of acceptable behavior

and the unwritten rules for interaction.

o Without this knowledge they may make social mistakes that will affect their smooth

introduction.

o The new employees then identify with the new company and build productive

relationships with their management, peer group and subordinates.


Induction and Socialization


Throughout the employment relationship

o After the new employee has joined there are a range of initiatives that a manager

can do to retain their staff including:

• Ensuring that their jobs are interesting.

• Their career goals are supported.

• Information is shared with them.

• They are connected with others in the organization.

• That they are respected and valued.

Make their jobs interesting

o Employees need opportunities for personal challenge and growth. If good workers

find out that they are no longer receiving these necessities then they may decide

that they have outgrown the company and consider leaving. The simplest way to

enrich jobs for individuals is to ask them questions such as:

• What skills do you have that you are currently not using?

• In what areas would you like increased responsibility?

• In what ways would you like your job changed?

o Managers therefore need to focus on job enrichment for their employees if they

wish to retain their services.

o A major cause of turnover is workplace boredom. Job enrichment is not difficult, but

it does require staying alert to opportunities for all your employees and working with

them to enrich their jobs.



Support their career goals

o Discuss your employee’s futures, openly and frequently. Involve them as you discuss

their abilities, choices and ideas.

o Employee’s don’t expect all the answers, but they do want you to listen to them and

to offer your perspective.

o

o They will also benefit from specific feedback with examples of their performance and

how it relates to their future goals.

o Take time out to have in-depth discussions with them about how the industry is

changing over the next 2-5 years and what skills they will need to compete for roles

in the new environment.

o For instance, should they be completing further business studies, a qualification in

health economics, gaining exposure to new therapeutic areas or undertaking

overseas assignments.



Share information with them

o Make your employees feel part of the organization by telling them what is happening.

o Information sharing is important at all times but critical during periods of change

(downsizing, mergers and acquisitions).

o If employees are worried about events and don’t have sufficient information

they are likely to worry about their job security and update their resumes.

o Managers must give information as early and as honestly as possible and this will

make employees feel important and valued. These employees are likely to have

insight into the specific problems and may be able to offer solutions.



Share information with them

o The role of the manager is also to help employees look into the future, by providing

information that helps the employee’s development and career advancement.

o Employees want to know about the company’s direction and goals, the industry’s

future and the emerging trends that may affect career possibilities. Employees with

this information will feel more confident in their future within the company.



Get them connected

o Employees need groups of colleagues who can support them, offer information or

help, or just listen to them.

o Connections are a major reason why people stay with a company. Managers need to

give attention to strengthening the bonds between people in their team and others

within the organization.

o Employees need to link with others to get their jobs done effectively. Managers need

to be asking their staff “who else in the company do you need to be liaising with to

optimize your role?”

o Relationships with others will help employees get their work done and will give them

insights to enhance their productivity. As employees are linked to other functions

within the company their knowledge and skills will grow and they are more likely to

stay.



Respect them

Even if employees are well paid and have

opportunities to learn and grow, if they

don’t like their bosses or co-workers they

will leave.



Thank You

employee turnover and maximizing staff retention

Business